A limited partnership must have at least one general partner. The general partners have unlimited liability. The limited partners are only liable to the extent of their investment in the partnership. Of course a general partner cannot limit their liability by simultaneously holding limited partnership interest.

A general partner may want to invest in a limited partnership interests (like shares of stock in a corporation) as an investment or to increase their control in the partnership. In addition, limited partnership interests are taxed differently than general partners. For example, a limited partner cannot deduct partnership losses against ordinary income. However, to reduce future income the

carry over losses can be taken when the limited interests are sold.