Unit 13
The AMJ Partnership has 3 partners: Amy, who made a 60,000 capital contribution; May, who made a 20,000 capital contribution; and June, whose capital contribution was 10,000. The partnership agreement is silent about how profits will be divided. If the partnership makes 90,000 in profits, how will it be distributed?
$30,00 each to Amy, May, and June
May is one of three limited partners in a limited partnership. Each limited partner made a capital contribution of $50,000. Assume there is a judgment against the partnership for $300,000 and that both the partnership and the general partner are insolvent. What is the maximum amount that May will have to pay on the judgment?
$50,000: May's capital contribution can be applied to the debt, but she is not personally liable beyond that.
Subchapter S corporations are limited to _________shareholders.
??
The maximum number of shareholders a Subchapter S corporation may have is
??
What is another name for a Subchapter S Corporation?
??
Which of the following issues do not require a unanimous vote of the partners?
???
Subchapter S corporation will avoid double taxation only if which of the following applies?
????
Sharing in net profits is not prima facie evidence that a partnership exists if the profits were paid by the partnership
As rent For wages As an annuity to the spouse of a deceased partne
Which of the following is not a right of a partner?
The right to draw yearly interest on his or her capital contribution
A partnership that fails to comply with a state's assumed name statute
Will be given a trade name by the attorney general Will not be able to use the courts of the state to sue its debtors
The capital contribution of a partner may consist in all of the following except
business experience
John, a partner in KLM Partners, had a personal loan from First Bank for 35,000. First Bank got a judgment against John after he defaulted on the loan. First Bank can reach John's interest in KLM Partners and require that a receiver be appointed to take John's share of the partnership profits to satisfy the judgment. The court order that will do this is an ________________
charging order
Debbie, the manager of a large furniture store, receives a bonus each year equal to 2% of the business' net profits. Under RUPA, this is conclusive evidence that Debbie has a partnership interest in the business.
false
If a partner assigns his or her interest in a partnership to a creditor, the assignee steps into the shoes of the partner and becomes entitled to participate in the management of the business
false
Marshaling of assets is the tax doctrine that allows income to be taxed only at the owner level and not at the organization level
false
Partners may use partnership property for both partnership and personal reasons.
false
Partnerships are required to use the term "Company" in their names.
false
The owner of a limited liability company LLC has unlimited personal liability for the debts of the LLC.
false
The partnership must pay interest each year on the capital contributions of the partners.
false
Which business entity is defined as "an association of two or more owners who carry on as co-owners a business for profit?"
general partnership
In a limited partnership, the _________partner has unlimited personal liability for the debts of the partnership; the ____________partner is liable only to the extent of his or her capital contribution.
general----limited
Which of the following is an informal association of two or more persons who agree to engage as co-owners in a single business transaction?
joint venture
If a business has the power to own property, enter into contracts, and sue others in court, it is said to have
legal capacity
Which of the following statements about the limited partner in a limited partnership is false?
limited partners may participate full in the management of the partnership
What is the provision of the tax rule that makes income taxable only for the individuals who receive it, and not for the business entity that produces it?
pass through
Bob, Sue and Jim were classmates in medical school who formed a professional corporation to practice medicine. Which of the following statements about their professional corporation is false?
they will be protected from suits for medical malpractice
A corporation must qualify to do business in each state where it conducts business activities.
true
A new partner is liable only to the extent of his or her capital contribution for the already existing debts of the partnership.
true
A partner in a trading partnership has the implied power to make warranties on goods sold by the partnership.
true
A partnership is a taxable entity.
true
A partnership maybe created by an express agreement between the parties or it may be implied from their conduct
true
An advantage to doing business as a corporation is that ownership interests can be transferred without impact on day-to-day business operations.
true
Members of professional associations and professional corporations are eligible under the Tax Code to participate in pension and profit-sharing plans.
true
Premiums paid by corporations for the health insurance it provides employees are tax-deductible expenses
true
Shareholders of a corporation may also be employees of that corporation.
true
Shareholders of corporations pay taxes on the dividends distributed to them by the corporation.
true
The bankruptcy of a partner will cause the dissolution of the partnership by operation of law.
true
The capital contribution of each partner is a liability to the partnership and must be returned to the partner when the partnership ends.
true
Unless agreed to otherwise, all partners have an equal vote in the management decisions of the partnerships.
true