Ch. 36 - Legal Forms and Structures

Question 1

Sole Proprietorships

Answer 1

• no distinction b/w individual and business

- full liability

Question 2

Canadian Controlled Private Corporation - Criteria

Answer 2

1. Is a resident of Canada
2. is not controlled (directly or indirectly) by one or more non-resident corporation
3. Is not controlled (directly or indirectly) by a public corporation
4. Has no class of shares listed on a stock exchange

Question 3

Partnerships

- how taxed

Answer 3

• net income is determined at the partnership level and allocated to partners (the partnership is not taxed, the partners are)

Question 4

Joint Ventures

- revenues and expenses

Answer 4

• revenues are allocated based on agreement, and expenses are individually deducted to determine income

Question 5

Characteristics in distinguishing partnerships and JVs

Answer 5

1. skills or resources contributed
2. Interest in property owned by the business
3. Mgmt decision-making
4. Sharing of profits and losses
5. Ongoing business or specific purpose