Question 1

A limited liability company may be classified as a partnership for tax purposes if:

Accepted Answer

A)  such an election is made by "checking the box" for partnership tax treatment on the appropriate Internal Revenue Service form. 
B)  such an election is made in the operating agreement. 
C)  such an election is made in the articles of incorporation. 
D)  a majority of its members petition the Internal Revenue Service for partnership tax treatment. 
A)  such an election is made by "checking the box" for partnership tax treatment on the appropriate Internal Revenue Service form. 
B)  such an election is made in the operating agreement. 
C)  such an election is made in the articles of incorporation. 
D)  a majority of its members petition the Internal Revenue Service for partnership tax treatment.

Question 2

LLC promoters can 'shake hands' and form an LLC.

Accepted Answer

A) True 
 B)False

Question 3

Each limited partner in a limited partnership has all of the following rights and benefits, except:

Accepted Answer

A)  A share of the profits. 
B)  The right to sue the general partner to protect the limited partners' interest. 
C)  The right to manage the limited partnership. 
D)  The right to vote on dissolution of the limited partnership. 
A)  A share of the profits. 
B)  The right to sue the general partner to protect the limited partners' interest. 
C)  The right to manage the limited partnership. 
D)  The right to vote on dissolution of the limited partnership.

Question 4

In a limited partnership, limited partners are not responsible for the debts of the firm if they engage in management activities.

Accepted Answer

A) True 
 B)False

Question 5

Limited partners may sue their partnership's general partner to protect the limited partners' interest.

Accepted Answer

A) True 
 B)False

Question 6

The dissolution and winding up of a limited partnership is governed by the same principles applicable to a: __________.

Accepted Answer

A)  "subchapter S" corporation. 
B)  limited liability company. 
C)  general partnership. 
D)  limited liability partnership. 
A)  "subchapter S" corporation. 
B)  limited liability company. 
C)  general partnership. 
D)  limited liability partnership.

Question 7

A creditor's right against a member's interest in an LLC is limited to a(n) _______ order, and the creditor with such an order has only the rights of an assignee of an interest in an LLC.

Accepted Answer

A)  dissolution 
B)  compliance 
C)  assignment 
D)  charging 
A)  dissolution 
B)  compliance 
C)  assignment 
D)  charging

Question 8

Courts tend to resolve ambiguities in limited partnership agreements against the general partners.

Accepted Answer

A) True 
 B)False

Question 9

A limited partner loses his limited liability when she becomes a contractor for the limited partnership, or the general partner.

Accepted Answer

A) True 
 B)False

Question 10

The spread of LLC's resulted from:

Accepted Answer

A)  a United States Supreme Court decision. 
B)  an Internal Revenue Service ruling. 
C)  a Wyoming Supreme Court decision. 
D)  a Securities and Exchange Commission ruling. 
A)  a United States Supreme Court decision. 
B)  an Internal Revenue Service ruling. 
C)  a Wyoming Supreme Court decision. 
D)  a Securities and Exchange Commission ruling.

Question 11

It is impossible to form a business in a manner that allows for single taxation and limited liability.

Accepted Answer

A) True 
 B)False

Question 12

An LLC is a separate legal entity and may own property in its own name.

Accepted Answer

A) True 
 B)False

Question 13

A limited partner can never lose money.

Accepted Answer

A) True 
 B)False

Question 14

You are asked to provide two friends who are in business together with advice regarding what they need to do to legally in order to form a limited liability company. Although your friends like the general notion of limited liability in the operation of their business, they are totally unfamiliar with the legal processes for forming a LLC, so you need to provide them with the basic requirements for LLC creation. What specific advice would you give them?

Accepted Answer

A limited liability company comes into e

Question 15

A limited partner may bring a derivative claim against the limited partnership.

Accepted Answer

A) True 
 B)False

Question 16

The owners of a limited liability company are known as: ______.

Accepted Answer

A)  members. 
B)  partners. 
C)  contributors. 
D)  electors. 
A)  members. 
B)  partners. 
C)  contributors. 
D)  electors.

Question 17

Management of an LLC is vested in its:

Accepted Answer

A)  members 
B)  partners 
C)  shareholders 
D)  managers 
A)  members 
B)  partners 
C)  shareholders 
D)  managers

Question 18

An LLC may be formed without filing formal articles of organization with the secretary of state.

Accepted Answer

A) True 
 B)False

Question 19

An protects partners from liability for the wrongful acts of those whom they directly supervise and control.

Accepted Answer

A) True 
 B)False

Question 20

Like a general partnership, LLC's are dissolved by all of the following situations except: _______.

Accepted Answer

A)  by the consent of the members. 
B)  upon the death of a member. 
C)  upon the expulsion of a member. 
D)  when a derivative suit is filed. 
A)  by the consent of the members. 
B)  upon the death of a member. 
C)  upon the expulsion of a member. 
D)  when a derivative suit is filed.

Exam 42: LPs, LLCs, and LLPs

A limited liability company may be classified as a partnership for tax purposes if:

LLC promoters can 'shake hands' and form an LLC.

Each limited partner in a limited partnership has all of the following rights and benefits, except:

In a limited partnership, limited partners are not responsible for the debts of the firm if they engage in management activities.

Limited partners may sue their partnership's general partner to protect the limited partners' interest.

The dissolution and winding up of a limited partnership is governed by the same principles applicable to a: __________.

A creditor's right against a member's interest in an LLC is limited to a(n) _______ order, and the creditor with such an order has only the rights of an assignee of an interest in an LLC.

Courts tend to resolve ambiguities in limited partnership agreements against the general partners.

A limited partner loses his limited liability when she becomes a contractor for the limited partnership, or the general partner.

The spread of LLC's resulted from:

It is impossible to form a business in a manner that allows for single taxation and limited liability.

An LLC is a separate legal entity and may own property in its own name.

A limited partner can never lose money.

A limited partner may bring a derivative claim against the limited partnership.

The owners of a limited liability company are known as: ______.

Management of an LLC is vested in its:

An LLC may be formed without filing formal articles of organization with the secretary of state.

An protects partners from liability for the wrongful acts of those whom they directly supervise and control.

Like a general partnership, LLC's are dissolved by all of the following situations except: _______.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

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Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

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Partnerships

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Shareholder Rights in Corporations

Securities Regulation

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