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Business Law > Exam 4 > Flashcards

Exam 4 Flashcards

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1
Q

How should we think of property?

A

As a bundle of rights recognized and enforced by society.

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2
Q

What is real property?

A

The earth, land, and anything attached to it.

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3
Q

Tangible property

A

Physical property

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4
Q

Intangible property

A

An idea or something abstract such as an idea or computer software

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5
Q

When would a person not own the property they make or produce?

A

Through a contract. Ex. an Employment Arrangement

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6
Q

Adverse Possession

A

A way to own property just by possessing it.

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7
Q

Adverse Possession requirements

A
  1. Notorious
  2. Continuous
  3. Hostile to the owner
  4. For statutory period of time (20 years in GA w/o Color of Title)
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8
Q

What are the requirements for a Gift?

A
  1. Intent
  2. Delivery
  3. Acceptance
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9
Q

What does Inter Vivos mean

A

Between the living

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10
Q

What is a Testamentary Gift?

A

A gift made at death

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11
Q

What is a Causa Mortis gift?

A

A gift in anticipation of death. Surviving automatically revokes the gift.

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12
Q

Accession

A

Increasing the value of property owned

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13
Q

Bailment

A

Delivery of property from one person to another for a temporary amount of time with the intent to have the property returned.

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14
Q

What are the Bailee duties in a Bailment?

A

Duty of care and duty to return

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15
Q

What’s the difference between a Bailment and a Lease?

A

In a Lease, the owner gives a right in property in exchange for some consideration (ex. the right of possession for rent)

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16
Q

Fixtures

A

Become a part of real property. Main exception is the “Trade Fixture Exception”

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17
Q

Fee Simple

A

Recognized as maximum ownership rights

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18
Q

What is a Life Estate?

A

Ownership of property for the life duration. After death, the ownership reverts to the remainder person.

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19
Q

Can the life in a Life Estate increase or change?

A

No, it is tied directly to the owner

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20
Q

Can the person named the Remainder in a Life Estate convey their remainder?

A

Yes

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21
Q

Easement

A

The right to use (Affirmative) or refrain from using property (Negative).

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22
Q

What are the 2 types of Joint Ownership?

A
  1. Joint Tenants in Common - each owner has an undivided interest and can transfer their right with a will.
  2. Joint Tenants with Right of Survivorship - When one dies, the right goes straight to survivor.
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23
Q

Where does the idea of ownership come from in the U.S.?

A

The right to conquest

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24
Q

How was property distributed when Natives were forced out of NW GA?

A

Lottery system

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25
Q

What are 2 types of Conveyance Deeds?

A
  1. Warranty - “I claim I own it”
  2. Quick Claim - “I don’t know if I own it”
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26
Q

Abstract of Title

A

Opinion of ownership rights generated by investigating deed records.

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27
Q

Leasehold

A

Right to possession of the property between a Landlord and a Tenant

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28
Q

Testator

A

Person who makes a will

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29
Q

Bequest

A

Will made at death

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30
Q

Ademption

A

Testator no longer owns property granted in the will (Ex. selling a granted vehicle)

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31
Q

Who are a person’s issue?

A

Their children

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32
Q

What does Per Capita and Per Stirpes mean?

A
  1. Per Capita - divided equally among group.
  2. Per Stirpes - if a member of group deceased, their share is distributed to their children.
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33
Q

Codocil

A

Amendment to will

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34
Q

Intestate

A

Death without a will

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35
Q

What is the age requirement in GA to make a will?

A

14 years old

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36
Q

What are the requirements of Testamentary Capacity?

A
  1. Of age
  2. Know the object of one’s bounty
  3. Know the characteristics of one’s property
  4. Express wishes regarding disposition of property
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37
Q

What are the formal requirements of a will?

A
  1. In writing
  2. Signed by Testator, or at their direction
  3. Signed in the presence of 2 uninterested witnesses
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38
Q

What is Years Support?

A

A GA specific law that prevents disinheriting the spouse or minor children

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39
Q

Advance Directive?

A

Appoints a health care agent and defines treatment preferences in the event of being incapacitated.

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40
Q

What is a Power of Attorney?

A

Document that appoints an agent to handle financial and legal decisions.

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41
Q

Who are heirs?

A

People who would inherit the estate if you had no will

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42
Q

Who are beneficiaries?

A

People who inherit the estate. A will can change beneficiaries

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43
Q

How are heirs determined?

A

By State statute

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44
Q

What is Probate?

A

Process to prove a will is the actual last will of the Testator and is valid. Involves adminstration

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45
Q

What is the administration of the estate?

A

Process of marshalling the assets, paying debts, and asset distribution

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46
Q

Who is the personal representative?

A

Refers to the executor (with will) or administrator (no will).

