A limited liability partnership is a form of partnership having limited liabilities. It has both the features of corporate and partnership. The liabilities of the partners are limited in the case of limited liability partnership. Limited liability partnership has the following features:
• The liabilities of partners are limited.
• Internal Revenue Service does treat LLP as separate entity for tax treatment. The partners of limited liability partnership are taxed. Hence, limited liability partnership has pass through tax treatment.
a. Protects partners from liability of their own deeds.
b. Protects the partners from the liability for the debt of the partnership.
c. Must pay tax on its income.
d. Both a and b.
e. (a), (b), and (c) are all correct.
Hence, the correct option is (b). Limited liability partnership protects the partners from the liability for debts of partnership.
A j oint venture is a partnership for a limited purpose; each organization that is part of a joint venture retains its own identity.
Therefore, the answer (d) association of persons engaged as co-owners in a single undertaking for profit is correct.
Difference between S corporation and close corporation:
Close corporation stock is not traded in public and it is also named as "closely held corporation."
S corporation's shareholders have limited liability of corporation and partnership's tax status.
"S corporations" are ruled by IRS. It does not have a taxable entity. "Close corporations" are ruled by state law. C corporation may or may not act as a S corporation. But it may be subject to low regulation and rules than C corporations.