Deck 37: Limited Liability Companies Special Business Forms

Question 1

A limited liability company must have an operating agreement.

Answer 1

False

Question 2

A joint venture is taxed like a partnership.

Answer 2

False

Question 3

For federal jurisdictional purposes, a limited liability company is treated like a corporation.

Answer 3

False

Question 4

A foreign limited liability company (LLC) is an LLC owned by an entity outside the United States.

Question 5

Most limited liability company statutes have strict provisions regu?lating members' meetings.

Question 6

A limited liability company is operated in compliance with state law.

Question 7

Most states do not permit one-member limited liability companies.

Question 8

The members, managers, and agents of a limited liability company are liable for its obligations by virtue of their status.

Question 9

In a limited liability company, members must participate in the manage?ment of the company.

Question 10

A limited liability company is a legal entity apart from its owners.

Question 11

A limited liability company must be formed in compliance with federal law.

Question 12

Most limited liability company (LLC) statutes provide that unless the members agree otherwise, all profits of the LLC will be divided equally.

Question 13

For federal income tax purposes, a limited liability company can choose to be taxed like a corporation.

Question 14

In a limited liability company, members cannot participate in its management.

Question 15

In a limited liability company, members do not have to participate in its manage?ment.

Question 16

A limited liability company offers the limited liability of a corporation.

Question 17

The dissociation of a mem?ber of a limited liability company in violation of the operating agreement is legally wrongful.

Question 18

Forming a limited liability company requires filing articles of organization in a state office.

Question 19

A limited liability company cannot be taxed as a corporation.

Question 20

An operating agreement for a limited liability company need not be in writing.

Question 21

The beneficiaries of a business trust are personally liable for its obligations.

Question 22

Like a corporation, the ownership of a joint stock company is represented by shares of stock.

Question 23

The participants in a joint venture have more implied and apparent authority than the partners in a partnership.

Question 24

A group of individuals getting together to finance a particular project may form a syndicate.

Question 25

A cooperative may take the form of a corporation.

Question 26

The owners of an unincorporated cooperative have joint liability for its obligations.

Question 27

Unlike a partnership, a joint venture is typically an ongoing business.

Question 28

Giving control of a joint venture to one of its participants does not affect the status of the relationship.

Question 29

A syndicate may exist in the form of a partnership but not a corporation.

Question 30

Unless otherwise agreed, the participants in a joint venture have an equal voice in controlling the enterprise.

Question 31

Unless otherwise agreed, the participants in a joint venture share its profits equally.

Question 32

The owners of a joint stock company are personally liable for its obligations.

Question 33

A joint venture does not terminate unless one of its participants dies.

Question 34

An unincorporated cooperative is often treated like a partnership.

Question 35

A business trust is created by a written trust agreement.

Question 36

In some states, business trusts pay corporate taxes.

Question 37

A cooperative is an association organized to provide an economic service to its members.

Question 38

A syndicate may be organized as a corporation but not as a partnership.

Question 39

The owners of an incorporated cooperative are personally liable for its obligations.

Question 40

Unincorporated cooperatives are often treated like partnerships.

Question 41

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

A) a member of a joint venture.
B) an owner of a sole proprietorship.
C) a partner of a partnership.
D) a shareholder of a corporation.

Question 42

Bookkeepers, LLC, is a limited liability company. Unless indi?cated otherwise on Bookkeepers's federal tax form, the firm will be taxed as

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

Question 43

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

A) advisable.
B) optional.
C) required.
D) wrongful.

Question 44

Denny and Erv want to form a limited liability company (LLC) to manage their Web business, Filmz Online. LLC statutes have been adopted in

A) all states.
B) no states.
C) only foreign countries.
D) only Wyoming.

Question 45

Serious Gamers, 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

A) corporate law.
B) partnership law.
C) sole proprietorship law.
D) syndicate law.

