Question 1

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, similar to a shareholder of a corporation. This means that the member's personal assets are generally protected from the company's obligations and debts. The other options, such as a partner in a partnership or owner of a sole proprietorship, have unlimited personal liability for the obligations and debts of the business. Therefore, the closest resemblance is to a shareholder in a corporation.

Question 2

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

Accepted Answer

Unless Bookkeepers, LLC elects to be taxed as a corporation, it will default to being taxed as a partnership because it is an LLC with multiple members. LLCs are not a recognized tax classification by the IRS and must choose between being taxed as a corporation, partnership, or sole proprietorship. Since an LLC with multiple members is similar in structure to a partnership, it is typically taxed as one.

Question 3

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

Accepted Answer

The answer of Cookie Kiosk LLC's members and managers are...

Question 4

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

Accepted Answer

LLC statutes have been adopted in all states in the United States. While there may be slight variations in the specifics of the statutes from state to state, the basic legal framework for forming and managing an LLC is consistent nationwide.

Question 5

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

Accepted Answer

As Serious Gamers, LLC is a limited liability company, it is governed by partnership law. This is because LLCs have characteristics of both partnerships and corporations, and therefore partnership law applies to the internal affairs of the company, including member disputes, unless otherwise stated in the operating agreement or by statute.

Question 6

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

Accepted Answer

Corporations have the ability to retain earnings and reinvest them in the business without distributing profits to shareholders as long as they pay taxes on those earnings. Partnerships and sole proprietorships, on the other hand, are required to distribute profits to their owners, and syndicates are typically used for specific project financing rather than ongoing businesses. Therefore, of the options given, a corporation would be the best choice for Energy Resources, LLC if they want to reinvest their profits in their business.

Question 7

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

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

Question 8

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

Accepted Answer

As a member of a limited liability company, Jay's liability is limited to the amount of his capital contribution. This means that he is only personally liable for Kappa LLC's debts up to the amount that he invested in the company.

Question 9

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

Accepted Answer

As a limited liability company (LLC), Bee Hive Honey is a separate legal entity from its members. This means that the company can be sued or sue others in its own name, and any liability the company incurs is separate from the personal assets of its members. Therefore, option C is the correct answer.

Question 10

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

Accepted Answer

Most states require that a limited liability company have at least one member. Option A of having no members is not possible as LLC stands for Limited Liability Company and it must have at least one member. Option C of having two members or option D of having three members including at least one general partner are not mandatory requirements for starting an LLC.

Question 11

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 management of the firm to any extent. This is one of the advantages of an LLC, as members have flexible management options and can participate actively in the company's operations. Additionally, members of an LLC are not personally liable for the company's debts, so Kris's management participation is not tied to assuming liability.

Question 12

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

Accepted Answer

To form a limited liability company (LLC), one must file articles of organization with the state agency. This document includes the LLC's name, address, registered agent, and the names of the company's owners or managers. It also outlines the company's purpose and operating agreement.

Question 13

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

Accepted Answer

High Pointe LLC is a limited liability company, which is a separate legal entity from its members. This means that High Pointe can hold title to property in its own name, rather than in the name of individual members. The liability of each member is limited to their investment in the company, and the company can continue to exist even if a member leaves or passes away.

Question 14

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

Accepted Answer

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

Question 15

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

A foreign entity like China Bank can become a member of an LLC in the United States, subject to the requirements set by the state laws where the LLC operates. This means that China Bank can invest in the LLC and have a say in its management and operations. However, it should be noted that there may be additional compliance requirements for foreign investors, such as registering with the IRS and obtaining an EIN.

Question 16

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

Accepted Answer

Unless the members have agreed otherwise, all members of a limited liability company are considered to be participants in the management of the company. This means that they all have the authority to make decisions and take actions on behalf of the company.

Question 17

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

Accepted Answer

The answer of Location! Realty LLC is a limited liability...

Question 18

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

Accepted Answer

In most states, unless the members have agreed otherwise, voting rights are apportioned according to capital contributions. As Waste Management Services, LLC, is a member-managed limited liability company, it is most likely that the voting rights would be apportioned according to capital contributions.

Question 19

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

Accepted Answer

LLCs are typically taxed as partnerships by default, unless they choose to be taxed as a corporation. Therefore, the best choice is C, a partnership. A and B are incorrect as they both refer to different types of business structures, and D is incorrect as an LLC cannot be taxed as a sole proprietorship.

Question 20

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

Accepted Answer

Disputes among members of an LLC are typically governed by the applicable state LLC statute, as LLCs are state-created entities and each state has unique laws governing them. The federal Uniform LLC Law serves as a model act for states to adopt, but it does not have the force of law and is not applicable in every state. Partnership law principles may be relevant in some cases, as LLCs share some similarities with partnerships, but the LLC operating agreement and state LLC statute generally govern the relationship among members. The state corporation statute is not applicable to LLCs, as they are a distinct type of business entity.

Quiz 37: Limited Liability Companies Special Business Forms