What is a key reason for establishing a limited partnership?

Establishing a limited partnership is primarily motivated by the desire to combine limited liability for certain partners with favorable tax treatment. In a limited partnership, one or more partners (known as general partners) manage the business and are fully liable for its debts, while the other partners (limited partners) contribute capital and share in profits but have their liability restricted to the amount they invested. This structure allows limited partners to contribute to the business without exposing their personal assets to risk beyond their investment, creating a balance between risk and participation in business profits.

Additionally, limited partnerships often benefit from pass-through taxation, meaning that profits and losses are reported on the individual partners' tax returns rather than at the partnership level. This tax treatment can be especially attractive to those looking to invest in certain types of businesses without incurring heavier tax burdens that might come with corporations.

The other options present notions that do not align with the core purpose of a limited partnership structure. For instance, avoiding tax returns is not a valid motivation, as all partners would typically have tax obligations based on the income received. Transparency of partners is not inherently mandated in this structure, since limited partners do not usually participate in management decisions, leading to less transparency compared to a general partnership. Finally, requiring unanimous consent