Chapter 41: History and Nature of Corporations (SmartBook Assignment)
An example of ____________ occurs when a shareholder causes a corporation to act to the personal benefit of the shareholder.
domination
A step that should be taken to prevent the piercing of veils between a parent and a subsidiary corporation would be that ____________.
each corporation must have its own book of accounts.
An isolated transaction that is completed within __________ and is not one in the course of repeated transactions of a like nature classifies as _________ business for qualification purposes.
30 days; not doing
Assume that to avoid an onerous labor union contract, a corporation creates a wholly owned subsidiary and sells its entire business to the subsidiary. The subsidiary claims that it is not a party to the labor contract and may hire nonunion labor. What result?
A court will pierce the veil between the two corporations because the subsidiary was created only to avoid the union contract
A law that should not be violated when a state imposes its laws on a foreign corporation is the _________ Clause of the United States Constitution.
Commerce
A state may tax a foreign corporation if such taxation does not violate the ____________ Clause of the United States Constitution.
Commerce
Under the ___________, the power to regulate interstate commerce is given to the federal government.
Commerce Clause
The _________ of the United States Constitution requires that a foreign corporation have sufficient contacts with a state before the state may exercise jurisdiction over the corporation.
Due Process Clause
Beginning in 1776, corporation law in the United States evolved independently of __________ corporation law.
English
A state may impose its laws on a foreign corporation if such an imposition does not violate the Due Process Clause of the _________ Amendment to the United States Constitution.
Fourteenth
____________ is the least likely scenario to be referred to as doing intrastate business.
Having passive ownership of real estate for investment
Identify a true statement about a corporation.
It is a legal entity separate from its shareholders.
__________-__________ statutes frequently specify several kinds of corporate activities that make foreign corporations subject to suit within a state.
Long arm
The revised _____________ is the basis of corporation law in 29 states and the District of Columbia.
Model Business Corporation Act
Most states have statutes for nonprofit corporations based on the revised __________ Act.
Model Nonprofit Corporation
The following states do not follow the Model Business Corporation Act: ____________. (Choose two correct answers.)
New York California
A(n) ___________ is treated nearly like a partnership for federal income tax purposes.
S corporation
The ____________ has held that a foreign corporation may be brought into a state's court in connection with its activities within a state?
United States Supreme Court
If an corporation elects to change its status to S-Corporation ____________ must consent.
all the shareholders
One true statement about close corporations is that they ____________.
are managed only by their controlling shareholders.
If required to qualify to do intrastate business in a state, a foreign corporation must apply for a certificate of __________.
authority
In the International Shoe case, the US Supreme Court justified its holding based on the "___________ theory" referring to a term in which a foreign corporation avails itself of the protection of a state's laws and suffers any reasonable burden that the state imposes as a consequence of such benefit.
benefit
In order to prevent the piercing of veils, transactions between a parent corporation and a subsidiary corporation must be recorded on the books of ___________.
both corporations
Corporations with very few shareholders whose shares are not available to the general public are called ____________ corporations.
close
The law of piercing the corporate veil is a(n) __________ law protecting creditors of corporations.
common
The action by which courts sometimes ignore the separateness of a corporation and its shareholders is called piercing the:
corporate veil.
A form of business called a(n) ________ can be classified into for profit, not for profit, and government-owned.
corporation
The internal affairs of a corporation include the relation between the __________.
corporation and its officers
A foreign corporation may be brought into a state's court in connection with its activities within a state, provided the state does not violate the ___________.
corporation's rights under the Commerce Clause
The ___________ will be liable to creditors when a transfer of corporate assets to shareholders occurs for less than fair market value.
corporation's shareholders
A state tax violates the Commerce Clause of the United States Constitution when it ____________.
does not relate to the services offered by the state
A corporation is a(n) ____________ corporation in the state that has been granted its charter.
domestic
Most business corporations are _________ corporations.
for-profit
A(n) __________ issues stock to its shareholders, who in turn invest in the corporation with the expectation that they will earn a profit on their investment.
