Limited Partner

AAA

DEFINITION of 'Limited Partner'

A partner in a partnership whose liability is limited to the extent of the partner's share of ownership. Limited partners generally do not have any kind of management responsibility in the partnership in which they invest and are not responsible for its debt obligations. For this reason, limited partners are not considered to be material participants.

INVESTOPEDIA EXPLAINS 'Limited Partner'

Because they are not material participants, the income that limited partners realize from their partnerships is treated as passive income, and can be offset with passive losses. However, there are a handful of exceptions to this rule. For example, limited partners who participate in a partnership for more than 500 hours in a year may be considered general partners.

RELATED TERMS
  1. Incentive Distribution Rights - ...

    These give a limited partnership's general partner an increasing ...
  2. Limited Partnership - LP

    Two or more partners united to conduct a business jointly, and ...
  3. Master Limited Partnership - MLP

    A type of limited partnership that is publicly traded. There ...
  4. Passive Income

    Earnings an individual derives from a rental property, limited ...
  5. Silent Partner

    An individual whose involvement in a partnership is limited to ...
  6. Public-Private Partnerships

    A business relationship between a private-sector company and ...
Related Articles
  1. Retirement

    Discover Master Limited Partnerships

  2. Several major tax benefits are available for oil and gas investors that are found nowhere else in the tax code.
    Investing Basics

    Oil: A Big Investment With Big Tax Breaks

  3. Options & Futures

    An Investor's Checklist To Financial ...

  4. Bonds & Fixed Income

    Can I invest my IRA in an entity, business ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center