Question 1

The terms to describe an LLC from another state,and another nation,respectively,are:

Accepted Answer

A)  foreign; alien 
B)  alien; offshore 
C)  foreign; offshore 
D)  interstate; foreign 
E)  interstate; offshore 
A)  foreign; alien 
B)  alien; offshore 
C)  foreign; offshore 
D)  interstate; foreign 
E)  interstate; offshore

Question 2

The LLC is a separate legal entity distinct from its members.

Accepted Answer

A) True 
 B)False

Question 3

An LLC can be formed in the state even though it can conduct business in all other states.

Accepted Answer

A) True 
 B)False

Question 4

A limited liability company with more than one member is taxed as a partnership:

Accepted Answer

A)  in all circumstances 
B)  only if at least four of six listed attributes are present in the limited liability company 
C)  only if no more than four of six listed attributes are present in the limited liability company 
D)  only if all six listed attributes are present 
E)  if the limited liability company has not elected to be taxed as a corporation 
A)  in all circumstances 
B)  only if at least four of six listed attributes are present in the limited liability company 
C)  only if no more than four of six listed attributes are present in the limited liability company 
D)  only if all six listed attributes are present 
E)  if the limited liability company has not elected to be taxed as a corporation

Question 5

Where a member's disassociation from an LLC is not wrongful,the LLC must purchase the member's distributional interest.

Accepted Answer

A) True 
 B)False

Question 6

An LLC is liable for any loss or injury caused to anyone as a result of a wrongful act or omission by a member or manager,but not by an agent or an employee of the LLC who commits the wrongful act while acting within the ordinary course of business of the LLC.

Accepted Answer

A) True 
 B)False

Question 7

Constructive notice is not sufficient when a member disassociates him or herself from the LLC.

Accepted Answer

A) True 
 B)False

Question 8

An LLC may not be organized by only one member such as a sole proprietor.

Accepted Answer

A) True 
 B)False

Question 9

An LLC is taxed at the entity level.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true about managers of a manager-managed LLC?

Accepted Answer

A)  All manager decisions must be approved by a majority vote of the members of the LLC. 
B)  Decisions must be made by unanimous consent of the managers. 
C)  The managers have the power to amend the operating agreement. 
D)  Admitting new members can be done by the managers. 
E)  Each manager has an equal right in the management of the company's business. 
A)  All manager decisions must be approved by a majority vote of the members of the LLC. 
B)  Decisions must be made by unanimous consent of the managers. 
C)  The managers have the power to amend the operating agreement. 
D)  Admitting new members can be done by the managers. 
E)  Each manager has an equal right in the management of the company's business.

Question 11

In a member-managed LLC,any matter relating to the LLC's business is decided by a majority vote of the members.

Accepted Answer

A) True 
 B)False

Question 12

Based on duration,all LLCs can be classified as either:

Accepted Answer

A)  short-term or long-term 
B)  fixed-length or variable-length 
C)  term or at-will 
D)  determined-length or undetermined-length 
E)  self-determined or statute-determined 
A)  short-term or long-term 
B)  fixed-length or variable-length 
C)  term or at-will 
D)  determined-length or undetermined-length 
E)  self-determined or statute-determined

Question 13

The owners of LLCs are called shareholders.

Accepted Answer

A) True 
 B)False

Question 14

If a member properly disassociates herself from an LLC,the member is entitled to receive:

Accepted Answer

A)  no payment because the disassociation is voluntary 
B)  fair market value for the distributional interest 
C)  the highest amount that a remaining current member is willing to pay for the interest 
D)  the amount negotiated with a willing purchaser of the interest 
E)  the amount originally invested by the member 
A)  no payment because the disassociation is voluntary 
B)  fair market value for the distributional interest 
C)  the highest amount that a remaining current member is willing to pay for the interest 
D)  the amount negotiated with a willing purchaser of the interest 
E)  the amount originally invested by the member

Question 15

Which of the following is true about limited liability companies?

Accepted Answer

A)  At least one member must have unlimited liability. 
B)  They can be formed without any specific steps taken by the owners. 
C)  In most cases,they can choose whether to be taxed as a partnership or corporation. 
D)  The owners are called shareholders. 
E)  They cannot have centralized management by only a few members. 
A)  At least one member must have unlimited liability. 
B)  They can be formed without any specific steps taken by the owners. 
C)  In most cases,they can choose whether to be taxed as a partnership or corporation. 
D)  The owners are called shareholders. 
E)  They cannot have centralized management by only a few members.

Question 16

A general partnership may not convert to an LLC.

Accepted Answer

A) True 
 B)False

Question 17

If a member of an LLC executes a personal guarantee for the debt of an LLC,which of the following is true?

Accepted Answer

A)  The personal guarantee would be unenforceable because it would circumvent the limited liability of the member. 
B)  The personal guarantee would result in personal liability of the member for any obligation of the LLC. 
C)  Because of the member's apparent authority,the personal guarantee would create liability for all other members if the LLC is a member-managed LLC. 
D)  The member will have personal liability according to the terms of the guarantee,but would not be personally liable for any other obligations of the LLC. 
A)  The personal guarantee would be unenforceable because it would circumvent the limited liability of the member. 
B)  The personal guarantee would result in personal liability of the member for any obligation of the LLC. 
C)  Because of the member's apparent authority,the personal guarantee would create liability for all other members if the LLC is a member-managed LLC. 
D)  The member will have personal liability according to the terms of the guarantee,but would not be personally liable for any other obligations of the LLC.

Question 18

Why do you think that the Internal Revenue Service adopted the "check-the-box" regulation allowing LLCs to choose their method of taxation?

Accepted Answer

Prior to the check-the-box regulation,an

Question 19

After dissolution and winding up,an LLC may terminate its existence.

Accepted Answer

A) True 
 B)False

Question 20

Managers of LLCs are personally liable for the debts,obligations,and liabilities of the LLC they manage.

Accepted Answer

A) True 
 B)False

Exam 39: Limited Liability Companies and Limited Liability Partnerships

The terms to describe an LLC from another state,and another nation,respectively,are:

The LLC is a separate legal entity distinct from its members.

An LLC can be formed in the state even though it can conduct business in all other states.

A limited liability company with more than one member is taxed as a partnership:

Where a member's disassociation from an LLC is not wrongful,the LLC must purchase the member's distributional interest.

An LLC is liable for any loss or injury caused to anyone as a result of a wrongful act or omission by a member or manager,but not by an agent or an employee of the LLC who commits the wrongful act while acting within the ordinary course of business of the LLC.

Constructive notice is not sufficient when a member disassociates him or herself from the LLC.

An LLC may not be organized by only one member such as a sole proprietor.

An LLC is taxed at the entity level.

Which of the following is true about managers of a manager-managed LLC?

In a member-managed LLC,any matter relating to the LLC's business is decided by a majority vote of the members.

Based on duration,all LLCs can be classified as either:

The owners of LLCs are called shareholders.

If a member properly disassociates herself from an LLC,the member is entitled to receive:

Which of the following is true about limited liability companies?

A general partnership may not convert to an LLC.

If a member of an LLC executes a personal guarantee for the debt of an LLC,which of the following is true?

Why do you think that the Internal Revenue Service adopted the "check-the-box" regulation allowing LLCs to choose their method of taxation?

After dissolution and winding up,an LLC may terminate its existence.

Managers of LLCs are personally liable for the debts,obligations,and liabilities of the LLC they manage.

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