What is a partnership interest, and what rights does it confer to the partner? What are inside basis and outside basis, and why are they important?
What is a partnership interest, and what rights does it confer to the partner?
A partnership interest represents a part ownership in an entity. It is designed to be a percentage interest, and an individual may, for example, own 16.67% of a partnership. That actually means that the individual partner owns an undivided 16.67% interest in the net assets of the partnership.
Rights conferred to a partner will vary depending on whether the partner is a general or limited partner. Rights will be further defined by whether the partner has a controlling interest or not.
For example, a general partner owning 16.67% cannot control the activities of a partnership without a coalition of partners who represent control, but each partner has a voice in management and an equal right to participate.
A limited ...
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