ExpertHard1 markMultiple Choice
CPA · Question 50 · Area II: Business Law
A partner in a general partnership transfers their partnership interest to a third party without the consent of the other partners. Which of the following statements is true?
A partner in a general partnership transfers their partnership interest to a third party without the consent of the other partners. Which of the following statements is true?
Answer options:
A.
The transfer is void.
B.
The transferee receives the transferor's right to distributions but does not become a partner.
C.
The partnership is automatically dissolved.
D.
The transferee becomes a partner with full management rights.
How to approach this question
Partnership Interest = Economic Rights (Assignable) + Management Rights (Not Assignable without consent).
Full Answer
B.The transferee receives the transferor's right to distributions but does not become a partner.✓ Correct
B
Under RUPA, a partner can transfer their transferable interest (share of profits/losses and distributions). However, the transferee does not become a partner and has no right to participate in management or inspect books unless the other partners consent.
Common mistakes
Thinking the new person becomes a full partner automatically.
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