[jsteinberger]

The following question is from Wiley Testbank. However, everything I read in CPA Excel states “as noted elsewhere, absent agreement to the contrary, partners equally share profits and losses.”

Flynn and Bleeker formed a partnership under the Revised Uniform Limited Partnership Act (RULPA). Flynn is the general partner and puts in a capital contribution of $40,000. Bleeker is the limited partner and puts in a capital contribution of $60,000. They do not discuss a profit-sharing plan. During the first year, the partnership earns $50,000 in profit. How do they split the profits between Flynn and Bleeker respectively?

MCQ

• $20,000 and $30,000 respectively <—- CORRECT ANSWER

• $25,000 to each.

• $50,000 and $0 respectively.

• None of the above.

Then…in another Wiley question I have a different answer:

This answer is correct. The requirement is to identify the method used to allocate profits and losses if there is no provision in the partnership agreement. Profits and losses are shared equally unless the agreement states otherwise.

What gives??!!! So confused and frustrated. Any thoughts or help? Thank you thank you thank you in advance

[lbi18]

Perhaps you have Limited Partnership and General Partnership confused.

Under the Limited Partnership rules, absent an agreement otherwise, profits are shared based upon the partners' capital contributions.

Under the General Partnership rules, absent an agreement otherwise, profits are shared based upon the number of partners in the partnership (i.e. equally).

The above question is correct because it mentions an LP, not a GP.

FAR - 85
AUD - 99
REG - 85
BEC - 10/4/13 (Waiting)

Using Becker Self-Study

[barelystayingsane]

Yeah LPs are the black sheep in the partnership group. They have EQUAL VOTING RIGHTS, but ALLOCATED P&L based on capital contributions.

[jsteinberger]

Thank you – that makes sense. I was very confused. 🙂

Also, I posted this question to my CPA Excel mentor discussion and all they would say is “CPA Excel material is correct.” They wouldn't explain it to me. I understand they can't comment on other material, but it would have been nice if they helped explain the simple concept to me.

Oh well – that's what I have you guys for!! Thanks!

[Anonymous]

where is the other question?

Link: Current CPAexcel Discount Codes

[Author]

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