Question
A general partner in a partnership has unlimited legal liability but also has managerial control over the partnership. A limited partner has limited liability but
A general partner in a partnership has unlimited legal liability but also has managerial control over the partnership. A limited partner has limited liability but does not exercise control over the day-to-day operations. John, your client, owns a machine shop operated as a sole proprietorship. The business is worth $10,000,000. He would like to transfer a portion of ownership to his two adult children, Cindy and Luke, by converting the business into a partnership. How would you structure a partial transfer of ownership in the business to Cindy and Luke to achieve a fair market value of the transfer that is less than Cindy and Lukes proportionate share of the $10,000,000 value? Are there any penalty concerns associated with the valuation discounts that your proposed transfer takes advantage of, especially if the valuation is found to be inaccurate?
In responding to classmates, comment on how the Andrews, Curry, Cook, andOKeefee cases covered in the required reading support or undermine the structuring of the ownership transfer to attain valuation discounts that your peers have proposed.
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