Deck 18: Limited Liability Companies and Limited Partnerships

Question 1

A limited partner who gives a general partner ad?vice on matters relating to the management of the partnership cannot be liable as a general partner.

Answer 1

False

Question 2

Normally,a dissociated member of an limited liability company (LLC)has the right to force the LLC to dissolve.

Answer 2

False

Question 3

A general partner has the power to dissociate from a limited partnership regardless of what the partnership agreement specifies.

Answer 3

False

Question 4

The liability of the members of a limited liability company is limited to the amount of their investments.

Question 5

A limited liability company can be taxed as a partnership.

Question 6

In a limited partnership,a limited partner has full responsibility for the partnership and for all its debts.

Question 7

In a limited partnership,with the exception of the right to participate in management,limited partners have essentially the same rights as general partners.

Question 8

Only a limited partnership's limited partners have a fiduciary obligation to the other partners.

Question 9

A limited liability company that has only one member cannot be taxed.

Question 10

When a member dissociates form a limited liability company,the member's duty of loyalty continues.

Question 11

In a limited liability limited partnership,the liability of a general partner is limited to the amount of capital he or she has invested in the partnership.

Question 12

A limited liability company (LLC)formed in one state but doing business in another state is referred to in the second state as a foreign LLC.

Question 13

In many states,an operating agreement is not required for a limited liability company to exist.

Question 14

A limited liability company as an entity is not liable for the wrongful acts or omissions of its members.

Question 15

An assignment of the interest of a limited partner dissolves a limited partnership.

Question 16

A limited liability company must be managed by non-member managers.

Question 17

Some states have passed laws prohibiting the withdrawal of limited partners from a limited partnership.

Question 18

A limited liability partnership allows its partners to avoid personal liability for the malpractice of other partners.

Question 19

Limited liability companies (LLCs)are governed by state LLC statutes.

Question 20

A limited liability company is not a citizen of any state.

Question 21

Esteban and Florian want to form a limited liability company (LLC)to manage their business,Gordian Nuts.LLC statutes have been adopted in

A)all states.
B)no states.
C)less than one-fifth of the states.
D)only Wyoming and Florida.

Question 22

Greta is a member of Hovercraft LLC.As a member,Greta is

A)a manager or officer,but not an owner.
B)an investor,but not a manager,officer,or owner.
C)an owner.
D)a participant,but not an investor,manager,officer,or owner.

Question 23

Jack and Kyra are partners in Law Firm,LLP,a limited liability partnership.Jack supervises Kyra,who negligently fails to appear in court on behalf of Milo,a client.Liability to Milo rests with

A)Jack and Kyra.
B)Jack only.
C)Kyra only.
D)neither Jack nor Kyra.

Question 24

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

A)all states.
B)every state in which its members are citizens.
C)no state.
D)only the state in which it was formed.

Question 25

Vasili is considering forms of business organization for Vasili's Designs,an ar?chitectural firm.An advantage of a limited liability partnership is that partners may be able to avoid personal liability for

A)any partnership obligation.
B)only other partners' wrongdoing.
C)only partnership obligations that exceed capital contributions.
D)only partnership obligations that fall within capital contributions.

Question 26

Coco is considering forms of business organization for her concessions business-Coco's Cupcakes.Most states require that a limited liability company have at least

A)no minimum number of members.
B)at least one member.
C)at least two members.
D)at least three members,including at least one general partner.

Question 27

Maury,Neil,and Ogden want to form a limited partnership to manage their Picture This photo studio.Their firm must have

A)at least one general partner and one limited partner.
B)at least two general partners.
C)at least two limited partners.
D)no general partners.

Question 28

Energy Unlimited,LP,is a limited partnership to which its partners,in?cluding Fink,have contributed capital.Energy's creditors include Graves Engineering,Inc.On Energy's dissolution,its assets will be distributed to pay

A)Fink and Graves proportionately.
B)Fink first.
C)Graves first.
D)neither Fink nor Graves.

Question 29

Fern and Gray want to form a limited partnership to manage two restaurants: Café Latte and Deli Delite.In most states,a limited partnership will be created when

A)a certificate of limited partnership is filed.
B)a partnership agreement is executed.
C)the business for which the firm is formed actually opens its doors.
D)the partners make their capital contributions.

Question 30

Lucy is a limited partner in Metro Contractors,a limited partnership,which cannot pay its debts.Lucy is personally liable for the debts

A)in proportion to the number of partners in the firm.
B)to no extent.
C)to the extent of her capital contribution.
D)to the full extent.

Question 31

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

A)dissociation.
B)dissolution.
C)winding up.
D)wrongful.

Question 32

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

A)capital contributions.
B)participation in management.
C)the number of members.
D)transactions with the firm.

Question 33

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 other?wise,participants in the firm's management will be considered to include

A)all members.
B)no member.
C)one member.
D)two members,including at least one general partner.

Question 34

B2B,LLC,is a limited liability company.Among its members,a dispute arises that the operating agreement does not cover.The dispute is gov?erned by

A)the applicable state LLC statute.
B)the federal Uniform LLC Law.
C)the principles of partnership law.
D)the state corporation statute.

Question 35

Stu is a limited partner and Tia is a general partner in S&T,a limited part?nership.Between Stu and Tia,on S&T's dissolution its assets will first be distributed to pay

A)either partner's unpaid distribution of partnership assets.
B)returns on either partner's contribution.
C)Stu.
D)Tia.

Question 36

Lui is considering forms of business organization for a chain of Magic Trix novelty stores.One advantage of the limited liability company form,with respect to tax options,is its

A)flexibility.
B)lack of accountability.
C)limited liability.
D)rigidity.

Question 37

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

A)a corporation.
B)a person.
C)a partnership.
D)a sole proprietorship.

Question 38

Bee Hive Honey,LLC's members include Chad.For purposes of suing and being sued,Bee Hive Honey is

A)an aggregate of Chad 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 39

Venture Capital,LP,is a limited partnership.Its limited partners include more than 150 sophisticated investors and investment professionals.A Venture limited partner loses his or her limited liability if he or she

A)acts as the firm's manager.
B)does not participate in the firm's management.
C)invests in Unified Fund,one of Venture's competitors.
D)votes on the firm's sale or dissolution.

Question 40

Vijay is a member of Watchit,LLC,a limited liability company.Vijay is li?able for Watchit's debts

A)in proportion to the total number of members.
B)to the extent of his capital contribution.
C)to the extent that the other members do not pay the debts.
D)to the full extent.

Question 41

Petra.Queenie,and Randell want to form Sales-to-Infinity,LLC (limited li?ability company).What should they provide in their operating agreement? If they fail to include some important operating details,what determines these details?

Question 42

International Exports,L.P. ,is a limited partnership,with $100,000 in de?clared but unpaid profits.International's creditors include Friendly Credit Corporation for $5,000 and Gwen,one of International's limited partners,also for $5,000.When Harry,one of International's general partners,de?cides to retire,the other general partners vote to liquidate and dissolve the firm.The limited partners,who are not asked their opinions,want Interna?tional to continue in business and file a suit against the general partners to compel this result.Can the court order International to continue? If not,what is the priority of the distribution of International's assets on its dissolution?