BUL exam 4
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.
Which of the following is/are advantages of a general partnership? (select all the correct answers)
-All partners have equal management rights. -The costs to form a partnership are minimal.
Which of the following statements is true about a partnership name? (select all the correct answers)
-The partnership must comply with the state's assume name provisions. -The name is an asset of the partnership that may be sold or assigned.
Absent an agreement otherwise, the members of an LLC have a statutory right to (select all the correct answers)
-inspect the books and records of the LLC -dissolve the LLC -approve a merger
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?
30,000 each to Amy, May and June
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? (not Double taxation)
All of the following could be recognized as advantages of doing business as a limited partnership:
A Limited Partnership is often a convenient and attractive option to investors.; A limited partnership allows limit partners to be liable only to the extent of their capital contribution.; Limited partners can invest in a partnership while effectively protecting their personal assets.
Which of the following is NOT one of the recognized disadvantages of doing business as a corporation?
A corporation can be in existence for a maximum of 99 years.
In a Limited Partnership, the General Partner's fiduciary duty is ______.
A duty of good faith and fair dealing to all partners in the partnership.
All of the following are considered advantages to a Limited Liability Partnership, except:
A limited liability partner is always insulated from personal liability of he or she commits malpractice.
A partnership will not terminate by operation of law if
A partner becomes insolvent
Which of the following is not required to create a partnership?
A written agreement between the parties.
Phil has a 1/4 partnership interest in Green & Sons. He has been denied access to the partnership books and records for over a year and he suspects that one of the partners has been engaging in secret business transactions using partnership funds. Phil wants to know the status of the business. Phil's remedy in this situation is to go to a court of equity for an ______________.
Accounting
John was a limited partner in Commercial Properties Limited. When the general partner became ill, John took over all the management duties of Commercial Properties. Ace Office Equipment, a supplier of Commercial Properties, is suing Commercial Properties over several months of unpaid bills. Under modern laws governing the operation of limited partnerships, which of the following statements best describes John's personal liability for Commercial's debt to Ace Office Equipment?
Ace can hold John personally liable for Commercial's debt only if Ace knew that John had taken over the management duties.
Which of the following is considered a disadvantage of doing business as a general partnership?
All partners are/may be held liable for partnership debts.
Subchapter S corporation will avoid double taxation only if which of the following applies?
All the shareholders agree to be taxed as in a partnership.
Subchapter S corporation will avoid double taxation only if which of the following applies? (select all the correct answers)
All the shareholders agree to be taxed as in a partnership.
The purpose of a buy and sell agreement is to
Arrange for the evaluation of the business and the method for financing the purchase of a withdrawing or deceased partner's interest.
The written agreement between two or more persons that creates a partnership and sets for the rights and duties of each partner is the_____________.
Articles of partnership
A security interest in personal property in favor of one who has performed services on the personal property is an ________.
Artisan's lien
A Limited Partnership must have ____________.
At least one general partner.
Jason has filed suit against Luke claiming $50,000 in damages. While the claim is being litigated, Jason can ask the court for a writ to seize property belonging to Luke which could be used to satisfy a judgment. The seizure prevents Luke from selling or otherwise disposing of the property during the proceedings. The writ Jason will ask for is a writ of________________.
Attachment
Under the "pass through" principle, a business entity
Avoids double taxation
Bill is a limited partner in K&L Limited Partnership. Which of the following statements about his partnership interests is false?
Bill has a right to make management decisions for K&L.
If a plaintiff shareholder cannot show that a director's decision was made in violation of his duties of loyalty or care, the court will allow the decision to stand under the __________rule.
Business judgment
The court order directing that the share of profits due a partner be given to his or her creditor to satisfy a judgment is a _________________order.
Charging
Rod and Todd have joint and several liability as sureties on a loan made to Rod's business by First Bank. Under this agreement, Todd is a _________________.
Co-surety
An extension of time of payment between a creditor and principal must be a valid agreement supported by ______ if it is to have an impact on the surety's liability.
Consideration
Which of the following best describes the "double taxation" on corporate profits?
Corporations pay taxes on the profits they distribute to the shareholders as dividends, and shareholders pay taxes on the same dividends as personal income.
