Question 1

Elmo is the owner and manager of a business trust.Under the terms of a business trust,Elmo is required to

Accepted Answer

As the owner and manager of a business trust, Elmo is required to both distribute the profits and manage the property. This is the typical arrangement for a business trust, where the trustee (in this case, Elmo) has both managerial and distribution responsibilities.

Question 2

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

Accepted Answer

A joint venture is a partnership between two or more businesses to combine their resources and expertise to achieve a specific goal, in this case, building an office and retail complex. It is a common form of business organization for projects that require a significant investment or specialized skills. A business trust is a type of investment where investors pool their resources to manage assets, and a joint stock company is a type of corporation where shareholders own stocks in the company. A syndicate is typically formed for a specific project or investment opportunity and involves a group of individuals or organizations pooling their resources for a specific purpose. However, a joint venture is the most appropriate choice for this scenario.

Question 3

Jay is a member of Kappa,LLC,a limited liability company.Jay is liable for Kappa's debts

Accepted Answer

As a member of a limited liability company, Jay's liability is limited to the extent of his capital contribution. This means that if Kappa, LLC incurs debts, Jay will only be personally liable for the portion of the debt that corresponds to his investment in the company. He will not be personally liable for the entire debt or for the debt of other members.

Question 4

QuizBooks LLC is a limited liability company.Like any other LLC,unless QuizBooks chooses otherwise,the firm will be taxed as

Accepted Answer

By default, an LLC is taxed as a partnership if it has more than one member, meaning the income is passed through to the members to be reported on their personal tax returns.

Question 5

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

Accepted Answer

For diversity jurisdiction purposes, an LLC is considered a citizen of every state in which its members are citizens. Since the members of Mit-E Mart LLC are citizens of both New Jersey and New York, the LLC is considered a citizen of both states.

Question 6

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

Accepted Answer

In most states, the default rule is that voting rights in a member-managed LLC are apportioned according to each member's capital contribution. This means that the member who has contributed the most capital to the LLC has the most significant voting power. However, members may agree to apportion voting rights according to different criteria, such as participation in management or seniority, by including specific provisions in the LLC's operating agreement. Transactions with the firm are not a typical factor in apportioning voting rights.

Question 7

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

Accepted Answer

Metro Purchasing Cooperative allows individuals to pool their resources in order to gain an advantage in the market. While forming a cooperative does not necessarily provide personal liability protection or tax exemptions, it does allow for members to collectively negotiate better prices and access to resources.

Question 8

Ray,Sully,and Toma form a syndicate to buy a professional football team.This syndicate could be set up as

Accepted Answer

A syndicate is a group of individuals or organizations that come together to achieve a common goal. In this case, Ray, Sully, and Toma are coming together to buy a professional football team.

They have two options for their business structure: a corporation or a partnership.

A corporation would provide them with limited liability and the ability to sell shares of the business to raise capital. However, it would also have more formal requirements and higher taxes.

A partnership would provide them with more flexibility and fewer formalities, as well as pass-through taxation. However, it would also expose them to unlimited liability for the business's debts and obligations.

Therefore, option B is the best choice, as it provides them with the option to choose the business structure that best suits their needs and goals.

Question 9

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

Accepted Answer

A corporation allows for the profits to be retained and reinvested in the business without being distributed to the shareholders. Additionally, a corporation provides limited liability protection to its members, which can be advantageous for a business. A partnership or sole proprietorship structure would require the profits to be distributed to the members and a syndicate is not a recognized business entity for tax purposes.

Question 10

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

Accepted Answer

As a member of an LLC, Kristal has the right to participate in the management of the company to any extent, regardless of her liability or investment in the company. This is one of the benefits of forming an LLC over other forms of business entities.

Question 11

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 otherwise,participants in the firm's management will be considered to include

Accepted Answer

In most states, unless the members of a limited liability company have agreed otherwise in their operating agreement, all members of the LLC are considered to be participants in the company's management. This means that all members have equal say in decision-making and management of the company, regardless of their ownership percentage. Therefore, choice A - all members - is the best choice.

Question 12

Serious Gamers,LLC,is a limited liability company.Among the members,a dispute arises that their operating agreement does not cover.No statute applies.The dispute is governed by the principles of

Accepted Answer

Since Serious Gamers, LLC is a limited liability company, it would be governed by partnership law in the absence of any specific statutory provisions or provisions in the operating agreement that address the dispute. This is because LLCs are often treated similarly to partnerships in terms of their structure and management. Corporate law and sole proprietorship law are not applicable since an LLC is not a corporation or sole proprietorship. Syndicate law is also not relevant, as it pertains to a specific type of investment banking arrangement.

Question 13

Omega Corporation and Precision Coding,Inc.,two software firms,wish to combine their research and development capabilities to make a special,limited edition computer game.The most appropriate legal entity for this project might be

Accepted Answer

A joint venture is a good choice for Omega Corporation and Precision Coding, Inc. because it allows them to collaborate on a specific project while maintaining separate legal identities. This entity allows them to share resources, funding, and expertise without a long-term commitment to a new company or business structure. Additionally, the joint venture agreement can outline the purpose, scope, and duration of the project, as well as how profits and liabilities will be shared between the two companies.

Question 14

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

Accepted Answer

The answer of Location! Realty LLC is a limited liability...

Question 15

Cookie Kiosk LLC's members and managers are Dwight,Emma,and Fawn.After Dwight's relationship to Cookie Kiosk ends,Emma and Fawn agree to discontinue the firm's business.This is most likely

Accepted Answer

The answer of Cookie Kiosk LLC's members and managers are...

Question 16

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

Accepted Answer

A business trust is managed by its trustees.

Question 17

Drew is a beneficiary of a business trust.As a beneficiary,Drew is required to

Accepted Answer

As a beneficiary, Drew is entitled to receive benefits from the trust but is not responsible for managing the property or distributing profits.

Question 18

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

Accepted Answer

The answer of As the beneficiary of a business trust,Kevin's...

Question 19

China Bank is a foreign entity-a firm owned and operated by investors in a foreign country.With respect to an LLC in the United States,China Bank can

Accepted Answer

A foreign entity like China Bank can become a member of an LLC in the United States, subject to the requirements set by the state laws where the LLC operates. This means that China Bank can invest in the LLC and have a say in its management and operations. However, it should be noted that there may be additional compliance requirements for foreign investors, such as registering with the IRS and obtaining an EIN.

Question 20

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

Accepted Answer

Dissociation refers to the separation of a partner or member from a business entity, while the entity continues to operate. In this scenario, Flip dissociates from Great States Trucking LLC, but the firm continues to do business.

Quiz 33: Limited Liability Companies Special Business Forms