John and Pat purchased a joint interest in a two-hectare campground with a variety store and mini-golf course and retained the existing manager to handle day-to-day operations. From time to time they made improvements to the site and each year they divided the profits (or losses) from the campground equally. If Pat takes over operational management and John assumes the administrative tasks associated with the campground, a partnership exists in respect of the business.

Question

Quizplus · Accepted Answer

John and Pat's joint purchase of the campground, shared improvements, and equal division of profits or losses, along with their division of operational and administrative tasks, indicate a partnership. A partnership is formed when two or more persons carry on a business in common with a view to profit.

John and Pat Purchased a Joint Interest in a Two-Hectare