The suit that a shareholder would bring against the officers of a corporation to enjoin ultra vires acts or acts that impair corporate assets is a __________suit.
Derivative
A partner who does not participate in management and whose existence is not known by the public is a _____________
Dormant partner
Frank is in the business of selling imported pottery. To induce a new wholesaler to sell him goods on credit, Frank and his brother Ed told the wholesaler that Ed was a partner in the business. In fact, Ed had no partnership interest and Frank was a sole proprietor. Ed now has liability to the wholesaler based on
Estoppel
Which of the following is recognized as a disadvantage to doing business as an LLC?
Existing court decisions addressing LLC issues and formation are relatively undeveloped, which may lead to legal uncertainty when making business decisions.
A partnership is a taxable entity.
False
A "certificate of limited partnership" is a document that is
Filed with the state Secretary of State by the limited partnership as part of its application process.
Which of the following usually provides an investor the least protection from personal liability for the debts of the business?
General Partnership
In which of the following business forms are profits taxed at both the entity level and the owner level?
General corporation
Which business entity has the following characteristics: liability of the owners is limited to their investments; ownership interest is easily transferrable and there are no legal limits to the number of owners; owners elect the managers of the business who operate under duties of loyalty and due care; the entity is organized under state law and may have perpetual existence; profits are subject to double taxation?
General corporation
A __________ is a party whose promise is not limited to a single transaction or to a single creditor.
General guarantor.
Which business entity has the following characteristics: owners have unlimited personal liability for the debts of the business, and joint and several liability for the contracts and torts of the other owners; there are few formalities in creating the entity; profits are taxed only at the owner level?
General partnership
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
Which of the following issues do not require a unanimous vote of the partners?
Hiring an office manager for 40 hours a week.
The merger that creates the greatest number of antitrust issues is a _____________merger.
Horizontal
Nelson and Jack are both avid sailors. When a sailing acquaintance put his older, but still highly desirable, boat up for sale, Nelson and Jack agreed to pool their resources to buy and fix up the boat, then sell it and split the profits. This is an example of an______
Joint venture
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
Partnership agreements often fund the purchase of a deceased partners' partnership interests with
Life insurance policies
Which business entity has the following characteristics: the entity is organized under state law; the owners must declare to the state whether the organization will be managed by the owners or by persons hired by the owners; owners have limited liability for the debts of the entity; both profits and losses pass through to the owners?
Limited Liability Company (LLC)
In which of the following business organizations does an owner risk losing his or her limited liability by actively and publicly managing the business?
Limited Partnership
All of the following could be recognized as advantages of doing business as a limited partnership, except:
Limited partners can actively share in management of the partnership, without incurring the risks of business liabilities.
Which of the following statements about the limited partner in a limited partnership is false?
Limited partners may participate fully in the management of the partnership.
An LLC in which non-owners are hired to run the day to day activities of the firm is a ______LLC.
Manager-managed
An LLC where a single person or select group has the power to manage is a ____________________LLC.
Manager-managed
A partnership that fails to comply with a state's assumed name statute
May exposed the partners to criminal liability; Will not be able to use the courts of the state to sue its debtors
A lien for the value of material and labor expended in the construction of buildings and other improvements is a _________.
Mechanic's lien.
Peter, Paul and John, who were licensed pharmacists, formed a partnership to purchase and run a small drugstore chain. Each held a 13 interest in the partnership. When Paul died his wife Ellen began receiving annuity payments equal to 13 of the partnership's net profits. The payments were to last for 3 years. Ellen is also a licensed pharmacist and perfectly capable of performing all the duties that Peter, Paul and John performed. She claims that under partnership law both her right to receive a share of net profits and her expertise in the field are prima facie evidence that she is a partner in the firm. Is Ellen correct?
No, paying a surviving spouse an annuity out of net profits is not prima facie evidence of partnership.
Allfam is a closely held family corporation, many of whose shareholders are employees of the corporation. In an attempt to reduce its taxes, Allfam paid its shareholder-employees enormous salaries and deducted the salaries as a corporate expense. Is Allfam permitted to do this?
No, the IRS will disallow the deductions for unreasonably high salaries and tax them as dividends.
