Question: ABC Partnership is a general partnership and was started by Partners A, B, and C in Year 1.The written partnership agreement is silent as to

ABC Partnership is a general partnership and was started by Partners A, B, and C in Year 1.The written partnership agreement is silent as to how the partners share in profits and losses. Partner A has capital contributions of $40,000, Partner B has capital contributions of $30,000,andPartner C has capital contributions of $30,000.Year 1's profit is $150,000.Partner A did most of the work of the daily operations of the partnership business and therefore demands $50,000 because that amount is in fact a reasonable amount of compensation for the quantity and quality of work done by Partner A. What will happen with Partner A's request for this $50,000 for his services?

a.Partner A is entitled to this amount only if payment by the partnership does not cause financial distress to the partnership.

b.Partner A is entitled to only one third of this $50,000 since he is one of three general partners.

c.Partner A will have to go to court to prove that the fair value of his services is worth $50,000 and will succeed in winning this case.

d.Partner A is not entitled to this amount because these are duties that a general partner is expected to perform anyway.

e.None of the other choices are correct.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Law Questions!