The allocations of the consumers' fees to Susan and the manufacturer's fees to Selena are examples of special allocations. Until passage of the Act, special allocations could only be made within partnerships. Now, owners can also make special allocations through LLCs. Although partnerships offer the flexibility of special allocations, they also have a major disadvantage. Each partner is liable for all the debts of the partnership.
Limited partnerships are available to shelter passive investors from liability.
However, organizing a limited partnership is expensive and complex. LLCs provide a simpler alternative. In general, the owners of a corporation are not personally liable for the corporation's debts. Indeed, owners often incorporate their businesses primarily to gain protection from personal liability. Accordingly, the members of an LLC will ordinarily not be liable for the LLC's debts.