Polly and Paul form a general partnership for purposes of practicing law. They agree that their relationship
Question:
as partners will be governed by the Revised Uniform Partnership Act and do not have any separate
agreements, either written or oral. Polly contributes $ to the partnership; Paul contributes
$ to the partnership. During year one, the partnership has net income of $ and makes
distributions of $ to each partner. During year two, Polly used $ of her own money to
purchase books for a law library. The documents reflecting the purchase identify Polly as a partner in the
Polly and Paul Law Partnership. During year two, the partnership had net income of $ but did not
make any distributions to the partners. In year three, Paul commits legal malpractice and the aggrieved
client sues Paul and the partnership for legal malpractice. The aggrieved client obtains a judgment of
$ against Paul and the partnership. During year three, the partnership had net income of $
exclusive of the amount of the judgment against the partnership
a What is the amount in each partners capital account at the end of Year One?
b What is the amount on which each partner will be taxed based on the partnerships performance
in Year One?
c Is the law library Pollys property or the partnerships property and, if the latter, does Polly have
any rights against the partnership?
d What is the amount on which each partner will be taxed based on the partnerships performance?
Dynamic Business Law
ISBN: 9781260733976
6th Edition
Authors: Nancy Kubasek, M. Neil Browne, Daniel Herron, Lucien Dhooge, Linda Barkacs