| | Limited Partnership and Corporations
I am a Limited Partner in Limited Partnership that owns property (mobile home park) and equipment. The General Partner leases the property and equipment to a Corporation who manages the Park. The General Partner is the President of the Corporation so he has full control over both businesses.
After years of attempting to receive information regarding the business of the Partnership, I received financial records for the Partnership and discovered the General Partner has been paying all his personal bills, including trips to the veterinarian for his cat, giving gifts to his girlfriend, motorcycle supplies, campground expenses, etc.... out of the Partnership's checking account. He documents this as his cash distributions.
The Partnership agreement states cash distributions are to be paid in cash only. The Partnership is not making any profit, all the profit is being made to the Corporation (at least $57,000.00 a month in rent for Park tenants). General Partner also, for no consideration paid, granted mobile homes owned by the Partnership to the Corporation, and sold them through the Corporation.
I was reviewing some of the blogs about tax evading, what was legal and what was not, and I am really concerned that this business is nothing more than a scam to get tax breaks. The General Partner paid himself large cash distributions through all his personal expenses, but never paid the other Limited Partners until years later and after he was caught. General Partner also informed me that the Partnership was doing really poorly and there was no money. This triggered me to demand the financial records when I discovered all of this. The Partnership finances are dwindling and I am concerned the business is going to go bankrupt.
Can one person have full control over 2 business entities when he is operating them to only benefit himself and not the other Partners as it relates to tax laws?