Deck 33: Limited Liability Companies Special Business Forms

Question 1

A limited liability company can be taxed as a partnership.

Answer 1

True

Question 2

A member of a limited liability company (LLC) has the power and the right to dissociate from the LLC at any time.

Answer 2

False

Question 3

A limited liability company must be managed by its members.

Answer 3

False

Question 4

The alter-ego doctrine can be applied to a limited liability company.

Question 5

In many states, an operating agreement is not required for a limited liability company to exist.

Question 6

Generally, a dissociated member of a limited liability company (LLC) has the right to have his or her interest in the LLC bought out by the other members.

Question 7

A limited liability company is a citizen of every state in which it does business.

Question 8

Some states provide that in the absence of an agreement to the contrary each member of a limited liability company has one vote.

Question 9

The members of a limited liability company enjoy limited liability.

Question 10

A limited liability company (LLC) formed in one state but doing business in another state is referred to in the second state as a foreign LLC.

Question 11

A limited liability company is not a citizen of any state.

Question 12

When a member dissociates form a limited liability company, the member's duty of loyalty continues.

Question 13

Foreign investors are not allowed to become limited liability company members.

Question 14

A limited liability company can be taxed as a corporation.

Question 15

If there is no limited liability company (LLC) agreement covering a topic under dispute, the state LLC statute will govern the outcome.

Question 16

A limited liability company must be managed by non-member managers.

Question 17

State limited liability company statutes are uniform.

Question 18

Most limited liability company statutes have no provisions regarding members' meetings.

Question 19

A limited liability company is operated in compliance with state law.

Question 20

Future members of a limited liability company (LLC) may enter into contracts on the entity's behalf before the LLC is formed.

Question 21

A joint venture resembles a partnership but is taxed like a corporation.

Question 22

A business trust is created by a written trust agreement.

Question 23

A cooperative must be incorporated.

Question 24

Most courts apply the same principles to joint ventures as they apply to corporations.

Question 25

A joint stock company is a hybrid of a partnership and a corporation.

Question 26

Fay is a member of Garden Groves LLC. Like other members of limited liability companies, Fay's liability for Garden Groves's obligations resembles the liability of

A) a member of a joint venture.
B) an owner of a sole proprietorship.
C) a partner of a partnership.
D) a shareholder of a corporation.

Question 27

Coco is considering forms of business organization for her concessions business-Coco's Cupcakes. Most states require that a limited liability company have at least

A) no minimum number of members.
B) at least one member.
C) at least two members.
D) at least three members, including at least one general partner.

Question 28

Greta is a member of Hovercraft LLC. As a member, Greta is

A) a manager or officer, but not an owner.
B) an investor, but not a manager, officer, or owner.
C) an owner.
D) a participant, but not an investor, manager, officer, or owner.

Question 29

A business trust resembles a corporation.

Question 30

Dani is considering forms of business organization for her financial advisory firm. Like most states, Dani's state requires that to form a limited liabil?ity company, she must file with a central state agency

A) articles of certification.
B) articles of formation.
C) articles of organization.
D) no specific documents.

Question 31

A joint venturer can be held personally liable for the venture's debts.

Question 32

The owners of an unincorporated cooperative have joint liability for its obligations.

Question 33

Like a corporation, the ownership of a joint stock company is represented by shares of stock.

Question 34

Joint venturers have the authority to enter into contracts for the business that will bind the joint venture.

Question 35

A group of individuals getting together to finance a particular project may form a syndicate.

Question 36

A syndicate may exist in the form of a partnership but not a corporation.

Question 37

The beneficiaries of a business trust are personally liable for its obligations.

Question 38

A syndicate may be organized as a corporation but not as a partnership.

Question 39

When a limited liability company is dissolved, any member who did not wrongfully dissociate may participate in the winding up process.

