taxiowa
Level 9
12-07-2019
09:37 AM
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There is a vague understanding that a partner will be classified as a general partner if the partner can:
1. Bind the partnership to an agrement or have the authority to enter a contract on behalf of the partnership.
2. Has personal liability for debts or obligations of partnership because he is a partner.
3. Works over 500 hours per year.
But as is always the case, facts and circumstances determine whether a partner does in fact materially participate. Personally I have always felt at least 1 LLC member should be judged as general, and I have often had more than that. For instance in farm LLC partnerships where 2 brothers work the farm but both wives work in town, maybe only the 2 boys are general with wives being passive.