Business LAW Flashcards
Gross Negligence
CPA recklessly departs from the standards of due care.
Sometimes called Constructive Fraud
Circular 230 requirements for
WRITTEN ADVICE
Practitioner must use reasonable efforts to solicit the necessary information to identify and ascertain the facts relevant to written advice
PRIVITY DEFENSE
Defense to negligence actions by 3rd parties
Reasonable care to clients, to any person or limited foreseeable class of persons whom the CPA knows will be relying on the CPA’s work
Covered Opinion
Any written or electronic advice concerning transactions specified by the IRS as LISTED transactions
ACTING WITH SCIENTER
An intent to deceive
LIMITED PARTNERSHIP
AT LEAST
1 General Partner
1 Limited Partner (cannot control business)
LIMITED LIABILITY PARTNERSHIP
No personal liability
DO NOT PAY INCOME TAX
PARTNERSHIP
All general partners are personally liable for the obligations of the entity
No requirement to file with the state
Joint ventures are similar to this and are more on a short-term basis
CORPORATIONS
Can sell ownership w/o unanimous consent of other owners
Restricted - restricted shares, voting trusts or voting agreements
LIMITED LIABILITY COMPANY
NOT personally liable
All owners can participate in management
Has an Operating Agreement
Contract Damages
Punitive Damages are not usually in contract actions, they are for intentional misconduct or fraud
Restitution of benefit conferred
Restore the benefit - Give back to the other party the payment that was made
Compensatory Damages
Breach of a personal service contract
Consequential Damages
Available if the damage was reasonably foreseeable
A voluntary petition is not subject to the $18,600 floor
The floor is only applicable to involuntary petitions
Valid Consideration
Will be present if there is a bargained for exchange of something of legal value
If the act promised has been performed then the bargain element fails
Release of a Co-Surety
Is treated the same as release of security
The release discharges the other co-sureties to the extent of the impairment of their right.
Social Security Tax
is A self-employed person’s net profit from self-employment
For employees it is calculated on employee’s gross wages, not taxable wages.
In Chapter 7 of the Bankruptcy Code
- Secured Creditors are paid
- Unsecured Creditors entitles to a priority are paid
- Claims for alimony have the 1st priority among unsecured creditors
Money owed at alimony will NOT be discharged in bankruptcy
For a Security Interest to attach
(i) there must be an agreement of the security interest and creditor taking control of the collateral
(ii) the creditor must give it value
(iii) debtor must have the rights in the collateral in order for the security interest to attach
In an auction without reserve,
the goods must be sold if an offer is made. Of course, if no offer is made within a reasonable time, the goods need not be sold.
Personal Liability for contracts entered into a business
Sole Prop - Liable
Partnership - ALL Liable
Limited Partnership - General Partner is Liable
A gratuitous Surety will be released
When the creditor commits fraud
There is breach or duress
Surety lacks capacity or goes bankrupt or material change
A Compensated Surety would be released only to the extent harmed
All employers who have quarterly payrolls of at least $1,500
or who Employ at least 1 person 1 day a week for 20 weeks in a YEAR must participate in FUTA
In order for a contract to be valid
It must have Consideration
Agreement made up of an offer and an acceptance
