Question 1

Bart,Dale and Bill form a limited liability company.They each own a one-third interest in the company,and agree to divide profits and losses on that basis.The operating agreement was silent regarding the transfer of an interest,and it did not address the status of a transferee.Bart sells his interest to Milly for $10,000.The company earns $99,000 in profits.and Milly informs Dale and Bill that she is their new member.They say "no way," and that she can forget about a share of the profits.Who is right under the Uniform Limited Liability Company Act,and why?

Accepted Answer

The answer of Bart,Dale and Bill form a limited liability...

Question 2

A limited liability company is a(n)________ LLC in the state in which it is organized.

Accepted Answer

A)  "close" 
B)  closely-held 
C)  immune 
D)  domestic 
E)  "S"-corporation

Question 3

Limited liability companies are creatures of federal law.

Accepted Answer

A) True 
 B)False

Question 4

A limited liability company can be organized:

Accepted Answer

A)  in only one state. 
B)  in no more than two states. 
C)  in no more than three states. 
D)  in all states. 
E)  at the federal level.

Question 5

An operating agreement for a limited liability company regulates the affairs of the company and the conduct of its business,but not relations among the members,managers,and company.

Accepted Answer

A) True 
 B)False

Question 6

Limited liability company ________ regulate the formation,operation,and dissolution of LLCs.

Accepted Answer

A)  decrees 
B)  mandates 
C)  codes 
D)  decisions 
E)  annotations

Question 7

In conformity with state law,five accountants formed a limited liability partnership.The partnership is dissolved at a time when partnership debts exceed assets.Which of the following is true?

Accepted Answer

A)  The limited liability partnership must continue as a legal entity until the debts are repaid. 
B)  The limited partners are personally liable for the debts of the partnership, since there was no general partner. 
C)  The limited partners are not personally liable for the debts of the partnership beyond their capital contributions. 
D)  The limited partners are not personally liable for the debts of the partnership, but only if the creditors specifically agreed not to hold them personally liable. 
E)  The limited partners are personally liable for the debts of the partnership, regardless of whether there was a general partner.

Question 8

The ULLCA is not law unless a state adopts it as its LLC statute.

Accepted Answer

A) True 
 B)False

Question 9

Why,when choosing a name for a new limited liability company,must organizers include the words "limited liability company," "limited company," or an appropriate abbreviation?

Accepted Answer

The answer of Why,when choosing a name for a new...

Question 10

In terms of fiduciary duty,a non-manager member of a manager-managed limited liability company is treated equally to a shareholder in a corporation.

Accepted Answer

A) True 
 B)False

Question 11

In a "member-managed" limited liability company,management power and the number of votes allowed each member are determined by each member's capital contribution.

Accepted Answer

A) True 
 B)False

Question 12

At the expiration of the term of a "term" limited liability company,the limited liability company can only be continued if all the members vote unanimously for its continuation.

Accepted Answer

A) True 
 B)False

Question 13

Under the ULLCA,the articles of organization of a limited liability company need not set forth whether the limited liability company is to be a manager-managed LLC

Accepted Answer

A) True 
 B)False

Question 14

Does it seem fair that owners of a limited liability company are not personally liable for debts of the company,even though they benefit from profit made by the company?

Accepted Answer

The answer of Does it seem fair that owners of...

Question 15

A member's distributional interest in a limited liability company is personal property and may be transferred in whole or in part.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true regarding membership sharing of limited liability company profits and losses?

Accepted Answer

A)  Unless otherwise agreed, members share LLC profits and losses equally. 
B)  Members share LLC profits and losses equally, and this distribution cannot be changed by agreement between LLC members. 
C)  Unless otherwise agreed, members share LLC profits and losses proportionally, depending on the date they become members of the LLC. 
D)  Members share LLC profits and losses proportionally, depending on the date they become members of the LLC, and this distribution cannot be changed by agreement between LLC members. 
E)  Unless otherwise agreed, members share LLC profits and losses proportionally, depending on the value of the capital contribution members made to the LLC.

Question 17

The general rule is that owners of a limited liability company are not personally liable to third parties for the debts,obligations,and liabilities of a limited liability company beyond their capital contribution.

Accepted Answer

A) True 
 B)False

Question 18

Ten persons formed the Magic City Company,LLC for a term of twenty years,with no designation as to whether the corporation is "member-managed" or "manager-managed." Shortly before the expiration of this period,the members held a vote on whether to continue the business for an additional five years.The vote was eight votes in favor and two against continuing.As a result:

Accepted Answer

A)  the limited liability company will continue for an additional five years. 
B)  the limited liability company will continue as an "at-will" limited liability company. 
C)  the limited liability company will be dissolved at the end of the original twenty-year term. 
D)  the court will assume operational control of the limited liability company upon expiration of the original term. 
E)  the limited liability company will continue for an additional twelve months.

Question 19

A transferee of a distributional interest in a limited liability company becomes a member of the LLC if it is so provided in the operating agreement or if all the other members of the LLC consent.

Accepted Answer

A) True 
 B)False

Question 20

Melinda,Brett,and Phil are the members of a "manager-managed" limited liability company.Melinda and Brett each contributed $1,000 in capital.Phil contributed $10,000 in capital.All of the members agreed to hire Betty to manage the company.Three months after she starts,however,Melinda and Brett have become dissatisfied with her.Phil wants her to stay.Which of the following is true?

Accepted Answer

A)  The votes of Melinda and Brett would be sufficient to have Betty removed. 
B)  Regardless of the amount of capital contribution, a vote to remove a manager must be unanimous. 
C)  Votes of members are counted on the basis of their capital contribution, and in this situation, Phil would have to vote in favor of her removal in order for Betty to be removed. 
D)  Betty can be removed if even one member votes in favor of her removal. 
E)  No vote can remove Betty for at least six months after she is appointed.

Exam 30: Limited Liability Company and Limited Liability Partnership

A limited liability company is a(n) ________ LLC in the state in which it is organized.

Limited liability companies are creatures of federal law.

A limited liability company can be organized:

An operating agreement for a limited liability company regulates the affairs of the company and the conduct of its business,but not relations among the members,managers,and company.

Limited liability company ________ regulate the formation,operation,and dissolution of LLCs.

In conformity with state law,five accountants formed a limited liability partnership.The partnership is dissolved at a time when partnership debts exceed assets.Which of the following is true?

The ULLCA is not law unless a state adopts it as its LLC statute.

Why,when choosing a name for a new limited liability company,must organizers include the words "limited liability company," "limited company," or an appropriate abbreviation?

In terms of fiduciary duty,a non-manager member of a manager-managed limited liability company is treated equally to a shareholder in a corporation.

In a "member-managed" limited liability company,management power and the number of votes allowed each member are determined by each member's capital contribution.

At the expiration of the term of a "term" limited liability company,the limited liability company can only be continued if all the members vote unanimously for its continuation.

Under the ULLCA,the articles of organization of a limited liability company need not set forth whether the limited liability company is to be a manager-managed LLC

Does it seem fair that owners of a limited liability company are not personally liable for debts of the company,even though they benefit from profit made by the company?

A member's distributional interest in a limited liability company is personal property and may be transferred in whole or in part.

Which of the following is true regarding membership sharing of limited liability company profits and losses?

The general rule is that owners of a limited liability company are not personally liable to third parties for the debts,obligations,and liabilities of a limited liability company beyond their capital contribution.

A transferee of a distributional interest in a limited liability company becomes a member of the LLC if it is so provided in the operating agreement or if all the other members of the LLC consent.