Deck 6: Limited Liability Companies

Question 1

Limited liability companies in the United States

A) were the first type of corporation provided for by state statutes.
B) have been popular since the 1950s.
C) are more numerous than corporations, part- nerships, and sole proprietorships combined.
D) have become an increasingly popular form of business organization.

Answer 1

D

Question 2

The limited liability company's articles of organization do not usually include

A) the name of the limited liability company.
B) the names and addresses of the managers who are personally liable for the debts and obligations of the company.
C) the name and address of the agent for ser- vice of process.
D) the duration of the company or a statement that the company has perpetual existence.

Answer 2

B

Question 3

A limited liability company is formed when

A) the articles of organization are signed.
B) all members sign the certificate of organiza- tion.
C) the articles of incorporation are filed with the secretary of state or other appropriate state authority.
D) the articles of organization are filed with the secretary of state or other appropriate state authority.

Answer 3

D

Question 4

The Uniform Limited Liability Company Act

A) has been adopted by all states except Loui- siana.
B) was adopted by the National Conference of the Commissioners of Uniform State Law in 1914.
C) has had no influence on the state laws that have been adopted concerning limited lia- bility companies.
D) was drafted to give state legislatures uni- form guidelines for drafting state legislation.

Question 5

The name of the limited liability company must contain language identifying it as a limited liability company.

Question 6

Both limited liability companies and partner- ships

A) offer limited personal liability to their owners.
B) can be formed by oral agreement without a written document.
C) are taxed like a partnership.
D) have interests that are freely transferable.

Question 7

An individual may become a member of a limited liability company only if admitted pursuant to the provisions of the company's articles of organization or operating agreement.

Question 8

The managers of a limited liability company are personally liable for the company's debts and obligations.

Question 9

Most limited liability companies are not subject to federal securities regulation.

Question 10

Limited liability companies in most states are subject to annual reporting requirements with the secretary of state or other appropriate state authority.

Question 11

The assets of a limited liability company are owned by the

A) designated member.
B) limited liability company itself.
C) limited liability company managers.
D) imited liability company members.

Question 12

Members of a manager-managed limited liabil- ity company serve as agents of the limited liability company.

Question 13

Consent of all members of the limited liability company is not usually required to

A) amend the limited liability company's operating agreement.
B) enter into contracts in the normal course of business.
C) amend the limited liability company's arti- cles of organization.
D) admit a new member to the company.

Question 14

All members of a limited liability company must be individuals.

Question 15

A limited liability company must have three or more members.

Question 16

The main source of limited liability company law is

A) federal law.
B) state law.
C) uniform law.
D) Internal Revenue Service regulation.

Question 17

A limited liability company is

A) considered an aggregate of the company's members.
B) an unincorporated business organization owned by members.
C) owned and managed by shareholders.
D) taxed as a corporation.

Question 18

The Internal Revenue Service's "Check the Box" regulations make it possible for

A) individuals to choose what type of entity they would like to form.
B) limited liability companies to be taxed as partnerships, unless the members check the box on a form to elect to be taxed as a cor- poration.
C) corporations to elect partnership taxation.
D) members of limited liability companies to choose which state laws they would like the company to be taxed under.

Question 19

Amending the articles of organization usually requires the approval of all members of the limited liability company.

Question 20

Filing articles of organization authorizes a limited liability company to transact business in every jurisdiction in the United States.

Question 21

In a derivative action, the cause of action belongs to the individual shareholder.

Question 22

A few states impose corporate income taxes on limited liability companies.