business law test 3

Using the formula and methodology demonstrated in class, calculate the income tax for an individual who has: -$164,999.00 of income from all sources -$3,024.00 in Exclusions -$7,868.00 in Adjustments -$15,570.00 in below-the-line Deductions -$2,554.00 in Credits For the purposes of this question, assume this is an individual taxpayer. Also assume a standard deduction of $12,550.00. In calculating the tax, use the following tax rates and brackets: Income Rate Up to $9,950 10% $9,951 to $40,525 12% $40,526 to $86,375 22% $86,376 to $164,925 24% $164,926 to $209,425 32% $209,426 to $523,600 35% $523,601 and more 37%

24,715.64

Assuming a millage rate of 14.445, calculate the ad valorem tax for a if a tract of real property with an assessed value of $228,000.00. (Ignore county credits, exemptions, etc. - just apply the millage rate to the property value to determine the total tax payable in a given year.)

3293.46

Angela purchases a rental house in 2012 for $86,900.00. The next year she spends $17,100.00 on a new roof for the house. Six years later, she sells the house for $110,700.00. In the year she sells the property, Angela will report capital gains of $__________ for this transaction.

6,700

Bob's Bar, Inc. is a corporation with three shareholders: Brandon, Maria, and Carlos. -Brandon owns 200 shares -Maria owns 210 shares -Carlos owns 500 shares The net profits of the corporation that will be distributed this year are $13,600. How much will Carlos receive from this divided?

7,473

Angela purchases a rental house in 2012 for $67,600.00. The next year she spends $7,100.00 on a new roof for the house. Six years later, she sells the house for $126,800.00. Angela's basis in the property is $__________.

74,700

A Corporation is authorized to issue 3,482 shares to all of its shareholders, all of which are in the form of common stock. Out of all the 3,482 authorized shares, the Corporation currently holds 239 shares as Treasury Shares and shareholders have subscribed to the remaining shares. You own 204 shares. The board of directors of the corporation votes to issue a dividend of $12,800 among the shareholders. How much will you receive?

805.18

Frank is the President of ABC Corporation. After careful thought, he decides it would be in the best interests of the Company to fire ABC's long-time Financial Advisor, Bill, and to hire Steve to replace him. It ends up being a terrible decision. Steve does a horrible job, costing the Corporation several million dollars. In a derivative suit brought by some of the shareholders, would a judge likely hold Frank accountable for the poor decision to fire Steve? a. Yes, the decision clearly cost the company (and therefore the shareholders) hundreds of thousands of dollars. b. Yes, because Steve's position was superior to Frank; therefore, Frank had no authority to fire Steve. c. No, because Frank had complete authority to act and he owed no duties to the shareholders or the board of directors. d. No, a judge would likely refrain from imposing liability because under the Business Judgement Rule, a court will not look to whether a business decision was good or bad, unless the conduct was egregious.

d

Unless otherwise agreed, in a general partnership, how many partners must vote on to make binding decisions of the partnership? a. A majority vote is required for all decisions b. A unanimous vote is required for all decisions c. Only one partner's vote is required to make decisions d. A unanimous vote is required for decisions outside the ordinary course of business; a majority vote is required for decisions in the ordinary course of business e. A majority vote is required for decisions outside the ordinary course of business; a unanimous vote is required for decisions in the ordinary course of business f. A partnership may not make legal decisions because partnerships are not recognized as legal entities with limited liability

d

What does ultra vires mean? a. "Extremely viral" - it occurs when the company's profits exceed those of its prior fiscal year b. "Contractually bound" - it occurs when as officer executes a contract c. "Exceeding expectations" - it occurs when a shareholder receives extraordinary dividends d. "Beyond the powers" - it occurs when a shareholder, director, or officer exceeds the authority of the corporation given to her or him e. "Beyond the variance" - it occurs when a shareholder, director, or officer breaches or otherwise acts outside the limitations of a contract