Jim and Sid are partners in Widget Manufacturing. Jim read a letter from one of Widget's buyers asking for adequate assurances that Widget would be able to meet an upcoming contractual obligation. The demand was proper and, under Article 2, the buyer could treat the contract as breached if Widget did not respond to the demand within 3 months. Jim forgot to tell Sid about the demand and did not respond to it himself. Widget is now being sued by Buyer for 4,000 in damages for breach of contract. Sid contends that the partnership is not liable because only one partner was aware of the demand. Is Sid correct?
No, the partnership is liable because notice to one partner is legally notice to all the partners and the partnership.
Preferred stock that is entitled to receive only the stated preferred dividend and no other is _______________ preferred stock.
Non-participating
Which of the following would bring about the dissolution of the partnership?
One of the partners dies.; All of the partners agree to end the partnership; The time the partnership is to last, as stated in the partnership agreement, has expired
Which of the following statements about the operation of a member-managed LLC is false?
Only the managing members have access to the books and records of the LLC
When ABC Corporation was formed, the directors authorized an issue of 1,250,000 shares at $1,000 a share. These shares are classified as _______________stock.
Par value
All of the following could be accurate statements about a general partnership:
Partners can share partnership profits.; Partners can share in management of the partnership.; The general partnership allows for quick, easy and immediate control.
All of the following could be accurate statements about a general partnership, except:
Partnership liabilities in a general partnership are limited to the amount of capital contribution.
A _______ provides protection against losses that may result from the failure of a contracting party to perform the contract as agreed.
Performance bond.
Corporations are said to have a burden of "double tax" because
Profits are taxed at the corporate level as income and again at the shareholder level as dividends.
Which of the following statements about the taxation of corporations is false?
Profits retained by the corporation are normally taxable to the shareholders under the corporate pass through rule
The right of first refusal refers to the right of LLC members to
Purchase the interest of another member in the LLC before it is offered to an outside buyer
Suits by the state to determine if a corporate charter should be cancelled or forfeited are _______________ proceedings.
Quo warranto
Megan agreed to act as a surety on a personal loan First Bank made to Arthur. When Arthur defaulted on the loan, Megan paid off the loan obligation. Megan now has the right of ________against Arthur.
Reimbursement
What happens when a court pierces the corporate veil?
Shareholders become personally liable for the debts of the corporation.
A partner who does not participate in the management of the business is a _________partner; a partner who participates in decisions and advises management, but whose partnership interest is not known to third parties is a _________________partner.
Silent---Secret
A ________ is a party who limits his or her promise to a single transaction or to a single creditor.
Special guarantor
What is another name for a Subchapter S Corporation?
Tax option corporation
Partners hold title to partnership property as
Tenants in partnership
A document that an LLC must submit to the secretary of state's office prior to doing business is ______.
The Articles of Organization.
A partnership need not give public notice of its dissolution if the dissolution was caused by
The bankruptcy of a partner
Which of the following is not normally included in the Partnership Agreement?
The daily work schedule for each partner.
Directors have which of the following fiduciary duties?
The duty of loyalty; The duty of due care
A member of an LLC risk personal liability for participating in all of the following activities, except:
The member consistently votes against decisions that are ultimately approved by the majority of other members of the LLC.
Which of the following statements about proprietorships is true?
The owner of a proprietorship is personally liable for all the debts of the proprietorship.
When considering whether a partner has breached his or her fiduciary duties to the partnership, courts are likely to consider all of the following, except:
The partner's personal net worth.
Jay, who is a partner in an accounting firm, is being sued for malpractice by a client. If the jury finds for the client, which of the following parties will have liability on the judgment? (select all the correct answers)
The partnership as an entity; Each of the other partners individually; Jay individually
In a suretyship, security for the creditor is provided by
The promise of a third party to perform if the debtor does not perform.
Which of the following is not a right of a partner?
The right to draw yearly interest on his or her capital contribution
All of the following are rights held by an individual member of an LLC, except:
The right to sell one's interest in the LLC without notifying or consulting the other members of the LLC.
Which of the following statements about LLC's is false?
There is an extensive body of law based on court decisions governing LLC's.
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.