for-profit corporation
A corporation incorporated in one state is a(n) __________ corporation in all other states in which it does business.
foreign
The circumstances under which states impose their laws on a business incorporated in another state is determined by the law of ___________ corporations.
foreign
A state's imposition of a tax on a ______ corporation must serve a legitimate state interest and be ______ in relation to the corporation's contacts with the state.
foreign; reasonable
Almost all for-profit corporations are incorporated under the __________ incorporation law of a state.
general
A(n) __________ corporation performs both governmental and business functions.
government-owned
To become a corporation, a business must __________ by complying with an incorporation statute.
incorporate
Soliciting orders by mail that require acceptance outside a state is not doing ______ business requiring qualification.
intrastate
A(n) __________ corporation does not require qualification to conduct _________ business simply by owning _______ or personal property. (Choose TWO correct answers)
intrastate real
Maintaining a stock of goods within a state from which to fill orders, even if the orders are taken or accepted outside the state, is doing __________.
intrastate business requiring qualification
A shareholder of a typical publicly held corporation is a(n) ___________ who is not concerned in the management of the corporation.
investor
A corporation that conducts most of its business in a state other than the one in which it is incorporated is called a(n) __________ corporation in the state in which it conducts most of its business.
pseudo-foreign
If an S corporation has profit, it ____________.
is taxed only once.
A(n) ___________ transaction that is completed within 30 days and is not one in the course of repeated transactions of a like nature classifies as not doing business for qualification purposes.
isolated
Transfer of corporate assets to shareholders for less than fair market value is called ___________.
looting
One of the most likely consequences of piercing the corporate veil is that it ___________.
makes a corporation's shareholders lose their limited liability
An accurate statement regarding doing business as a corporation would be that a corporation ___________.
may be incorporated in one state yet do business in other states in which it is not incorporated.
An incorrect statement regarding corporation law would be that ____________.
most of the common law of corporations deals with executive compensation.
A(n) _______ would be an example of a government-owned corporation.
municipality
A(n) __________ corporation provides services to their members under a plan that eliminates any profit motive.
not-for-profit
A(n) __________ is a type of corporation that does not issue stock.
not-for-profit corporation
A(n) __________ corporation is a foreign corporation doing most of its business in a state other than the one in which it is incorporated.
pseudo-foreign
A true statement about corporations would be that they ___________.
operate based on procedures established by state and federal corporation statutes.
A corporation that owns at least a majority of the shares of another corporation is called the _________ corporation.
parent
A true statement about a corporation's liabilities would be that a _____________.
parent corporation is not liable for the obligations of its subsidiary corporation.
Professionals such as physicians, lawyers, and accountants can incorporate under the __________ corporation acts.
professional
If required to qualify to do intrastate business in a state, a foreign corporation must maintain a(n) ___________ in the state.
registered agent
Greater contacts are needed to subject a corporation to _________ taxation in a state than are needed to subject it to property taxation.
sales
A business can usually incorporate by paying a required fee and filing a required document with the ___________ of state of the state of incorporation.
secretary
The first requirement for a court to pierce the corporate veil is domination of a corporation by its _____________.
shareholders
Early American corporations received __________ from state legislatures.
special charters
Regulation of the internal affairs of a corporation is most likely to be exercised by the ___________.
state of incorporation
Nonprofit corporations are regulated primarily by the ___________.
states
The _________ not have the power to exclude or discriminate against __________ corporations that are engaged solely in interstate commerce. (Choose two correct answers)
states do foreign
A(n) __________ is a special type of close corporation.
subchapter S corporation
The following three activities within a state might make a foreign corporation subject to the state's long-arm statute: _____________. (Choose three correct answers.)
the commission of a tort the ownership of property the making of a contract
A true statement about publicly held corporations would be that __________.
their shares are available to public investors.
Suppose corporation ACorp attempts to escape liability on a contract by reincorporating or by forming B, a subsidiary corporation. BCrop will claim that it is not bound by the contract, even though it is doing the same business as was done by ACorp. In such a situation, a court __________.
will pierce the corporate veil and hold BCorp liable on the contract