Which of the following statements is true about a partnership name?
(The name is an asset of the partnership that may be sold or assigned.
The name must include the word "company" in it.)
The partnership must comply with the state's assume name provisions.
Both a and c - ️️Both a and c
The...
BUL 3310 BAILEY EXAM 4 FSU
Which of the following statements is true about a partnership name?
(The name is an asset of the partnership that may be sold or assigned.
The name must include the word "company" in it.)
The partnership must comply with the state's assume name provisions.
Both a and c - ✔️✔️Both a and c
The owner of a limited liability company LLC has unlimited personal liability for the debts
of the LLC.
T/F? - ✔️✔️False
Which of the following is NOT one of the recognized disadvantages of doing business
as a corporation?
A corporation must comply with a great number of state and federal regulations.
Corporate profits are subject to double taxation.
A corporation must qualify to do business in each state in which it engages in business
activities.
A corporation can be in existence for a maximum of 99 years. - ✔️✔️A corporation can
be in existence for a maximum of 99 years.
Which of the following statements about LLC's is false?
LLC's are a relatively new form of business organization.
There is an extensive body of law based on court decisions governing LLC's.
Shareholders have no personal liability for the debts of the LLC.
The LLC is not a taxable entity. - ✔️✔️There is an extensive body of law based on
court decisions governing LLC's.
Investors favor using Limited Partnerships to invest in commercial real estate because
they can use the depreciation of the property as a tax loss.
,T or F - ✔️✔️True
Professional corporations are business entities organized under state law.
T/F? - ✔️✔️True
Allfam is a closely held family corporation, many of whose shareholders are employees
of the corporation. In an attempt to reduce its taxes, Allfam paid its shareholder-
employees enormous salaries and deducted the salaries as a corporate expense. Is
Allfam permitted to do this?
Yes, this is a legitimate way for closely held corporations to reduce their taxes.
No, the IRS will disallow the deductions for unreasonably high salaries and tax them as
dividends.
No, the shareholder-employees will have do return the excess portion of their salaries
to the corporation.
No, the IRS will disallow the deductions for this year, but will allow the corporation to
treat them as carry-forward losses for next year. - ✔️✔️No, the IRS will disallow the
deductions for unreasonably high salaries and tax them as dividends
Which of the following statements about the limited partner in a limited partnership is
FALSE?
Limited partners may participate fully in the management of the partnership.
There must be at least one limited partner.
Limited partners must approve any changes to the partnership agreement.
Limited partnerships that invest in real estate are typically good tax shelters for the
limited partners. - ✔️✔️Limited partners may participate fully in the management of the
partnership.
Vic and Thom bought an antique Corvette at auction with the intent of restoring it and
selling it for a profit, which they will share equally. Vic and Thom have formed a
professional association.
T/F? - ✔️✔️False
Members of professional associations and professional corporations are eligible under
the Tax Code to participate in pension and profit-sharing plans.
T/F? - ✔️✔️True
,In a Limited Liability Company, the losses and profits pass through to the shareholders.
T/F? - ✔️✔️True
The partnership must pay interest each year on the capital contributions of the partners.
False - ✔️✔️False
If a partnership agreement does not say how losses will be shared, they will be shared
Equally among the partners
Proportionately according to the capital contribution of each partner.
In whatever way the profits are shared.
Equally among those partners who have not made loans to the partnership - ✔️✔️In
whatever way the profits are shared
Partnerships typically buy life insurance policies on each partner in order to fund the
required purchase of the partner's interest in the partnership when the partner dies.
T/F? - ✔️✔️True
An incoming partner has unlimited personal liability for the already existing debts of the
partnership.
T/F? - ✔️✔️False
The surviving partner is entitled to compensation for winding up the affairs of the
partnership.
T/F? - ✔️✔️True
If a personal creditor of Partner A wants to attach A's partnership interest in satisfaction
of the debt, he would do so through a marshalling order.
T/F? - ✔️✔️False
Jim and Sid are partners in Widget Manufacturing. Jim read a letter from one of
Widget's buyers asking for adequate assurances that Widget would be able to meet an
upcoming contractual obligation. The demand was proper and, under Article 2, the
buyer could treat the contract as breached if Widget did not respond to the demand
, within 3 months. Jim forgot to tell Sid about the demand and did not respond to it
himself. Widget is now being sued by Buyer for 4,000 in damages for breach of
contract. Sid contends that the partnership is not liable because only one partner was
aware of the demand. Is Sid correct?
Yes, as an equal owner of the business Sid was entitled to equal notice.
No, Sid did not receive the notice because of his own negligence in attending to
partnership correspondence.
No, the partnership is liable under the doctrine of respondeat superior
No, the partnership is liable because notice to one pa - ✔️✔️No, the partnership is
liable because notice to one partner is legally notice to all the partners and the
partnership.
Unless agreed to otherwise, all partners have an equal vote in the management
decisions of the partnerships.
T/F? - ✔️✔️True
In a limited partnership LP, what are the partners who have unlimited personal liability
for the debts of the LP?
General partners
Joint partners
Limited partners
Silent partners - ✔️✔️General Partners
Shareholders of a corporation may also be employees of that corporation. - ✔️✔️True
Corporations are said to have a burden of "double tax" because
Profits are taxed at the corporate level as income and again at the shareholder level as
dividends.
Corporations are taxed at both the state and federal level.
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