A form of business organization where the limited partners are only liable to the extent of the amount of money that they invested in the partnership. Limited partners are not involved in the management decisions of the business but are entitled to the flow-through of income and expenses for tax purposes.
An arrangement between a general partner and a limited partner. The general partner manages the project, and collects fees and a percentage of profits and income. Limited partners invest in the project but have limited liability; they are not involved in the day-to-day management of the project, and they receive a percentage of the profits and income. In general, they also receive tax benefits.
A partnership co-owned by a general partner and limited partner(s). The general partner manages the business operations. Limited partners have limited liability up to their investment and are not involved in daily activities.
The legal structure used by most venture and private equity funds. Usually fixed life investment vehicles. The general partner or management firm manages the partnership using policy laid down in a Partnership Agreement. The Agreement also covers, terms, fees, structures and other items agreed between the limited partners and the general partner.
An organization comprised of a general partner, who manages a fund, and limited partners, who invest money but have limited liability and are not involved with the day-to-day management of the fund. In the typical venture capital fund, the general partner receives a management fee and a percentage of the profits (or carried interest). The limited partners receive income, capital gains, and tax benefits.
Investments — in real estate and oil and gas, for example — that pass both profits and losses on to investors. By definition, limited partnerships are passive investments, subject to the passive-loss rules.