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47
Q

What are the papers issued by the Probate Court?

A
  1. Letters Testamentary (with Will)
  2. Letters of Administration (No Will)
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48
Q

Who are the parties to a Trust?

A
  1. Grantor (Trustor/Settlor)
  2. Beneficiaries
  3. Trustees
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49
Q

What is the property of a Trust called?

A

Corpus

50
Q

What is an Inter Vivos Trust? A Testamentary Trust?

A
  1. Created while Grantor is alive
  2. Created at the moment of death (ex. in will)
51
Q

What is a revocable Trust?

A

Can be revoked or changed by the Grantor

52
Q

What is an irrevocable Trust?

A

It cannot be changed once created

53
Q

What is a Spendthrift provision?

A

Prevents creditors from anticipating distribution to beneficiaries. Prevents creditors from forcing Trustee to make a distribution because the Beneficiary owes money to someone.

54
Q

Who has a broad authority to tax under the Constitution?

A

Congress.

55
Q

Ad Valorem taxes

A

According to value. Applies to real property.

56
Q

Milage Rate

A

Equal to 1/10th of 1%. (Ex. 15.48 is the same as 1.548%)

57
Q

At what level of government are Real Property taxes collected?

A

State and Local

58
Q

What are other property taxes?

A
  1. Vehicles
  2. Equipment
  3. Inventory
59
Q

What is FICA?

A

Federal Insurance Contributions Act

60
Q

Who pays the payroll taxes?

A

The employer and the employee

61
Q

What are the two types of payroll taxes?

A
  1. Medicare
  2. Social Security
62
Q

At what levels of government are Income tax collected?

A

Federal and State

63
Q

At what level are Sales Tax collected?

A

State and Local

64
Q

At what level(s) in the supply chain are Sales Taxes collected?

A

Only collected once at the Retail level (The last time the item is sold)

65
Q

What are other names for Duties?

A

Tariffs, Customs, or Imports

66
Q

How is the Tariff tax calculated?

A

Tax Rate x Value and depends on 2 factors:

  1. Country of origin
  2. Class of good
67
Q

What are the three transfer taxes?

A
  1. Estate tax
  2. Gift tax
  3. Generation-skipping tax
68
Q

What is the Annual Exclusion?

A

A small gift under this annual number, you would not have to report to the IRS.

69
Q

What is the Lifetime Exclusion?

A

The threshold before you would have to pay taxes on a gift/transfer. Applies upon death.

70
Q

How is the value of a gift calculated?

A

Fair Market Value

71
Q

What are some examples of licenses and Occupational Taxes?

A

Fees paid to the government.
1. Medical license
2. Parking fees
3. Toll fees
4. Fireworks permit

72
Q

How are income taxes paid?

A

Paid through estimates throughout the year and on April 15, reconcile estimates.

73
Q

When are final taxes due each year?

A

April 15

74
Q

What are Capital Gains?

A

Monetary gains from the purchase and later sale of property.

Gain = Amount Realized - Basis

75
Q

What is a tax “basis”?

A

Basis is what you paid for the property plus improvements

76
Q

What is included from the term “Income from whatever source derived”? Where is it located in the 1040?

A

Any income. It is not written on the 1040 and not reported to the IRS

77
Q

What are exclusions?

A

Things that are subtracted from Income from whatever source derived. Figures out the Gross Income.

78
Q

Examples of exclusions in reporting Income Tax?

A
  1. Life insurance proceeds
  2. Gifts
  3. Inheritances
  4. Bond interests
  5. Injury comp. lawsuits
  6. Worker’s comp.
  7. Scholarships
  8. Employment benefits
79
Q

What are Adjustments?

A

“Above the line deductions.” Reduce the tax shown on income and not subject to standard deduction.

80
Q

What are some important Adjustments?

A

Retirement contributions
Health savings accounts contr.
Moving expenses
Student loan interest
Tuition and Fees
Business Expenses

81
Q

What are Deductions?

A

“Below the line deductions.” Taken in alternative to the standard deduction. Take either the Standard Deduction or Below the Line deductions, whichever is greater.

82
Q

What are important deductions?

A

Out-of-pocket medical expenses (>7.5% AGI)
SALT deduction (State and Local Taxes)
Foreign taxes
Mortgage interest
Charitable contributions
Casualty and Theft losses

83
Q

What is a Marginal tax rate?

A

The top tax bracket you are in

84
Q

What is an Effective tax rate?

A

Take total tax paid and divide into taxable income.

85
Q

What are Credits?

A

Come at the end and are dollar for dollar reductions in tax.

86
Q

Under what UCC article is commercial paper covered?

A

Article 3

87
Q

What types of negotiable instruments covered?

