<P> It is important to note that while FLPs are completely legal, deliberately engaging in any practice the IRS deems to be specifically undertaken to evade paying taxes is illegal . Determination of the fair market value must be performed by a qualified appraiser, typically defined as someone certified to perform such work (either by the American Society of Appraisers, the Chartered Financial Analyst Institute, or another similar organization), someone who routinely performs this type of work as a normal course of business, and in compliance with federal and state laws, as well as generally accepted appraisal standards and the Uniform Standards of the Professional Appraisal Practice (USPAP). </P> <P> FLPs should be formed as long - term family investment asset vehicles . In addition to investing in marketable securities, the GP can purchase alternative investments, such as hedge fund and private equity interests . Another "alternative investment" would be an interest in a closely held business created by one of the LPs . In this way, the FLP can serve as a vehicle for encouraging family entrepreneurship . An LP (e.g. a son or daughter of the founder) could submit a business plan and request seed capital or a loan for a new venture . </P> <P> An FLP can also be formed as a family limited liability company (FLLC), which offers legal advantages over an LP . While the GP of an FLP is personally liable for all debts and obligations of the FLP . no "member" (instead of "partner") of a FLLC is personally liable . Furthermore, in an FLLC, there are no restrictions on members participating in management, unlike the restrictions on LPs . A FLLC is often managed by a group of "managing members" or one or more "managers". </P> <P> Because an FLP or FLLC is a real business entity, it should be treated as one . Meetings should be held on a regular basis to review the conduct of the entity's investment business . The entity must make any distributions proportionately to all partners or members . It should never be used as the personal bank account of the founder . </P>

Which of the following is true regarding california limited partnerships