All of the following are functions of an LLC's Operating Agreement, except:
To indemnify members of the LLC from liability for any unlawful acts.
A partnership that buys and sells commodities is a _______________partnership; a partnership that produces goods or sells services is a _____________partnership.
Trading----non-trading
Which of the following statements about treasury stock is false?
Treasury stock can be resold only at par value.
The Articles of Incorporation for ABC Corporation specifically forbids the corporation from making personal loans to its officers or directors. Despite this, the board approved a personal loan to the President of the corporation. This action by the board is ______________.
Ultra vires
Which of the following parties could claim an artisan's lien?
a common carrier of goods; a jeweler who repaired a watch; the owner of a storage facility
Smith's Inc. is a closely held corporation in which Joe Smith is the President and owns 80% of the corporation's stock. The corporation was undercapitalized when it was formed, and for the past seven years Joe has regularly taken funds from the corporate account to pay his own personal expenses and debts. Should Smith's Inc. not have sufficient funds to pay a creditor, the creditor may hold Joe personally liable for the corporation's debt under the _____________theory.
alter ego
Which of the following statements about the rights and duties of doctors who practice medicine in a professional corporation is true?
are eligible to participate in tax advantaged pension plans.
The formal document that represents the agreement of the parties to form a partnership is the ___________.
articles of partnership
A(n) _______ is a legal proceeding accompanying an action in court by which a plaintiff may acquire a lien on a defendant's property as a security for the payment of any judgment that the plaintiff may recover.
attachment
To protect instate investors, most states have statutes regulating the sale of stocks and other securities within the state. These state statutes are referred to as ________________laws.
blue sky
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
The combination of two corporations that results in the dissolution of both corporations and the emergence of a new corporation is a(n) _____________.
consolidation
Bob is a co-surety with Sue on a loan that was made to Sue's business. If the business defaults on the loan and Bob is required to pay the full amount, Bob has the right of ____________ against Sue.
contribution
The method of voting that gives minority shareholders the best chance of electing someone to the board of directors is ______________ voting.
cumulative
A surety is liable to the creditor as soon as the principal ________.
defaults
Any change in the identity of the partners, whether through death, withdrawal, or the adding of a new partner, results in the ________________of the old partnership.
dissolution
A surety owes a _______ to the principal for any profits obtained after the surety performs.
duty to account?? (Not duty to discharge)
A business organized as a proprietorship may have up to, but not more than, thirty-five owners.
false
A commonly cited disadvantage of an LLC is that its members often risk personal liability if the business of the LLC fails.
false
A corporation can be in existence for a maximum of ninety-nine years.
false
A corporation incorporated in Delaware and doing business in New Jersey is not a foreign corporation in New Jersey.
false
A creditor in possession of collateral given to him or her by the principal may return it to the principal without the consent of the surety.
false
A creditor must exhaust his or her judicial remedies against the principal before seeking to recover from the surety.
false
A disadvantage of the Limited Liability Company is that profits are taxed both as income to the corporation and as dividends to the members.
false
A doctor who practices as part of a professional association cannot be sued for malpractice.
false
A joint venture cannot sue or be sued.
false
A limited partnership has to have at least two general partners and at least one limited partner
false
Absent an agreement otherwise, each partner is entitled to compensation for his or her services in managing the business.
false
An "improvement" to real property necessarily increases the market value of the real property.
false
An LLC must have at least two members that participate in management in order to lawfully do business.
false
An artisan's lien is always assignable.
false
Compared to other business entities, a general partnership requires filing complex documentation with the secretary of state's office before it is authorized to do business.
false
Contracts of suretyship are legally indistinguishable from contracts of indemnity.
false
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
In a Limited Liability Company, the unanimous consent of the members is required to hire a new employee.
false
In a closely held corporation, the majority shareholders have a statutory duty to purchase the stock of a minority shareholder who has died.
false
In a partnership for a term of years, each partner has both the power and the right to withdraw from the partnership at any time.
false
Individual members of the LLC can never bind the LLC in a valid and enforceable contract.
false
Lack of capacity and discharge in bankruptcy are two common defenses that are available to a surety that may be asserted against a creditor.
false
Limited Liability Companies are one of the oldest forms of business organization
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
One of the disadvantages of a Limited Liability Partnership is double taxation.
