What is a primary purpose of forming a limited partnership?

The primary purpose of forming a limited partnership is to allow passive investment without personal liability. In a limited partnership, there are two types of partners: general partners and limited partners. General partners manage the business and have full personal liability for the debts and obligations of the partnership, while limited partners contribute capital but do not participate in day-to-day management. Their liability is restricted to the amount of their investment in the partnership. This structure enables individuals to invest while limiting their financial risk and protecting their personal assets from business liabilities, making it an attractive option for passive investors who wish to support a business without taking on the inherent risks associated with being actively involved in its management.

This option is distinctive because it highlights the specific benefit of limited liability combined with the opportunity for investment, which is central to the appeal of limited partnerships. The other options do not accurately represent the key feature or purpose of limited partnerships.