Question 40

Mit-E Mart LLC was formed in New Jersey. Mit-E Mart's members are Odel, who is a citizen of New Jersey, and Pola, who is a citizen of New York. For federal diversity jurisdictional purposes, Mit-E is a citizen of

A) all states.
B) New Jersey and New York.
C) New Jersey only.
D) no state.

Question 41

Simone is a manager of Rolling Hills Resort LLC, a limited liability company. Rolling Hills is formed in a state that does not explicitly create fiduciary duties for LLC managers but does require the exercise of good business judgment. Unless a court rules otherwise, Simone owes fiduciary duties to

A) Rolling Hills's members.
B) Rolling Hills's suppliers.
C) Rolling Hills's customers.
D) none of the choices.

Question 42

Kirby is a manager of Jumpstart Fitness LLC, a limited liability company. Jumpstart is formed in a state that imposes fiduciary duties on LLC managers. Kirby owes these duties to

A) Jumpstart's members.
B) Jumpstart's suppliers.
C) Jumpstart's customers.
D) none of the choices.

Question 43

Kristal is a member of Laboratory CSI Services, LLC, a limited liability company. Kristal can participate in the firm's management

A) only to the extent that she assumes liability for the firm's debts.
B) only to the extent of her investment in the firm.
C) to any extent.
D) to no extent.

Question 44

Jordana is a member of Klondike Coffee, LLC, a limited liability company. Jordana is liable for Klondike's debts

A) in proportion to the total number of members.
B) to the extent of his capital contribution.
C) to the extent that the other members do not pay the debts.
D) to the full extent.

Question 45

Qatar Global Investments is a foreign entity-a firm owned and operated by investors in a foreign country. With respect to a limited liability company in the United States, Qatar Global can

A) act as a creditor, but cannot otherwise invest or participate.
B) become a member.
C) not become a member, but can participate in its operations.
D) not become a member or otherwise participate in its operations.

Question 46

Peyton, Qiana, and River form a syndicate to buy a professional basketball franchise. This syndicate could be set up as

A) a joint venture.
B) a corporation.
C) a sole proprietorship.
D) a limited liability company.

Question 47

Rafaela Art Gallery and Sequoia Exhibitions form a joint venture. When a dispute arises, Rafaela files a suit against Sequoia. The court is most likely to apply the same principles to this joint venture as it applies to

A) business trusts.
B) cooperatives.
C) corporations.
D) partnerships.

Question 48

Shae's Café and Tommy's Grill form a joint venture. Shae can participate in the venture's management

A) only to the extent that she assumes liability for the venture's debts.
B) only to the extent of her investment in the venture.
C) to any extent.
D) to no extent.

Question 49

Jeri and Knute are members of Lighthouse Tours LLC, a limited liability company. With respect to Lighthouse Tours's liability, as members, Jeri and Knute are shielded from

A) all liability.
B) no liability.
C) personal liability.
D) "alter ego" liability.

Question 50

Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 51

CPA Accounting, LLC, is a limited liability company. If the law in CPA's state is like the law in most states, unless the members have agreed other?wise, participants in the firm's management will be considered to include

A) all members.
B) no member.
C) one member.
D) two members, including at least one general partner.

Question 52

Jessica's Jumpin' Jelly Beans, LLC, is a limited liability company. Unless indi?cated otherwise on Jessica's federal tax form, the firm will be taxed as

A) a cooperative.
B) a corporation.
C) a joint venture.
D) a partnership.

Question 53

Exotic Stuff Company and First Pier, Inc., form a business organiza?tion to engage in importing and exporting. Its property is held in the names of the members and its shareholders have personal liability. This business or?ganization is

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 54

Cecilia's Day Spa, LLC, is a member-managed limited liability company. If the law in Cecilia's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to

A) capital contributions.
B) participation in management.
C) the number of members.
D) transactions with the firm.

Question 55

Homer's Remodeling, LLC, is a limited liability company. Among the mem?bers, a dispute arises that their operating agreement does not cover. No statute applies. The dispute is governed by the principles of

A) corporate law.
B) partnership law.
C) sole proprietorship law.
D) joint venture law.

