Question

Six equal partners own a local pizzeria. The partners have made a tremendous profit and bought many personal items such as cars, boats, new homes, and so on. In order to protect their personal possessions, they decide to incorporate the pizzeria, so that the six partners own shares in the corporation and have limited liability. The business is worth $675,000. After an accident, the partners lose a lawsuit and have to pay $1.2 million in damages. How much money will each partner personally lose to pay this lawsuit

Answer 1

The amount of damage payable by each partner individually is $112,500 because their loss is limited to their maximum shares.

Given data

Number of partners in Pizzarie is 6 with all having equal shares.

Value of business is $675,000

Total Damage $1.2 million

Hence, the money to be paid by each partners individually is:

= $675,000 / 6

= $112,500.

In conclusion, the amount of damage payable by each partner individually is $112,500 because their loss is limited to their maximum shares.