Limited Partnerships are entities consisting of at least one general partner and at least one limited partner.  The general partners manage the business’ day to day operations and are liable for the debts and obligations of the partnership.  However, the general partner in a limited partnership may be a Corporation.  The limited partners are not allowed to participate in the management or control of the business.  The limited partners risk is limited to what they invest in the partnership.  A partnership agreement is required which spells out the rights and obligations of both the general and limited partners.  Because of the nature of the limited partners’ investment, losses are subject to “passive activity loss” and “at-risk” tax rules which place limits on loss deductions for investments that are considered passive and/or are not considered to be at-risk.  The partnership itself is not taxed.  The general partners are taxed on the individual level based on their share of the profits or losses and their income earned as managers of the partnership.  Unlike corporations, Limited Partnerships cannot retain annual earnings for future investments.