CFA Level I · CFA Level I Exam · Organizational Forms, Corporate Issuer Features, and Ownership
Compared with a general partnership, a limited partnership most likely gives its limited partners:
Limited partners most likely have liability limited to their capital contribution and take no role in management. The general partner runs the business and bears unlimited liability. Partnerships generally pass income through to partners rather than being taxed separately.
- Aliability limited to their capital contribution but no role in managementCorrect
- Bunlimited liability in exchange for control of daily operations
- Ctax-free status because the partnership is a separate taxpayer
Explanation
Limited partners are typically passive, with liability capped at their investment; general partners manage and bear unlimited liability. Partnerships are usually pass-through entities, so the tax option is wrong.
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