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Exam 4: Limited Liability Companies and Special Business Forms

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Question 21

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The alter-ego theory cannot be applied to a limited liability company.

A) True
B) False

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Question 22

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Unless a limited liability company indicates otherwise, the Internal Revenue Service automatically taxes it as a partnership.

A) True
B) False

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Question 23

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If a dispute arises and the applicable limited liability company statute does not cover the issue, a court will most likely dismiss the case.

A limited liability company is a citizen of every state of which its members are citizens.

The members of a limited liability company have unlimited liability for any loss or injury caused by the wrongful acts or omissions of the firm.

A syndicate may be organized as a corporation or a partnership, or in some situations as no recognizable form of business organization.

A limited liability company can be held liable for any loss or injury caused by the wrongful acts or omissions of its members.

Tax Accounting, LLC, is a member-managed limited liability company. If the law in Tax Accounting's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to

In most states, a limited liability company can have only a limited number of members.

Rollo is a member of Smooth Operators LLC, a limousine service. Rollo's relationship to Smooth Operators ends, but the firm continues to do business. This is​

Business Media, a partnership, publishes periodicals, including Cycle Review. DangerZoners, also a partnership, publishes Extreem Sportz. Business Media and DangerZoners agree to pool their resources in a one-time deal to print and market a book, Future Runs. In contracting with Geo Cache, Inc., for supplies to print the book, Business Media commits fraud. In contracting with Host Articles Agency for materials to use in Extreem Sportz, DangerZoners commits fraud. Geo Cache and Host Articles file suits against Business Media and DangerZoners. What type of business organization has Business Media and DangerZoners formed? To whom, if anyone, is Business Media liable? To whom, if anyone, is DangerZoners liable?

Dreem Land Corporation and Earthbound Investments Company transfer their property to Financial Managers, Inc., which manages the property and distributes the profits to Dreem and Earthbound. This form of a business organization is

Farm & Ranch is an unincorporated cooperative. Unincorporated cooperatives are often treated like

Typically, the articles of organization of a limited liability company (LLC) include information on how the LLC will be managed.

Under most limited liability company statutes, if the members do not specify how profits will be split, they are divided in proportion to the members' capital investment.

For federal income tax purposes, one-member limited liability companies are not taxed.

In a limited liability company, the management may consist of members or nonmembers, but not both.

Members of a limited liability company (LLC) can stipulate in their operating agreement how managers will be chosen or removed.

The members of a joint venture have less implied and apparent authority than the partners in a partnership.

In many states, an operating agreement is required for a limited liability company to exist.