Question 1

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

Accepted Answer

As a beneficiary of a business trust, Evelyn is not responsible for distributing the trust's profits nor assuming responsibility for the trust's debts. Her role is simply to receive any distributions or benefits that are specified in the trust agreement. However, she is also not responsible for drafting the trust agreement itself, as this is typically the responsibility of the trustee.

Question 2

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 3

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

Accepted Answer

The answer of Peyton,Qiana,and River form a syndicate to buy...

Question 4

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

Accepted Answer

A purchasing cooperative allows individuals to pool their resources to gain an advantage in the marketplace. This type of organization does not necessarily provide personal liability protection or tax exemptions like a corporation would.

Question 5

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

Accepted Answer

As trustee of a business trust, Dwight is responsible for managing the trust's assets and making distributions of profits to the beneficiaries of the trust. He is not usually personally responsible for the trust's debts, and the trust agreement would typically be drafted by an attorney.

Question 6

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

Accepted Answer

A joint stock company is a business organization where property is held in the names of the members, and shareholders have personal liability.

Question 7

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

Accepted Answer

A business trust is managed by its trustees, who hold legal title to the trust property and are responsible for managing the business and making decisions on behalf of the trust and its beneficiaries. The trustees are held to a fiduciary duty to act in the best interests of the beneficiaries and can be held liable for any breaches of this duty. Directors, officers, general partners, and managing members are typically associated with other types of business entities, such as corporations, partnerships, and LLCs, and do not apply to business trusts.

Question 8

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

Accepted Answer

In most states, to form a Limited Liability Company (LLC), articles of organization must be filed with a central state agency.

Question 9

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

Accepted Answer

A corporation allows for the reinvestment of profits into the business without distributing them to shareholders. Additionally, it offers limited liability protection to the members of the LLC.

Question 10

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 can participate in the firm's management to any extent allowed by the company's operating agreement. This means that Kris can have a significant role in the management of the company, regardless of the extent of her personal liability or investment in the company.

Question 11

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

Accepted Answer

Unincorporated cooperatives are typically treated as partnerships for taxation and legal purposes.

Question 12

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

Accepted Answer

A joint venture is usually formed for a single activity or transaction. While it is possible for a joint venture to have a longer duration, it is typically formed for a specific project or business undertaking.

Question 13

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

Accepted Answer

Since Homer's Remodeling, LLC is a limited liability company, it is not governed by corporate law or sole proprietorship law. Joint venture law may not apply since it depends on the specific agreement between the parties. Therefore, the best choice is partnership law, as LLCs share some characteristics with partnerships and the principles of partnership law may provide guidance in resolving a dispute among members.

Question 14

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

Accepted Answer

Since Shae is part of the joint venture, she can participate in the management to any extent as long as it is agreed upon by all parties involved. Joint ventures are usually formed by two or more businesses or individuals who agree to contribute their resources and expertise for a specific business purpose. As a participant in the venture, Shae has a say in how the business is run and how decisions are made.

Question 15

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

Accepted Answer

A foreign entity like China Bank can become a member of a limited liability company (LLC) in the United States, as there are generally no restrictions on foreign ownership of LLCs.

Question 16

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. As a limited liability company, it is a separate legal entity that can own property, enter into contracts, and sue or be sued. The members of the LLC have limited liability and their personal assets are protected from the company's debts and liabilities.

Question 17

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

Accepted Answer

The organization formed by consumers in Bayside City that exists to provide an economic service to its members without profit is a cooperative. Cooperatives are typically formed by individuals or businesses with similar needs who come together to jointly own and democratically control an enterprise. Unlike corporations or joint stock companies, cooperatives are not formed primarily for profit or the benefit of shareholders, but for the benefit of their members.

Question 18

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

Accepted Answer

By default, a limited liability company (LLC) is taxed as a partnership unless the owner elects to have it taxed as a corporation.

Question 19

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

A member of a limited liability company (LLC) has limited liability for the company's obligations, similar to a shareholder of a corporation. This means that their personal assets are protected and they are not personally responsible for the debts and liabilities of the company. This is different from a sole proprietorship, partnership, or joint venture where the owner/partner/participant is personally liable for the debts and obligations of the business.

Question 20

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

Accepted Answer

For federal diversity jurisdiction, an LLC is considered a citizen of every state in which its members are citizens. Since Oscar is a citizen of New Jersey and Peri is a citizen of New York, Might-E Mart LLC is a citizen of both New Jersey and New York.

Quiz 38: A: Limited Liability Companies Special Business Forms