d

When Bill calculates his income tax on his tax return, he discovers that he is in the 32% tax bracket. This means that the income tax will be calculated __________. a. By multiplying the income in Bill's tax bracket and each higher tax bracket above his bracket by the corresponding tax rate for the range in each such bracket b. By itemizing Bill's deductions and taking the difference multiplied times his exclusions. c. By deducting the standard deduction from his taxable income, then multiplying the resulting number by 32% d. By multiplying the taxable income in Bill's tax bracket and each lower tax bracket by the corresponding tax rate for the range in each such bracket e. By multiplying his taxable income by 32%

d

Select all of the following that Corporations and other legal entities have the right to do under the doctrine of Corporate Personhood. a. Swear statements in court b. Drive a car c. Sign affidavits d. Enter into contracts e. Be sued f. File a Lawsuit g. Vote

d, e, f

Select all of the following that qualify as Exclusions from Income that can be excluded in determining Gross Income. a. Wages b. Alimony c. Pensions d. Gifts e. Forgiven Debts f. Workers Compensation Benefits g. Dividends h. Proceeds from Life Insurance i. Inheritances

d, f, h, i

After completing her tax return, Anne shows a Taxable Income of $210,550.00. Using the tax brackets and rates below, what is Anne's Marginal Tax Rate? Income Rate Up to $9,950 10% $9,951 to $40,525 12% $40,526 to $86,375 22% $86,376 to $164,925 24% $164,926 to $209,425 32% $209,426 to $523,600 35% $523,601 and more 37% a. 10% b. 26.8% c. 23.03% d. 32% e. 35% f. 18.079%

e

What does Respondeat Superior mean? a. "Respond to the superior" - it means that only owners may take actions that bind the company b. "Respond in Superior Court" - it means that lawsuits must be answered in superior court c. "Let the superior person respond to the allegations" - it means the superior partner is responsible for all decisions and the inferior partners are not d. "Employees are liable" - it means that all employees are liable in the same manner as the partnership e. "Let the master answer" - it means the partnership itself is liable for torts committed by the partners in the ordinary course of the partnership business

e

Which of the following securities must be registered under the requirements of the Securities Act of 1933 (choose all that apply)? a. Jane and Sam form an LLC called "J&S Sandwiches, LLC" and they offer Membership Interests to the public in exchange for a $4 million stake in the Company. b. Bob's Membership Interest when he forms a single-member LLC called "Bob's Burgers, LLC" c. Fran owns many shares in Coca-Cola, Inc. and offers to sell all of them them to her brother, Joe, for $7 million. d. Peter owns a large life insurance annuity and auctions it off to the public at a minimum price of $9 million. e. Brenda and Anita form an LLC called "B&A Sandwiches, LLC" and they offer Membership Interests to the public in exchange for an $8 million stake in the Company.

e

Select all of the following that are Transfer Taxes. a. Sales Tax b. Occupational Tax c. Payroll Tax d. Ad Volorem Tax e. Generation Skipping Tax f. Estate Tax g. Gift Tax h. Income Tax i. Duties

e, f, g

Owners of LLCs are called Managers True False

f

The most common facts leading a plaintiff to "pierce the corporate veil" is when the corporation has comingled its assets with those of others. True False

f

The owners of a corporation are referred to as __________. a. Partners b. Directors c. Members d. Managers e. Officers f. Shareholders

f

When Walmart purchases goods from its suppliers, Walmart must pay sales tax based on the purchase price. True False

f

Which of the following legal concepts from class was applied in the Citizens United v. Federal Election Commission case? a. Articles of Incorporation b. Ultra Vires c. Limited Partnerships d. Preemptive Rights e. General Partnerships f. Corporate Personhood

f

Sam decides to start selling widgets, so he writes up a business plan, gets a bank loan, and starts renting a storefront in the Dalton Mall. He puts up a sign at the front of the store and runs some ads in the newspaper. Sam is operating his business as a __________. a. Limited Liability Partnership b. Limited Partnership c. Limited Liability Company d. General Partnership e. Limited Liability Limited f. Partnership g. Sole Proprietorship h. Nonprofit Corporation i. Corporation

g

Match the corporate roles below with the corresponding duties, powers, and responsibilities. ____ Determines when to pay Dividends ____ Establishes the Price of Stock ____ Elects Officers ____ Receives Dividends ____ Manages Day-To-Day Business of the Corporation ____Elects Directors 1. Shareholder 2. Director 3. Officer