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
Registered agents have liability on the pre-incorporation contracts of the corporation.
false
Shareholders are taxed on the value of the stock they receive in stock dividends
false
State laws regulating the sale of securities within the state are called red herring laws.
false
Subchapter S corporations cannot have more than thirty-five shareholders, each of whom must sign the election to be taxed in a manner similar to a partnership.
false
The Statute of Limitations does not apply to surety contracts.
false
The articles of incorporation are drawn up at the first organizational meeting of the corporation.
false
The general contractor is eligible for a mechanic's lien on the real property, but the subcontractors on the project are not.
false
The majority of states have not yet enacted Limited Liability Partnership enabling statutes.
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
The person appointed by a corporation to receive service of process is the receiver.
false
State law requires that state chartered banks post bonds to protect the banks from losses caused by embezzlement by bank employees. The bonds posted by banks are __________bonds.
fidelity
When a ________ is purchased, a bonding company promises to pay an employer any loss, not to exceed a stated amount, caused by the covered employees' embezzlement.
fidelity bond
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
States give corporations many rights, among them the right to sue and the right to own property in the corporation's name. What do such legal rights collectively constitute for a corporation?
legal capacity
Which business entity has the following characteristics: one owner has unlimited personal liability for the debts of the business while other owners are liable only to the extent of their investments; owners lose their limited liability if they actively manage the business; the entity is organized under state law; both profits and loses pass through to the owners?
limited partnership
Stock which has no stated value when it is sold is ___________stock.
no par value
By statute, a limited partnership must have a minimum of ____________limited partners.
one
By statute, a limited partnership must have a minimum of ___________general partners.
one
The business entity that consists in an association of two or more persons to carry on as co-owners a business for profit is an__________.
partnership
Perfect Painters submitted a bid to paint the dorm rooms at State University during the summer. State Law requires that all bidders for state contracts post a bond protecting the state against loss if the bidder fails to perform within the contract time. The kind of bond Perfect Painters will post is a _______________bond.
performance
A shareholder who cannot attend a shareholder meeting may give another person the right to vote her shares in that election. This temporary grant of authority is an _______.
proxy
A partner who participates in the management of the partnership, but whose existence is not known to the public is a _____________ partner.
secret
A partner who does not participate in the management of the partnership is a ________partner.
silent
Allison is going to create a lawn service business. Allison would like to limit her liability by creating a subchapter "S" corporation. She does not know if the state she lives in allows for a single shareholder corporation. Where should Allison look to find the answer to her question?
state statutes
Jo and Anna, who are mother and daughter, are co-owners of Joanna's Frocks. When the bank loaned money to the business, Jo and Anna agreed to be sureties on the loan. Under the loan agreement, Anna will be liable only if Jo defaults on her obligation as a surety. Anna is a __________on the loan.
sub-surety
A ________ provides security for a creditor without involving an interest in the property, where the security for the creditor is provided by a third person's promise to be responsible for the debtor's obligation.
suretyship
A Subchapter S corporation is taxed in the same way a partnership is taxed.
true
A buy and sell agreement normally specifies the terms under which a withdrawing or deceased partner's interest will be bought out.
true
A corporation must qualify to do business in each state where it conducts business activities.
true
A creditor can assign a general guarantor's promise to a new creditor for value.
true
A dormant partner is one who does not participate in the management of the business and whose identity is not known to third parties.
true
A limited partner has liability to the full extent of his or her capital contribution.
true
A limited partner normally has no liability beyond his or her contribution
true
A limited partner risks personal liability when he or she actively participates in the management of partnership affairs.
true
A limited partnership must have at least one general partner and one limited partner.
