Question

Bob and Sally Jones form a Family Limited Partnership and transfer their farm to the partnership in exchange for a 1 percent general partner interest and 99 percent limited partner interests. Bob and Sally retain the one percent general partner interest and gift the limited partner interests to their three children. Which of the following is a true statement about the Family Limited Partnership?A. Bob and Sally cannot decide to sell the farm without the consent of at least a majority of the limited partners.B. If the farm business distributes $100,000 to the partners proportionately, Bob and Sally will only receive $1,000 and their children will receive $99,000.C. If the farm had a fair market value of $1,000,000 at the time Bob and Sally made their gifts to their children a judgment creditor could probably seize the farm before the gifts are madeD. Bob and Sally cannot gift their general partner interest to their children.

Answer 1

Answer: If the farm business distributes $100,000 to the partners proportionately, Bob and Sally will only receive $1,000 and their children will receive $99,000

Step-by-step explanation:

The information gotten from the passage said Bob and Sally Jones had a Family Limited Partnership and then transferred their farm to the partnership for a 1 percent general partner interest and a 99 percent limited partner interests. They retain the one percent general partner interest while giving the limited partner interests to their three children.

If $100,000 is distributed, since eBob and Sally owns 1 percent, they will get 1% of $100,000 which is (1/100 × 100000) = $1000 while the remaining $99,000 goes to their children.