2, 2, 2, 1, 3, 1

Put the following steps in the order required to form a corporation. ____File Articles of Incorporation with the Secretary of State ____Shareholders Subscribe to Shares ____Name Reservation ____Hold Organizational Meeting

2, 4, 1, 3

A Corporation has issued a total of 155,000 Shares of Stock to its Shareholders (excluding Treasury Shares). You own 36,900 shares. If the company is sold for a price of $600,000, how much will you receive?

142,838.71

Mark purchases 45 shares of stock in Coca Cola for a $40.31 per share on December 1, 2016. On October 31, 2021, he sells all 45 shares for a price of $48.75 per share. On Mark's income tax return, he will report __________. a. $379.80 as capital gains b. $2,193.75 as ordinary income c. $40.31 as capital gains d. $379.80 as ordinary income e. $2,193.75 as capital gains f. $8.44 as capital gains g. $8.44 as ordinary income h. $48.75 as capital gains i. $40.31 as ordinary income j. $1,813.95 as ordinary income k. $1,813.95 as capital gains l. $48.75 as ordinary income

a

The hands-on, day-to-day management of a corporation is handled by the __________. a. Officers b. Managers c. Secretary of State d. Directors e. Contractors f. Shareholders g. Partners h. Members

a

To form an LLC, the __________ must be filed with the Secretary of State. a. Articles of Organization b. Articles of Incorporation c. Stock Certificates d. Bylaws e. Shareholder's Agreement f. Operating Agreement

a

Which law requires a registration statement (also known as a prospectus) to be filed? a. The Securities Act of 1933 b. The Securities Act of 1934 c. Trust Indenture Act of 1939 d. The Securities Exchange Act of 1934 e. Sarbanes-Oxley Act of 2002 f. St. Germain Act of 1982

a

John and Jason form a general partnership. After opening the business, Jason signs a supply agreement on behalf of the partnership with Sam. Later, the partnership breaches the contract. Select all of the following who Sam may sue. a. The partnership b. Sam c. Jason d. John e. None of the above

a, c, d

To form a 501(c)(3) nonprofit corporation, the IRS requires that the corporation exist for one or more exclusively charitable purposes. Select all of the following that are charitable purposes recognized by the IRS. a. Religious b. Reduction of Pollution c. Literary d. Scientific e. Prevention of cruelty to children or animals f. Educational g. Political

a, c, d, e, f

Select all of the following that are abbreviations for legally recognized types of Partnerships a. LP b. LLLLP c. GP d. LLP e. HP f. FP g. LLLP

a, c, d, g

Taxes imposed on the value of goods that are brought in to the United States from other countries are called __________ (Select all of the following that apply) a. Tariffs b. Form 990 c. Customs d. Chattel Paper e. Imports f. Duties g. Bills h. FICA i. Sales

a, c, e, f

The IRS provides formal and informal guidance to taxpayers in which of the following forms? (Select all that apply.) a. Revenue Procedures b. Supreme Court Decisions c. Private Letter Rulings d. Revenue Testing Centers e. Revenue Rulings f. Certified Public Accountants g. Public Letter Rulings h. Internal Revenue Bulletins