Question 56

Farm2Fork, LLC, is a limited liability company. Rather than dis?tribute its profits to its members, Energy wants to reinvest the profits in its business. For this reason, Energy may prefer to be taxed as

A) a corporation.
B) a partnership.
C) a sole proprietorship.
D) a business trust.

Question 57

Flip is a member of Great States Trucking LLC. Flip's relationship to Great States ends, but the firm continues to do business. This is

A) dissociation.
B) dissolution.
C) winding up.
D) wrongful.

Question 58

Location! Realty LLC is a limited liability company. Like other LLCs, for federal jurisdictional purposes, Location! Realty is most likely a citizen of

A) all states.
B) every state in which its members are citizens.
C) no state.
D) only the state in which it was formed.

Question 59

Chocolate Sundry LLC's members and managers are Devlin, Effie, and Flavia. After Devlin's relationship to the firm ends, Effie and Flavia agree to discontinue the business. This is

A) illegal.
B) optional.
C) required.
D) wrongful.

Question 60

StartUp Investors, LLC, is a limited liability company without a written operating agreement. Among the mem?bers, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

A) distributed according to the members' proportionate shares of ownership in the firm.
B) divided equally among the members.
C) forfeited to the state.
D) reinvested in the business until the dispute is resolved.

Question 61

As the trustee of a business trust, Dwight is required to

A) manage the trust and distribute its profits.
B) assume liability for the trust's debts.
C) draft a written trust agreement.
D) none of the choices.

Question 62

Dreem Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and EZ. This form of a business organization is

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 63

National Capital Corporation and International Investments, Inc., form a joint stock company. The ownership of a joint stock company is repre?sented by

A) partnership certificates.
B) shares of stock.
C) title documents.
D) trust certificates.

Question 64

Jin, Karlo, and other consumers form Metro Purchasing Cooperative. This form of business organization makes it possible for these individuals to

A) avoid personal liability for the acts of the cooperative.
B) obtain an exemption from state laws governing corporations.
C) pay no taxes on their business income.
D) pool their resources to gain an advantage in the market.

Question 65

Jade, Kelly, and Lila organize a nonprofit business-JKL Markets, Inc.-to buy groceries from wholesalers and sell them to consumers who buy a membership in JKL. Because the firm is a nonprofit entity, it is able to sell the groceries for less than a commercial grocer could. What form of business organization is JKL Markets? Is it significant that JKL is incorporated?

Question 66

Buyers Club is an incorporated cooperative. Like other incorporated coop?eratives, Buyers Club distributes profits to its owners on the basis of

A) the amount of capital they contribute.
B) the degree to which they participate in management.
C) their transactions with the cooperative.
D) the requirements of the state in which it was incorporated.

Question 67

Petra, Queenie, and Randall want to form Sales-to-Infinity, LLC (limited li?ability company). What should they provide in their operating agreement? If they fail to include some important operating details, what determines these details?

Question 68

Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an in?vestment group, or

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 69

Big Valu Grocery Stores is an unincorporated cooperative. Big Valu and other unincorporated cooperatives are generally treated like

A) business trusts.
B) corporations.
C) joint stock companies.
D) partnerships.

Question 70

Neverend Music Company and Monotonous Metronome Corporation form a joint stock company. A joint stock company can be formed for, at the most,

A) an implied duration of not more than six months.
B) a perpetual existence.
C) a single activity or transaction.
D) a stated duration of not more than one year.

Question 71

Consumers in Delta City form a business organization to provide, without profit, an economic service to its members. This is

A) a business trust.
B) a cooperative.
C) a corporation.
D) a joint stock company.

Question 72

As the beneficiary of a business trust, Kevin's liability for trust debts and obligations is

A) limited to his capital investment in the trust.
B) limited to his personal assets.
C) nothing.
D) unlimited.