I provided the start-up capital ($16000) and equipment ($10,000) as part of a general partnership in Pennsylvania in 2012/2012. (My share of the partnership was 49% and the managing partner had 51%). Several months later, there was an unrelated dispute and the managing partner stopped all contact. Since April 2012, I have not received any communication, accounting or tax information. The partnership was legally filed with the State of Pennsylvania. Can I withdraw from the partnership? If I withdraw, can I take this as an investment loss on my taxes? Is there any recourse to find out what happened to the money?
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5 lawyers agree
yes hire an attorney and demand an accounting
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Securities / Investment Fraud Attorney
You will need a PA attorney to assist in going to court to demand an accounting and possibly seek dissolution of the partnership. Your question says the partnership is "in" PA but does not identify the state of formation. Some states provide different remedies than others, and you may need an attorney from somewhere other than PA to assist if the partnership was not formed in PA.
The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.
Business associates stand in a fiduciary relation to one another in all matters pertaining to the business. The business relation is one of trust, loyalty and confidence. It imposes upon the parties the highest standards of good faith, the duty to act for the common benefit of all parties in all transactions relating to the business and the duty to refrain from taking any advantage of one another by the slightest misrepresentation, concealment, threat or adverse pressure of any kind. As a fiduciary, one party cannot put his interests before those of the business. Furthermore, a fiduciary cannot perform actions that are not in the best interests of the business.
So, in this case, you can sue your partner for a “breach of fiduciary duty”. A business fiduciary duty, in Pennsylvania, requires a partner to act honestly and in good faith to achieve the best interests for the company. An example of a breach of this fiduciary duty is when a partner uses company property for his or her personal profit, without the informed consent of the other partner. In addition to suing him for breach of fiduciary duty, if he deliberately ran the business into the ground, then you can also sue him for the loss by filing a derivative action against him on the business’ behalf. Finally you would be entitled to an accounting of all funds placed into the partnership.
Disclaimer: Please note you should not rely upon the information provided herein as legal advice. It is for general informational purposes only. Legal advice can only come from a qualified attorney after having had an opportunity to become familiar with all of the fact specific circumstances of a particular legal matter, and then to apply or research the relevant law.
Real Estate Attorney
You have some potentially serious legal claims here, including personal claims against your partner for fiduciary breach, minority shareholder/partner oppression, and possibly fraud, which could entitled you to damages beyond mere recovery of your investment. Before you take a loss on your tax returns, you should exhaust all avenues for getting your money back.
2 lawyers agree
Partners owe duties to one another that are typically defined in the partnership agreement or other document that formed your business. This document will be critical for any attorney who helps you out.
For specific legal advice, an attorney needs to know the specific facts and circumstances of a case. This answer does not constitute legal advice nor does it form an attorney/client relationship.
1 lawyer agrees