a, c, e, h

Amy and Aharon form a general partnership, but they don't enter into a written partnership agreement and they never discuss how the profits will be divided. Amy manages the company and spends an average of six hours every day devoted to company business. Aharon only spends an average of three hours every day devoted to company business - half as much time as Amy. In the first year, the company earns $90,000 of net profits which may be distributed to the partners. Under the law, how should Amy and Aharon split the profits? a. Aharon is entitled to $60,000 and Amy is entitled to $30,000 b. Amy is entitled to $45,000 and Aharon is entitled to $45,000 c. Neither party is entitled to any of the profits because they never agreed as to how the profits will be distributed; they must agree on the distribution of the profits or else the profits will accumulate in the partnership d. Amy is entitled to $90,000 and Aharon is entitled to $0 e. Amy is entitled to $60,000 and Aharon is entitled to $30,000 f. Aharon is entitled to $90,000 and Amy is entitled to $0

b

In a manager-managed LLC, the day-to-day management decisions of the company are made by the __________. a. Partners b. Managers c. Shareholders d. Members e. Owners f. Directors

b

To form a corporation, the Articles of Incorporation must be filed with _________. a. The superior court in the county of the corporation's registered agent b. The secretary of state c. The superior court in the county of any shareholder's residence d. The superior court in the county of the corporation's principal office e. The state board of corporations f. The county records office g. The SEC

b

What is "Corporate Personhood?" a. The legal notion that the rights of natural persons are limited to those of corporations and other legal entites b. The legal notion that a corporations and other legal entites have at least some of the legal rights and responsibilities enjoyed by natural persons c. The legal notion that corporations and other legal entites are legally equvelant to natural persons in all ways d. The legal notion that corporations and other legal entites do not have any of the same rights as natural persons

b

Which of the following are examples of Municipal Corporations? a. Whitfield County b. The City of Dalton c. The Tennessee Valley Authority (TVA) d. A close corporation e. Hamilton Health Care System, Inc.

b, c

Select all of the following that are duties of partners in a general partnership. a. Duty of Obligation b. Duty of Good Faith c. Duty of Loyalty d. Duty to Account e. Duty Superior f. Duty to Inform g. Duty of Care

b, c, d, f, g

The primary causes of the Stock Market Crash of 1929 included __________. a. Abusive practices by the Secretary of State b. Abusive practices by banks c. Market speculation d. Interference with trade by the president e. Incorrectly filed corporations f. Trading on margin

b, c, f

Choose all of the following types of businesses that enjoy limited liability. a. Torts b. Limited Liability Companies c. Sole Proprietorships d. General Partnerships e. Corporations

b, e

Select all of the following that are requirements to form a General Partnership. a. Registering a Trade Name b. Seeking to make a profit c. Filing documents with the Secretary of State d. Equal ownership interests in the partnership e. Association of 2 or more persons f. A written partnership agreement

b, e

Which of the following are exempt from the filing requirements under the Securities Acts of 1933 and 1934? a. Short-term notes (less than 270 days) b. Small offerings made to accredited investors c. Publicly traded offerings d. Bank securities e. Securities from nonprofit entities f. Private offerings g. International offerings h. Securities that do not result in a gain for income tax purposes

b, e, f, h

"FICA" stands for __________. a. Free Income Contributions Act b. Freeport Independent Contributions Act c. Federal Insurance Contributions Act d. Federal Income Contributions Act e. Free Insurance Combination Act f. Federal Insurance Combination Act

c

An Individual's Income Tax return is reported on which IRS Form? a. Form 706 b. Form 1120 c. Form 1040 d. Form 990 e. Form 709

c

What is "treasury stock?" a. Stock with a par value greater than zero b. Stock that gives voting rights c. Outstanding stock that is held (or has been repurchased) by issuing company and not by a shareholder d. Stock that pays dividends e. Stock held in the bank f. Outstanding stock that can be sold for a value to any party (unless restricted by a shareholder's Agreement)

c

Owning stock in a corporation typically entitles the shareholder to rights, which may include (assuming no other limitations under the bylaws): a. The right to sign checks on behalf of the corporation b. The right to make day-to-day business decisions c. The right to receive dividends d. The right to elect board members e. The right to authorize dividends f. The right to inspect relevant corporate records g. The right to elect officers

c, d, f

A "close corporation" typically has a small number of owners who usually know each other or have a relationship of some kind True False

t