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