Deck 38: A: Limited Liability Companies Special Business Forms

Question 1

Most states apply their limited liability company (LLC)statutes to an LLC formed in another state.

Answer 1

False

Question 2

The members of a limited liability company (LLC)are personally liable for the wrongful acts or omissions of the LLC.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

For federal income tax purposes,one-member limited liability companies are automatically taxed as sole proprietorships.

Question 5

Limited liability companies (LLCs)are governed by a federal LLC statute.

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

The owners of a limited liability company enjoy limited liability.

Question 8

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

Question 9

Most limited liability company statutes specify how members' voting rights must be apportioned.

Question 10

A cooperative must be incorporated.

Question 11

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

Question 12

A limited liability company must be managed by its members.

Question 13

Unless a limited liability company indicates otherwise,the Internal Revenue Service automatically taxes it as a partnership.

Question 14

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

Question 15

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

Question 16

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

Question 17

A limited liability company can sue or be sued,enter into contracts,and hold title to property.

Question 18

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

Question 19

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

Question 20

A limited liability company can be taxed as a corporation.

Question 21

Evelyn is a beneficiary of a business trust.As a beneficiary,she is required to

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

Question 22

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 23

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 24

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 marketplace.

Question 25

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

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

Question 26

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 27

Loni,Michel,and Nita are investors in Oceanic Exploration,a busi?ness trust.A business trust is managed by its

A)directors and officers.
B)general partners.
C)managing members.
D)trustees.

Question 28

Lars is considering forms of business organization for his auto repair firm.Like most states,Lars's state requires that to form a limited liabil?ity company,he must file with a central state agency

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

Question 29

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 30

Kris is a member of Laboratory Services,LLC,a limited liability company.Kris 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 31

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

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

Question 32

Fibreboard Construction,Inc. ,and Gated Community Corporation form a joint venture.A joint ven?ture is usually formed for

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

Question 33

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 34

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 35

China Bank 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,China Bank 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 36

High Pointe LLC's members include Irvin.For purposes of holding title to property,High Pointe is

A)an aggregate of Irvin and the other members.
B)a natural person in the members' "family."
C)a legal entity apart from the owners.
D)a non-participating third party.

Question 37

Consumers in Bayside 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 38

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 39

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

Question 40

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

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

Question 41

Capital Investment Corporation and Durable Goods,Inc. ,form a business trust.Excel Company and Finest Corporation form a joint stock company.Growing Acres Corporation and Hybrid Farms,Inc. ,form an in?corporated cooperative.What features do these combinations of business organization have in common?

Question 42

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?