# Tenn. Code Ann. § 61-1-202: Formation of partnership > Tennessee · Statutes · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-202 ## Section - **Citation:** Tenn. Code Ann. § 61-1-202 - **Heading:** Formation of partnership - **Jurisdiction:** Tennessee - **Kind:** Statutes - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** TN Code / Title 61 / Chapter 1 / Section 61-1-202 ## Text (a) Except as otherwise provided in subsection (b), the association of two (2) or more persons to carry on as co-owners of a business for profit forms a partnership, whether or not the persons intend to form a partnership. (b) An association formed under a statute other than this chapter, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this chapter. (c) In determining whether a partnership is formed, the following rules apply: (1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property; (2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived; (3) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment: (A) Of a debt by installments or otherwise; (B) For services as an independent contractor or of wages or other compensation to an employee; (C) Of rent; (D) Of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner; (E) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or (F) For the sale of the goodwill of a business or other property by installments or otherwise. Acts 2001, ch. 353. (a) Except as otherwise provided in subsection (b), the association of two (2) or more persons to carry on as co-owners of a business for profit forms a partnership, whether or not the persons intend to form a partnership. (b) An association formed under a statute other than this chapter, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this chapter. (c) In determining whether a partnership is formed, the following rules apply: (1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property; (2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived; (3) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment: (A) Of a debt by installments or otherwise; (B) For services as an independent contractor or of wages or other compensation to an employee; (C) Of rent; (D) Of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner; (E) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or (F) For the sale of the goodwill of a business or other property by installments or otherwise. (1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property; (2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived; in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property; (2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived; (3) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment: (A) Of a debt by installments or otherwise; (B) For services as an independent contractor or of wages or other compensation to an employee; (C) Of rent; (D) Of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner; (E) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or (F) For the sale of the goodwill of a business or other property by installments or otherwise. (A) Of a debt by installments or otherwise; (B) For services as an independent contractor or of wages or other compensation to an employee; (C) Of rent; (D) Of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner; (E) Of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or (F) For the sale of the goodwill of a business or other property by installments or otherwise. Acts 2001, ch. 353. ## Nearby sections - [Tenn. Code Ann. § 61-1-101 Chapter definitions](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-101.md) - [Tenn. Code Ann. § 61-1-102 Knowledge and notice](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-102.md) - [Tenn. Code Ann. § 61-1-103 Effect of partnership agreement - Nonwaivable provisions](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-103.md) - [Tenn. Code Ann. § 61-1-104 Supplemental principles of law](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-104.md) - [Tenn. Code Ann. § 61-1-105 Execution, filing, and recording of statements](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-105.md) - [Tenn. Code Ann. § 61-1-106 Governing law](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-106.md) - [Tenn. Code Ann. § 61-1-107 Partnership subject to amendment or repeal of chapter](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-107.md) - [Tenn. Code Ann. § 61-1-201 Partnership as entity](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-201.md) - [Tenn. Code Ann. § 61-1-202 Formation of partnership](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-202.md) - [Tenn. Code Ann. § 61-1-203 Partnership property](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-203.md) - [Tenn. Code Ann. § 61-1-204 When property is partnership property](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-204.md) - [Tenn. Code Ann. § 61-1-301 Partner agent of partnership](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-301.md) - [Tenn. Code Ann. § 61-1-302 Transfer of partnership property](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-302.md) - [Tenn. Code Ann. § 61-1-303 Statement of partnership authority](https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-303.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_TN_T61_C1_S61-1-202. Check the current official text before relying on it. Not legal advice.