CORPORATE PARTNERSHIP ESTATE AND
GIFT TAXATION 1ST EDITION PRATT EXAM
STUDY GUIDE 2026 TEST PAPER
QUESTIONS AND SOLUTIONS GRADED A+
⩥ What governs a partnership agreement when it does not provide rules
on a matter? Answer: The RUPA (Revised Uniform Partnership Act)
generally governs.
⩥ What fiduciary duties do partners owe each other? Answer: Partners
owe fiduciary duties of loyalty and care, which may be limited but not
eliminated by the partnership agreement.
⩥ What is the duty of loyalty in a partnership? Answer: The duty of
loyalty requires partners to account for any property, profit, or benefit
derived from the partnership and refrain from competing with the
partnership before dissolution.
⩥ What is the duty of care in a partnership? Answer: The duty of care
requires partners to refrain from grossly negligent or reckless conduct,
willful misconduct, or knowing violations of the law.
,⩥ What is the duty of good faith in a partnership? Answer: Partners must
discharge their duties under the RUPA and partnership agreement in a
manner consistent with good faith and fair dealing.
⩥ How is partnership property defined? Answer: Partnership property is
owned exclusively by the partnership, not the individual partners, and is
determined by the intent of the parties at the time of acquisition.
⩥ What binds a partnership to the actions of a partner? Answer: A
partner acts as an agent of the partnership, binding it for acts carried out
in the ordinary course of business or with actual or apparent authority.
⩥ What is the liability of partners in a partnership? Answer: All partners
are jointly and severally liable for the debts and obligations of the
partnership unless agreed otherwise.
⩥ What happens to a new partner's liability for prior partnership
obligations? Answer: A new partner is not personally liable for
obligations incurred before their admission to the partnership.
⩥ How are partnership distributions divided among partners? Answer:
Each partner is entitled to an equal share of distributions unless the
partnership agreement specifies otherwise.
, ⩥ What is required for a partnership to alter a matter within its ordinary
business? Answer: A majority of the partners must decide to alter a
matter within the ordinary course of business.
⩥ What is a limited partnership? Answer: A limited partnership has both
general partners, who manage the business and have liability, and
limited partners, who have no personal liability for the debts of the
partnership.
⩥ What distinguishes general partners from limited partners in a limited
partnership? Answer: General partners have management rights and
liability, while limited partners do not have personal liability exposure.
⩥ Can a limited partner act as an agent of the limited partnership?
Answer: A limited partner is only an agent if general agency principles
govern their actions with the limited partnership.
⩥ What is the significance of a partnership agreement? Answer: A
partnership agreement governs the relations among partners and the
conduct of the business, and can specify rules for profit and loss
distribution.
⩥ What is the role of the RUPA in partnerships? Answer: The RUPA
provides default rules for partnerships and includes non-waivable
provisions that take precedence over conflicting partnership agreement
provisions.
GIFT TAXATION 1ST EDITION PRATT EXAM
STUDY GUIDE 2026 TEST PAPER
QUESTIONS AND SOLUTIONS GRADED A+
⩥ What governs a partnership agreement when it does not provide rules
on a matter? Answer: The RUPA (Revised Uniform Partnership Act)
generally governs.
⩥ What fiduciary duties do partners owe each other? Answer: Partners
owe fiduciary duties of loyalty and care, which may be limited but not
eliminated by the partnership agreement.
⩥ What is the duty of loyalty in a partnership? Answer: The duty of
loyalty requires partners to account for any property, profit, or benefit
derived from the partnership and refrain from competing with the
partnership before dissolution.
⩥ What is the duty of care in a partnership? Answer: The duty of care
requires partners to refrain from grossly negligent or reckless conduct,
willful misconduct, or knowing violations of the law.
,⩥ What is the duty of good faith in a partnership? Answer: Partners must
discharge their duties under the RUPA and partnership agreement in a
manner consistent with good faith and fair dealing.
⩥ How is partnership property defined? Answer: Partnership property is
owned exclusively by the partnership, not the individual partners, and is
determined by the intent of the parties at the time of acquisition.
⩥ What binds a partnership to the actions of a partner? Answer: A
partner acts as an agent of the partnership, binding it for acts carried out
in the ordinary course of business or with actual or apparent authority.
⩥ What is the liability of partners in a partnership? Answer: All partners
are jointly and severally liable for the debts and obligations of the
partnership unless agreed otherwise.
⩥ What happens to a new partner's liability for prior partnership
obligations? Answer: A new partner is not personally liable for
obligations incurred before their admission to the partnership.
⩥ How are partnership distributions divided among partners? Answer:
Each partner is entitled to an equal share of distributions unless the
partnership agreement specifies otherwise.
, ⩥ What is required for a partnership to alter a matter within its ordinary
business? Answer: A majority of the partners must decide to alter a
matter within the ordinary course of business.
⩥ What is a limited partnership? Answer: A limited partnership has both
general partners, who manage the business and have liability, and
limited partners, who have no personal liability for the debts of the
partnership.
⩥ What distinguishes general partners from limited partners in a limited
partnership? Answer: General partners have management rights and
liability, while limited partners do not have personal liability exposure.
⩥ Can a limited partner act as an agent of the limited partnership?
Answer: A limited partner is only an agent if general agency principles
govern their actions with the limited partnership.
⩥ What is the significance of a partnership agreement? Answer: A
partnership agreement governs the relations among partners and the
conduct of the business, and can specify rules for profit and loss
distribution.
⩥ What is the role of the RUPA in partnerships? Answer: The RUPA
provides default rules for partnerships and includes non-waivable
provisions that take precedence over conflicting partnership agreement
provisions.