Question 46

Energy Resources, 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

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

Question 47

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

A) all states.
B) New Jersey and New York.
C) New Jersey only.
D) no state.

Question 48

Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappa'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 49

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 50

Bill is considering forms of business organization for his Web site consult?ing firm. Most states require that a limited liability company have at least

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

Question 51

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

A) only to the extent that she assumes liability for the firm's debts.
B) only to the extent of her investment in the firm.
C) to any extent.
D) to no extent.

Question 52

Dan is considering forms of business organization for his financial advisory firm. Like most states, Dan's state requires that to form a limited liabil?ity company, he must file with a central state agency

A) articles of certification.
B) articles of formation.
C) articles of organization.
D) no specific documents.

Question 53

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

A) an aggregate of Irvin 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 54

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 55

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

A) act as a creditor, but cannot otherwise invest or participate.
B) become a member.
C) not become a member, but can participate in its operations.
D) not become a member or otherwise participate in its operations.

Question 56

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 57

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 58

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

A) capital contributions.
B) participation in management.
C) seniority.
D) transactions with the firm.

Question 59

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

A) a corporation.
B) a joint venture.
C) a partnership.
D) a sole proprietorship.

Question 60

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 61

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

A) distribute the profits and manage the property.
B) distribute the profits only.
C) manage the property only.
D) neither distribute the profits nor manage the property.

Question 62

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

A) business trusts.
B) corporations.
C) joint stock companies.
D) partnerships.

Question 63

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

A) a business trust.
B) a cooperative.
C) a corporation.
D) a joint stock company.

Question 64

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

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 65

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

A) an implied duration of not more than six months.
B) a single activity or transaction.
C) a stated duration of not more than one year.
D) perpetual existence.

Question 66

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

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 67

National Capital Corporation and International Investments, Inc., form a joint stock company. The ownership of a joint stock company is repre?sented by

A) partnership certificates.
B) shares of stock.
C) title documents.
D) trust certificates.

Question 68

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

A) avoid personal liability for the acts of the cooperative.
B) obtain an exemption from state laws governing corporations.
C) pay no taxes on their business income.
D) pool their resources to gain an advantage in the market.

Question 69

Buyers Club is an incorporated cooperative. Like other incorporated coop?eratives, Buyers Club distributes profits to its owners on the basis of

A) the amount of capital they contribute.
B) the degree to which they participate in management.
C) their transactions with the cooperative.
D) the requirements of the state in which it was incorporated.

Question 70

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

A) limited to his capital investment in the trust.
B) limited to his personal assets.
C) nothing.
D) unlimited.

Question 71

Owen, Paula, Quinn, and Rita combine to finance the building of Super Stores, a shopping mall. Their selected form of business organization is an in?vestment group, or

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 72

Fab is the owner and manager of a business trust. Gilly is the benefici?ary. Responsibility for the debts and obligations of the trust rest with

A) Fab and Gilly.
B) Fab only.
C) Gilly only.
D) neither Fab nor Gilly.

Question 73

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

A) distribute the profits and manage the property.
B) distribute the profits only.
C) manage the property only.
D) neither distribute the profits nor manage the property.

Question 74

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

A) a corporation only.
B) a corporation or a partnership.
C) a partnership only.
D) neither a corporation nor a partnership.

Question 75

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

A) directors and officers.
B) general partners.
C) managing members.
D) trustees.

Question 76

Downwind Land Corporation and EZ Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Downwind and EZ. This form of a business organization is

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 77

Vela and other farmers in Washington County form a business organi?zation to provide, without profit, an economic service to its members. This is

A) a business trust.
B) a cooperative.
C) a corporation.
D) a joint stock company.

Question 78

Delta Music Company and Eagle Tech Corporation form a joint stock company. A joint stock company can be formed for, at the most,

A) an implied duration of not more than six months.
B) a perpetual existence.
C) a single activity or transaction.
D) a stated duration of not more than one year.

Question 79

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

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

Question 80

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.