Q: Could you explain the ins and outs of a LLLP?
A: A limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership. It consists of one or more general partners and one or more limited partners. As with a limited partnership, the general partners manage the business operations of the LLLP. The limited partners maintain a financial interest and may represent the primary source of financing for the LLLP.
The key advantage of this partnership form is that the general partners enjoy limited liability on the debts and obligations of the LLLP.
The LLLP’s profits and losses flow down or flow through to the partners, reported on the Schedules K-1 (Form 1065) provided by the LLLP to each partner.
Certain states prohibit the formation of an LLLP, although states that do so generally allow an LLLP organized outside the state to conduct business within the state. If so, the LLLP partners are personally liable for state income taxes on their share of partnership profits associated with income from operations in the state.
In addition to limiting general partners’ liability for partnership debts and obligations, the LLLP offers protection for partnership assets if a general partner is subject to a legal judgment against his or her personal assets, i.e., personal assets in the form of a partnership interest are shielded from attachment.
A: A limited liability limited partnership (LLLP) is a relatively new modification of the limited partnership. It consists of one or more general partners and one or more limited partners. As with a limited partnership, the general partners manage the business operations of the LLLP. The limited partners maintain a financial interest and may represent the primary source of financing for the LLLP.
The key advantage of this partnership form is that the general partners enjoy limited liability on the debts and obligations of the LLLP.
The LLLP’s profits and losses flow down or flow through to the partners, reported on the Schedules K-1 (Form 1065) provided by the LLLP to each partner.
Certain states prohibit the formation of an LLLP, although states that do so generally allow an LLLP organized outside the state to conduct business within the state. If so, the LLLP partners are personally liable for state income taxes on their share of partnership profits associated with income from operations in the state.
In addition to limiting general partners’ liability for partnership debts and obligations, the LLLP offers protection for partnership assets if a general partner is subject to a legal judgment against his or her personal assets, i.e., personal assets in the form of a partnership interest are shielded from attachment.