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Exam 17: Limited Liability Business Forms

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Question 31

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If the members of a limited liability company want to reinvest profits in the business, they may opt for the firm to be taxed as a corporation.

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Question 32

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Development LP is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals, including Ethan. Ethan loses his limited liability if he

A) participates extensively in the firm's management.
B) does not participate in the firm's management.
C) invests in a project that the firm has declined.
D) votes to sell or dissolve the firm.

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Question 33

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Because title to the property of a limited liability company must be held in the name of one or more of its members, disputes over its ownership is avoided.

A business organizational form that limits its owners' liability allows the firm to lawfully

Like a sole proprietorship or a partnership, the members of a limited liability company have unlimited liability for the firm's debts.

In a limited partnership, every partner has full responsibility for the management of the partnership and its obligations.

Brent and Char are limited partners in Dental Center, a limited partnership. In terms of the firm's books and information regarding partnership business, Brent and Char are entitled to

Dain is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Dain is liable for the debts

Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad. For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as

Otto is a limited partner in Port Exports, a limited partnership. Otto allows his name to be used in partnership business, contributes services to the firm, and regularly advises Quinn, the general partner, on Port's management. The firm's creditors believe, based on Otto's conduct, that he is a general partner. Otto is liable for Port's obligations

Accounting LLC is a member-managed limited liability company. Unless the members have agreed otherwise, all decisions with respect to the firm's business are made by

If a limited liability company is not meeting the economic purpose for which it was established, a court may order the dissolution of the firm.

To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likely to hold Nicole

A limited liability partnership allows professionals to avoid personal liability for the malpractice of other partners.

An operating agreement is required for a limited liability company to exist, and it must be in writing.

A limited partner can force the dissolution of a limited partnership even if the other partners want to continue the business.

When a member of a limited liability company guarantees payment of a loan to the firm, the member is personally liable for the obligation.

A limited liability company that wants to distribute profits to its members could avoid "double taxation" by electing to be taxed as

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

The members of a limited liability company should protect their interests by creating a written operating agreement.