Smith & Jones, Accountants, is a limited liability partnership (LLP). The major features of an LLP are that it limits the personal liability of the partners and
A) it allows the partnership to continue as a pass-through tax entity.
B) LLP statutes do not vary from state to state.
C) it can only do business in the state in which it was formed.
D) only a few states have enacted LLP statutes.

Question

​Smith & Jones, Accountants, is a limited liability partnership (LLP). The major features of an LLP are that it limits the personal liability of the partners and
A) ​it allows the partnership to continue as a pass-through tax entity.
B) ​LLP statutes do not vary from state to state.
C) ​it can only do business in the state in which it was formed.
D) ​only a few states have enacted LLP statutes.

Quizplus · Accepted Answer

An LLP allows the partnership to continue as a pass-through tax entity, which means that the profits and losses of the partnership pass through to the individual partners to be reported on their personal tax returns. This is a key feature of LLPs, in addition to limiting the personal liability of the partners. B, C, and D are incorrect because LLP statutes do vary from state to state, an LLP can do business in multiple states, and more than just a few states have enacted LLP statutes.

​Smith & Jones, Accountants, Is a Limited Liability Partnership (LLP)

Smith & Jones, Accountants, Is a Limited Liability Partnership (LLP)