Question

1. What could Dormilee Morton have done to strengthen her status as a limited partner?
2. Both Mortons testified that Mrs. Morton was only involved in a very small part of the business and that Steven had taken charge over all financial and tax affairs. Do you think it is fair to hold a widow responsible for the misdealing or ineptness of her son in this case?

Dormilee Morton inherited the assets of her husband’s construction company and her son Steven Morton ran the day-to-day operations of the business as a limited partnership indicated by the business tax returns filed by Steven and by Mrs. Morton’s personal tax returns. During the 5 years of the partnership’s existence, Mrs. Morton signed for bank loans as “Dormillee Morton and Steven Morton d/b/a Morton Construction Company,” she provided additional capital for the business when needed, and her home phone number and address were listed as the principal place of business for Morton Construction. When the IRS assessed Morton Construction in back taxes and penalties, they pursued Mrs. Morton as a general partner because Steven and the business with without assets and Mrs. Morton defended on the basis that she had been nothing more than a limited partner and thus insulated from liabilities of the partnership.



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  • CreatedNovember 06, 2014
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