A
  1. Checks (Drafts)
  2. Notes
  3. CDs
88
Q

What is a Draft?

A

An order to pay (ex. Check). Also called order paper.

89
Q

Which of these are orders and which are promises?

A
  1. Checks (Drafts) are orders
  2. Notes and CDs are promises
90
Q

Who are the parties to a Note?

A
  1. Maker
  2. Promisee
91
Q

What is a Balloon payment?

A

At the end of a term of a promissory note, the full balance becomes due.

92
Q

What is meant by Negotiability?

A

Idea that commercial paper is a near-substitute for money that is easily transferrable.

93
Q

What does it mean to negotiate a check?

A

To legally transfer from one holder to another or cash the check with a bank.

94
Q

What are the requirements for a check to be negotiable?

A
  1. In writing
  2. Signed by Drawer
  3. Unconditional promise to pay certain sum
  4. Payable on demand or at certain time to person.
  5. No other conditions for payment
95
Q

Who is a Holder of a Draft?

A

Person who possesses the draft and right to negotiate the draft further

96
Q

Order paper vs Bearer paper?

A
  1. Order paper - payable to the order of a specific person
  2. Bearer paper - anyone who has the paper can negotiate it (cash it).
97
Q

What is Indorsement?

A

Signing the check.

98
Q

What is a Special Indorsement?

A

Names a new holder, keeping the status of Order Paper

99
Q

What is a Holder in Due Course?

A

Holder who accepts a negotiable instrument in good faith, without reason to doubt its legitimacy, in exchange for some value.

100
Q

What is a Blank Indorsement?

A

Signing a check without naming a specific person, creating Bearer Paper.

101
Q

What is the benefit of being a Holder in Due Course?

A

You can treat a check as cash. Right to negotiate the check.

102
Q

What is the difference between secured and unsecured credit?

A

Secured credit has collateral

103
Q

What problem exists for unsecured creditors?

A

Risk. Judicial Action is the sole remedy.

104
Q

Higher or lower interest rates for unsecured creditors? Higher or lower loan amounts?

A

Higher interest rates and lower loan amounts

105
Q

What is a Security Interest in property?

A

A right in property to obtain the property if the underlying owner fails to pay obligation.

Mortgage
Deed to Secure Debt (GA)

106
Q

How does a lender take collateral for a Secured Loan?

A

Foreclosure

107
Q

Under what article of the UCC are secured transactions for personal property covered?

A

Article 9

108
Q

What does it mean to perfect a Security Interest?

A

Makes security interest publicly available and world has notice of security interest.

109
Q

How are mortgages perfected?

A

File Deed of Trust/Deed of Secure Debt in GA

110
Q

What is the process of Foreclosing on real property in GA?

A

Give Debtor notice
Accelerate the Loan
Publish/Advertise Foreclosure sale for 4 weeks
Hold an Auction to sell property

111
Q

How are Security Interests perfected under the UCC?

A

Filing a UCC Financing Statement (UCC-1)

112
Q

How long do UCC Security Interests last and how are they renewed?

A

Valid for 5 years and renewed by filing Continuation Statement

113
Q

How does Debt priority work?

A

If an inferior lien holder forecloses, they have to take the property subject to superior liens.

114
Q

What are the goals and purposes of bankruptcy laws?

A
  1. Protect creditors from unfair actions of the debtor
  2. Protect honest Debtors from overbearing Creditors.
  3. Give Debtors more time to work through Debt
  4. Give Debtors a fresh start
115
Q

Who are the parties in a Bankruptcy?

A
  1. Creditor
  2. Debtors
  3. Trustee
116
Q

What are the common types of bankruptcy proceedings?

A

Liquidations or Reorganizatons

117
Q

Under which Chapter of the Bankruptcy Code do most consumer liquidations fall?

A

Chapter 7

118
Q

How does a bankruptcy commence?

A

Filing of a petition

119
Q

What is the Automatic Stay and when does it occur?

A

As soon as a petition filed, this is enforced. No creditors or debtors can take further actions (ex. perfecting liens, lawsuits, collecting debt, paying debt)

120
Q

What is a Meeting of the Creditors?

A

Key steps to Bankruptcy. Trustee sits down with Debtor and creates plan to administer Bankruptcy Estate. Creditors have opportunity to cross examine the Debtor.

121
Q

What is a Proof of Claim and who must file one?

A

Required for Unsecured Creditors to provide in Bankruptcy.

122
Q

What is a preference? What time periods apply to preferences? What exception applies?

A

A preferential payment, signaling preference for one Creditor over another.

Time period:

  1. 90 days before filing
  2. Insiders = 1 year

Exceptions:

  1. Transactions in the ordinary course of business (ex. paying Bills)

Business Law (4 decks)

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