Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

BL 3305 > EXAM 3 > Flashcards

EXAM 3 Flashcards

1
Q

Who creates an Entity?

A

State Statutes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Entities have _______ and ______ like an individual

A

rights and duties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Entities and owners are __________

A

SEPERATE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Biggest advantage for Entities:

A

LPL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Limited Personal Liability

A

Entity owner is NOT liable for the debts of the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Unlimited Personal Liability

A

Owners ARE liable for the debts of the entity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Sole Proprietorship

A

One person owns controls…NOT AN ENTITY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

General Partnership

A

2+, co-owners, for profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Joint Venture

A

2+, for profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Limited Partnership

A

at least one general partner and at least one limited partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

LLC

A

members participate in management of the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Limited Liability Partnership

A

a limited partnership in which the liability of the general partners has been limited to some or all of the partnerships obligations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Can lose capital contribution in:

A

LPL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Risk Type for Sole Proprietorship:

A

Unlimited

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Risk Type for General Partnership/Joint Venture:

A

Unlimited AND Lose CC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Risk Type for LLC and Corporations:

A

Limited AND Lose CC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Risk Type for Limited Partnership (GENERAL PARTNER):

A

Unlimited AND Lose CC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Risk Type for Limited Partnership (LIMITED PARTNER):

A

Limited AND Lose CC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Loopholes to LPL:

A

Guarantees liability for entity OR is wrongful actor that gives rise to liability

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

3 Ways to create an Entity:

A

(FAL) File, Agreement, Law

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Who must file a document w State Secretary to form Entity?

A

Corps, LLCs, LPs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Who must enter into agreement to form entity?

A

GP/JV (sometimes LLCs/LPs but not req. for them)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

This entity is the ONLY ONE that forms by law:

A

GP/JV

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

3 Requirements for entity to be created by law:

A

2+, for profit, profit SHARING

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

________________ is DIFFERENT than ____________

A

Gross Profit, Revenues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

Profit sharing key notes:

A

Doesn’t have to be paid out or equal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What entity is for a specific period of time

A

Joint Venture

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

LLCs are taxed on a:

A

Personal level ONLY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

Flow Through for Tax Purposes:

A

Entity is not taxed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Which entity is subject to double taxation

A

C corporation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

Which entities have Flow Through

A

LLCs, LPs, S Corporations, GP/JV

32
Q

Owners for LLCs are called

A

Members

33
Q

Member Managed

A

Members manage the LLC

34
Q

Manager Managed

A

Members elect manager, members only vote on big stuff

35
Q

Operating Agreement includes:

A

Rules, rights/duties of members/managers

36
Q

7 Steps to forming an LLC:

A

(CCROPS)
1. Choose name
2. Certificate of Formation
3. Registered Agent
4. Organizer signs document
5. Pay filing fee
6. Sign Operating Agreement

37
Q

Filing fee amount for LLCs

A

$300

38
Q

How can Entities isolate risk?

A

Forming subsidiaries

39
Q

Advantages to corporations:

A

(CLEP) Centralized Management, Limited, Easy ownership transfer, Perpetual Existence

40
Q

Who elects BoD in corp?

A

Shareholders

41
Q

When/How are BoD elected?

A

Annually, vote thru proxy

42
Q

Can shareholders act on behalf of entity?

A

NO

43
Q

2 big voting topics:

A

Mergers, Loan Facilities

44
Q

3 powers of BoD:

A

Elect officers, amend bylaws, Approve BIG items

45
Q

Can the director (or board) act on behalf of entity?

A

NO, they just approve

46
Q

Officers get to:

A

Make decisions and act on behalf of the entity WITHIN THEIR AUTHORITY

47
Q

Can employees act on behalf of entity?

A

Sometimes, can act on behalf of explicit direction from officers

48
Q

Entities are domestic to where they:

A

Filed their certificate of formation

49
Q

If an entity wants to “do business” in a foreign territory, they must:

A

Register for tax/RA purposes

50
Q

“Not Doing Business”

A

Defending a lawsuit, Having bank account, Owning real estate, Collecting a debt (outside of lawsuit)

51
Q

When does the court expand NDB to DB?

A

Operating real estate, Performing services, Office located within state

52
Q

Penalties to not registering to “do business”

A

Fines, cannot sue as plaintiff

53
Q

Subchapter S

A

<100 shareholders, no foreign or entity shareholders, one class of stock, only USA

54
Q

Want a _______ issue of stock

A

HIGH

55
Q

Want a ________ par value on stock

A

LOW

56
Q

Why is Delaware the most common state for entity formation?

A

Revised often, Case Law (predictable, consistent)

57
Q

Shareholder Agreements in Publicly Traded Companies

A

Typically don’t exist

58
Q

Shareholder Agreements for Privately Traded Companies

A

VERY IMPORTANT

59
Q

What does Entity Owners Agreement include?

A

(RFAW)
1. Restrictions on ownership transfer
2. Future Capital Contribution Requirements
3. Action Approval
4. Withdrawal?

60
Q

Default for transfers:

A

Consent for new owner needed

61
Q

First Right of Refusal:

A

First offer to owners, then sell to outside party if time expires

62
Q

Drag-Along:

A

May force owner to sell

63
Q

Tag-Along:

A

May force other owners who are selling to include you

64
Q

Are Capital Contributions Required?

A

No

65
Q

What happens if an owner does not contribute capital?

A

Dilution

66
Q

Supermajority percentage:

A

75-90%

67
Q

Majority percentage:

A

> 50%

68
Q

Withdrawal

A

Can shut entity down, typically prohibited unless payed off over time

69
Q

ACTIVE requires that an entity abides by:

A

Reporting and tax requirements in each state

70
Q

If entity is DISSOLVED/INACTIVE, owner can become __________________

A

Personally Liable

71
Q

Piercing the Veil is when:

A

Owners are held personally liable for the debts of the entity

72
Q

PtV is __________________

A

Common Law

73
Q

Court can accept PtV if:

A

Entity is Owner’s Alter Ego OR Entity is sham to perpetuate fraud

74
Q

Entity is considered an Alter Ego when:

A

Owner uses assets as their own, Comingles entity and owner assets, Lack of corp. formalities

75
Q

Owners can be held liable when:

A

Involuntarily terminated/dissolved, PtV, Improper Distributions

BL 3305 (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions