Upon dissolution of a partnership, how are assets distributed among partners?

When a partnership is dissolved, the assets are distributed among the partners based on their ownership interests or capital contributions. This means that the distribution takes into account the proportion of each partner's investment in the partnership and their respective share of the profits and losses as outlined in the partnership agreement. It ensures that partners receive a fair share of the assets reflective of their stake in the business.

This method of distribution is typically laid out in partnership agreements and adheres to the principles of equity in business transactions. In the absence of a specific partnership agreement, state laws, including those based on the Uniform Partnership Act, usually default to this equitable allocation based on ownership interest or capital contribution.

Other options do not accurately reflect the legal principles governing the dissolution of partnerships. Equitably distributing assets according to ownership interests or capital contributions ensures that partners are treated fairly based on their contributions to the venture. Therefore, this approach aligns with the underlying purpose of partnership law, which emphasizes fairness and responsibility among partners.