Texas Business Organizations Code 152.052 – Rules for Determining If Partnership Is Created
(a) Factors indicating that persons have created a partnership include the persons’:
(1) receipt or right to receive a share of profits of the business;
(2) expression of an intent to be partners in the business;
(3) participation or right to participate in control of the business;
(4) agreement to share or sharing:
(A) losses of the business; or
(B) liability for claims by third parties against the business; and
(5) agreement to contribute or contributing money or property to the business.
(b) One of the following circumstances, by itself, does not indicate that a person is a partner in the business:
(1) the receipt or right to receive a share of profits as payment:
(A) of a debt, including repayment by installments;
(B) of wages or other compensation to an employee or independent contractor;
(C) of rent;
(D) to a former partner, surviving spouse or representative of a deceased or disabled partner, or transferee of a partnership interest;
(E) of interest or other charge on a loan, regardless of whether the amount varies with the profits of the business, including a direct or indirect present or future ownership interest in collateral or rights to income, proceeds, or increase in value derived from collateral; or
(F) of consideration for the sale of a business or other property, including payment by installments;
(2) co-ownership of property, regardless of whether the co-ownership:
(A) is a joint tenancy, tenancy in common, tenancy by the entirety, joint property, community property, or part ownership; or
(B) is combined with sharing of profits from the property;
(3) the right to share or sharing gross returns or revenues, regardless of whether the persons sharing the gross returns or revenues have a common or joint interest in the property from which the returns or revenues are derived; or
(4) ownership of mineral property under a joint operating agreement.
Terms Used In Texas Business Organizations Code 152.052
- Business: means a trade, occupation, profession, or other commercial activity. See Texas Business Organizations Code 1.002
- Joint tenancy: A form of property ownership in which two or more parties hold an undivided interest in the same property that was conveyed under the same instrument at the same time. A joint tenant can sell his (her) interest but not dispose of it by will. Upon the death of a joint tenant, his (her) undivided interest is distributed among the surviving joint tenants.
- Ownership interest: means an owner's interest in an entity. See Texas Business Organizations Code 1.002
- Partner: means a limited partner or general partner. See Texas Business Organizations Code 1.002
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Partnership: means an entity governed as a partnership under Title 4. See Texas Business Organizations Code 1.002
- Person: means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity. See Texas Business Organizations Code 1.002
- Property: includes tangible and intangible property and an interest in that property. See Texas Business Organizations Code 1.002
- Share: means a unit into which the ownership interest in a for-profit corporation, professional corporation, real estate investment trust, or professional association is divided, regardless of whether the share is certificated or uncertificated. See Texas Business Organizations Code 1.002
- Tenancy by the entirety: A type of joint tenancy between husband and wife that is recognized in some States. Neither party can sever the joint tenancy relationship; when a spouse dies, the survivor acquires full title to the property.
- Tenancy in common: A type of property ownership in which two or more individuals have an undivided interest in property. At the death of one tenant in common, his (her) fractional percentage of ownership in the property passes to the decedent
(c) An agreement by the owners of a business to share losses is not necessary to create a partnership.