Exam 2 CHP 37,38,39 Flashcards
An association of two or more persons to carry on as co-owners of a business for profit.
Partnership
A business entity that has no tax liability.
Pass-through entity
True or false.
Joint ownership of property does in and of itself create a partnership.
False
What document is a partnership responsible for filing with the IRS?
Information Return
When a third person has reasonably and detrimentally relied on the representation that a nonpartner was part of a partnership.
Partnership by Estoppel
What are the fiduciary duties that a partner owes to the partnership?
Duty of care and loyalty
What are the 5 rights of partners?
- Management rights
- Interest in partnership
- Compensation
- Inspection and account of the books
- Property rights
A third party has the option of suing all of the partners together or one or more of the partners separately.
Joint and Several Liability
When a partner ceases to be associated in the carrying on of partnership business.
Dissociation
After a partner’s dissociation, his or her interest in the partnership must be purchased according to the rules in UPA 701.
Buyout
The process of collecting, liquidating, and distributing the partnership assets.
Winding up
True or False.
Creditors receive leftovers of the partnership before partners do after a dissolution.
True.
A hybrid form of business designed mostly for professionals who normally do business as partners in a partnership. Limits liability.
Limited Liability Partnership (LLP)
True or False
The supervising partner who oversees another partner is not liable for the partner’s negligent acts in the LLC.
False.
The supervising partner IS liable for the partner they oversee.
A partnership that limits the liability of some of its owners.
Limited Partnership (LP)
True or False.
Both general partners and limited partners are fully liable for the negligence of the partnership.
False.
Only the general partner has unlimited liability, where as the limited partner has limited liability based on their financial contribution(unless the limited partner is involved with management of the company, then they may be seen as a general partner involving litigation)
What is the difference between a Limited Partnership (LP) and a Limited Liability Limited Partnership (LLLP)?
A LP puts more liability on the general partner, whereas a LLLP puts liability on all partners based on their financial contribution (goes for both general and limited partners).
Owners of a LLC are called…
Members
A hybrid that combines the limited liability aspects of a corporation and the tax advantages of a partnership.
Limited Liability Company (LLC)
To form an LLC, _____ must be filled with a central state agency - secretary of state office.
Articles of Organization
Preformation contracts must be adopted by a corporation after they are formed. The process is called…..
Novation
What are the 6 provisions of an LLC’s operating agreement?
- Who’s Management
- Who gets Profits
- How Membership Interests is transferred
- Dissociation and Dissolution
- Member Meetings - happen or not
- Voting Rights
When two or more persons or business entities combine their efforts or their property for a single transaction or project or a related series of transactions or projects.
Joint Venture
Several individuals or firms join together to finance a particular project. An investment group.
Syndicate
A true hybrid of a partnership and a corporation. Ownership is represented by transferable shares of stock and it is managed by directors and officers of the company or association, and it can have perpetual existence.
Joint Stock Company
An association that is organized to provide an economic service to its members(or shareholders). May be incorporated or not.
Cooperative
Created by a written trust agreement that sets forth the interests of the beneficiaries and the obligations and powers of the trustees.
Business Trust
A legal entity created and recognized by state law.
Corporation
A company whose business activity consists of holding shares in another company.
Holding Company
A corporation classification that a corporation’s home state uses.
Domestic Corporation
A corporation classification that another state uses for a corporation.
Foreign Corporation
A corporation classification used for corporations created out of country.
Alien Corporation
A corporation who shares are held by relatively few persons, often members of a family.
Close Corporation
How are shares dealt with in a close corporation?
They are traded and repurchased through the corporation and its shareholders.
A corporation that can avoid the imposition of income taxes at the corporate level while retaining many of the advantages of a corporation. Must fill requirements.
S corporation
A corporation designed for business that want to consider society and environment in addition to profit.
Benefit Corporation
A party that serves the corporation that handles legal documentation and turning in of forming articles. Must be identified.
Registered Agent
The primary document needed to incorporate a business.
Articles of Incorporation
When a corporation has substantially complied with all condition precedent to incorporation. (Rightful and lawful)
De Jure Corporation
When a corporation has a substantial defect in formation, or fails to hold an organization meeting to adopt bylaws.
De Facto Corporation
