Question 1

Fact Pattern 
Brad is a general partner,and Carlos and Dora are limited partners,in Eastside Physicians,a medical clinic and limited partnership.
-Refer to Fact Pattern 18-1B.Brad's dissociation from the firm results in

Accepted Answer

Brad's dissociation as a general partner from the limited partnership would result in the termination of Eastside's legal existence, as a limited partnership requires at least one general partner for the partnership to exist.

Question 2

Homer's Remodeling,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 the company is a limited liability company, it cannot be governed by sole proprietorship or franchise law. Corporate law may apply to corporations, but not necessarily to limited liability companies. Therefore, the principles of partnership law would most likely apply to this situation, as members of a limited liability company are similar to partners in a partnership.

Question 3

Bret is a general partner in Capitol Realty,LLLP,a limited liability limited partnership,which cannot pay its debts.Bret is personally liable for the debts

Accepted Answer

The answer of Bret is a general partner in Capitol...

Question 4

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

Accepted Answer

By default, a limited liability company (LLC) with more than one member is taxed as a partnership unless it elects to be taxed as a corporation.

Question 5

Fact Pattern 
Brad is a general partner,and Carlos and Dora are limited partners,in Eastside Physicians,a medical clinic and limited partnership.
-Refer to Fact Pattern 18-1B.Carlos's assignment of his interest in Eastside to Good Credit Corporation results in

Accepted Answer

Carlos's assignment of his interest in Eastside to Good Credit Corporation would not affect Eastside's existence as a separate legal entity. The assignment would simply transfer Carlos's share of profits and losses to the Good Credit Corporation as a limited partner.

Question 6

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

Accepted Answer

As a member of a limited liability company, Kris has the right to participate in the management of the firm to any extent, regardless of her investment or liability for the firm's debts. LLCs offer a lot of flexibility in terms of management and ownership, allowing members to have varying roles and responsibilities.

Question 7

Gizelle,Haya,and Ivy do business as Janitorial Services,Limited Partnership.After Gizelle's relationship to the firm ends,Haya and Ivy agree not to continue the business.This is

Accepted Answer

Dissolution is the process of ending a partnership. In this case, since two of the partners agree to end the business after the departure of one partner, it is a dissolution.

Question 8

Farm2Fork,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

As a corporation, Farm2Fork, LLC can retain its profits and reinvest in the business without distributing it to its members. Additionally, corporations have limited liability protection, which can be advantageous for the members in case of any legal issues or debts incurred by the company.

Question 9

Connie,Drew,and Ellen are the general partners of Foreign Auto Repair,a limited partnership.Connie dies.The partnership can

Accepted Answer

The answer of Connie,Drew,and Ellen are the general partners of...

Question 10

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

As a foreign entity, China Bank can become a member of an LLC in the United States.

Question 11

Dunn and Etta are limited partners in Fancee Fashion Stores,a limited partnership.In terms of the firm's books,Dunn and Etta are entitled to

Accepted Answer

Limited partners in a limited partnership are entitled to access the partnership's books and records, similar to general partners, to ensure transparency and protect their investment interests.

Question 12

Fact Pattern 
Brad is a general partner,and Carlos and Dora are limited partners,in Eastside Physicians,a medical clinic and limited partnership.
-Refer to Fact Pattern 18-1B.Eastside is dissolved and its assets are collected,liquidated,and distributed.This results in

Accepted Answer

When a limited partnership is dissolved and its assets are collected, liquidated, and distributed, it results in the termination of its legal existence. Therefore, option D is the correct answer. Option A is incorrect because the dissolution of the partnership implies the end of its existence. Option B is incorrect because the partnership's debts do not mature but still need to be paid off. Option C is incorrect because the business is already suspended upon dissolution.

Question 13

Hugh is a limited partner and Ida is a general partner in HI Volume,a limited partnership.Joy is one of HI Volume's creditors.On HI Volume's dissolution,the party whose rights have the first priority to the firm's assets is

Accepted Answer

In a limited partnership, the general partner(s) have unlimited liability and are responsible for the debts and obligations of the partnership, while the limited partner(s) have limited liability and are only responsible up to the amount of their investment.

In the event of the partnership's dissolution, the creditors have the first priority to the partnership's assets. As Joy is one of HI Volume's creditors, they would have the first priority to the firm's assets.

Hugh and Ida, as partners, have no priority over the creditors in this scenario. Therefore, choice D is the correct answer.

Question 14

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

Accepted Answer

The answer of Chocolate Sundry LLC's members and managers are...

Question 15

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

Accepted Answer

In most states, including Lars's state, to form a limited liability company (LLC), the owner must file articles of organization with a central state agency. This document provides important information about the business, including its name, purpose, ownership structure, and management. It sets the legal foundation for the LLC, determines how it will be taxed, and protects the owner's personal assets from business debts and liabilities. Therefore, option C, articles of organization is the correct document that Lars needs to file to form a limited liability company.

Question 16

Genetic Innovations,LP,is a limited partnership.The partners sign an agreement purporting to state how the firm's profits and losses are to be divided.The profits and losses of the firm will be divided

Accepted Answer

As a limited partnership, Genetic Innovations, LP has signed an agreement stating how the profits and losses of the firm are to be divided. According to the principles of partnership law, partners in a limited partnership are allowed to agree on the manner in which profits and losses are distributed, as long as this agreement follows basic legal principles. Therefore, the profits and losses will be divided according to the agreement signed by the partners.

Question 17

Rick and Sandy are limited partners in Terrific Profit Enterprises,a limited partnership.To avoid personal liability for partnership obligations,they must not

Accepted Answer

Limited partners are not allowed to participate in the management of the partnership in order to avoid personal liability for partnership obligations. Therefore, Rick and Sandy must not participate in the firm's management in order to maintain their limited liability status.

Question 18

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

Accepted Answer

Fay's liability for Garden Grove's obligations is similar to a shareholder of a corporation because both are not personally responsible for the business's debts and liabilities beyond their investment in the company.

Question 19

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

The answer of Mit-E Mart LLC was formed in New...

Question 20

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

Accepted Answer

High Pointe LLC is a legal entity apart from the owners, which is one of the main benefits of setting up an LLC - it separates personal assets from business assets and limits personal liability.

Quiz 18: Limited Liability Companies and Limited Partnerships

Fact Pattern Brad is a general partner,and Carlos and Dora are limited partners,in Eastside Physicians,a medical clinic and limited partnership. -Refer to Fact Pattern 18-1B.Brad's dissociation from the firm results in