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 person may become a partner without making a capital contribution.
true
A receiver is an officer of the court who takes possession of property involved in a lawsuit for the benefit of the ultimate owner.
true
A shareholder who holds watered stock is potentially liable to the creditors of the corporation should the corporation become insolvent and unable to meet its obligations.
true
A sole proprietorship is not a taxable entity; all profits or losses are reported and taxed as individual income.
true
A sub-surety becomes liable to the creditor only when another surety fails to perform.
true
A surety who only guarantees collection is entitled to notice.
true
A surety's obligation is a generally promise to do what the principal agreed to do.
true
Absent an agreement otherwise, a Limited Liability Company's operating agreement can only be amended with the unanimous consent of the members.
true
Because the LLC is a relatively new type of business entity, there are often fewer published court opinions addressing LLC issues.
true
Both contractors and subcontractors are entitled to a mechanic's lien against the owner for nonpayment of their accounts.
true
Co-sureties share joint and several liability to the creditor
true
Contractors have a longer period in which to file mechanic's liens that subcontractors or suppliers have.
true
Directors have personal liability if the corporation fails to withhold social security taxes from employee wages.
true
If net profits are retained in a Subchapter S corporation, income tax must be paid by shareholders on these earnings even though the earnings have not yet been received.
true
If the formalities of creating a limited partnership are not met, a partnership will be treated by courts as a general partnership.
true
If the partnership agreement does not state how long the partnership is to last, a partnership- at- will is created.
true
If the principal does not default, the surety never becomes liable to the creditor.
true
In a Limited Liability Company, the losses and profits pass through to the shareholders.
true
In a closely held corporation, shareholders owe each other substantially the same fiduciary duties that partners owe one another.
true
In most states corporations can have perpetual existence.
true
Limited Partnership must have at least one general partner.
true
Limited partners may lose the full amount their capital contribution if the limited partnership incurs debts that exceed its assets.
true
Members of professional associations and professional corporations are eligible under the Tax Code to participate in pension and profit-sharing plans.
true
Modification of the creditor-principal agreement generally discharges the surety.
true
Most states consider a shareholder attempt to oust management to be a proper purpose for allowing the shareholders access to corporation books and papers.
true
Once a cash dividend is declared, it becomes a debt of the corporation.
true
Once a corporation has been dissolved and the remaining assets of the corporation have been distributed to the shareholders, a creditor of the corporation may be able to sue the former shareholders on the corporate debt.
true
One partner has the ability to veto the admission of a new partner into the business.
true
One recognized advantage to a general partnership is that it allows partners to share in management and profits of the partnership.
true
Partner A defrauded a client of the partnership. Partners B and C are jointly and severally liable with A to the client, even though they were unaware of the fraud.
true
Partners have unlimited personal liability for the debts incurred by the partnership.
true
Partnership books must be kept in the firm's place of business and be accessible to all partners
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
State courts have the power to order that real property be sold to satisfy a mechanic's lien.
true
State law determines whether or not a mortgage will have priority over a mechanic's lien.
true
State laws regulating the sale of securities within the state are called blue sky laws.
true
Subchapter S corporations are now allowed to have up to 100 shareholders (it cannot exceed 100 shareholders).
true
Subchapter S corporations may have a maximum of 100 shareholders.
true
The admission of a new partner automatically dissolves the partnership.
true
The limited liability partnership is often an attractive option for professional associations such as law firms, accountants and medical doctors.
true
The manager of a manager-managed Limited Liability Company may be a non-member.
true
The surviving corporation in a merger assumes the liabilities and obligations of the merged corporation.
true
The surviving partner is entitled to compensation for winding up the affairs of the partnership.
true
The two types of guaranty agreements are general and special.
true
To create a Limited Liability Corporation, articles of organization must be filed with the state's Secretary of State's office.
true
Unless agreed to otherwise, all partners have an equal vote in the management decisions of the partnerships.
true
Unless agreed to otherwise, partners are not entitled to compensation for work done to further the interests of the partnership.
true
Usury laws do not apply to corporations when they borrow money.
true
Voluntary surrender of personal property subject to an artisan's lien generally terminates the lien.
true
When holders of mechanic's liens are equal in priority, and there are not sufficient funds to satisfy all their claims, they will share the funds that are available on a pro-rata basis.
true
Alice bought 10,000 shares of ABC Corporation that had a par value of 10 a share. To pay for her shares, Alice gave ABC 45,000 in cash and a piece of real property that she said was worth 55,000. In fact, the land appraised for only 20,000. The stock that Alice bought from ABC Corporation is ______________ stock.
watered
If a judgment for dollar damages is not paid, the judgment creditor may apply for a ______.
writ of execution
