REG 5

Question 1

Order of distribution on dissolution of a general partnership

Answer 1

General Partner Loans

PArtners’ Capital accounts

General partners’ profits

Question 2

Agent Duties to the Principal

Answer 2

Duty of loyalty

Duty of obedience

Duty of reasonable care

Duty of account

Question 3

Principals responsibilities to the agent

Answer 3

Duty of Compensation/Reimbursement
Duty to indemnify the agent - For harm or loss
Duty to deal fairly and in good faith with the agent
Duty to act in accordance with the express and implied terms of a contract

Question 4

Methods of authority:
Ratification

Answer 4

When Agent goes into an agreement with no actual authority and principal in unaware

Principal approves the work that is done, don’t have to contact third party

Question 5

Reasons for automatic termination of agency relationship

Answer 5

Death (of eitheir principal or agent)
Incapacity (principal only)
Bankruptcy (Principal only)
Licensing (Agent only)
Destruction of Subject Matter
Illegality

Question 6

Requirements to form an agency contract

Answer 6

Only Principals Competence, agents compentency does not matter

only written agreement needed when land is sold

Question 7

Specific Performance

Answer 7

An order by a court to complete a previously established transaction in a contract

Question 8

Statute of Frauds - Contracts that require writing

Answer 8

Contracts involving the sale of land
Contracts that cannot be performed within one year
Surety Agreements
Marriage contracts
Contracts involving the sale of goods over $500
Executor Contracts

Question 9

Contracts the would be VOID - Assume everything else is voidable

Answer 9

Fraud in the execution
Physical Duress
Illegality
Adjudicated incompetency
Mutual Mistake

Question 10

Negligence

Answer 10

Failure to perform practice in a way that a reasonable or prudent CPA would.

Question 11

3 categories of excuse for Excusing performance of a contract

Answer 11

Impossibility
Impracticability
Frustration of purpose

Question 12

Anticipatory repudation

Answer 12

breach of contract
Breeching party has not breached contract but Anticipate that they will

Question 13

LLC Operating agreement - Designed to resolve issues

Answer 13

When to make distributions
Voting Rights
Rights of refusal ect

Question 14

Accord and satisfaction

Answer 14

agreement btw two contracting parties in which the performance will replace an original performance agreed upon.

Question 15

UCC Sales Article

Answer 15

Sale of goods - All Tangible Personal Property

(Boats, cars ect)

Question 16

Common Laws Contracts

Answer 16

Contracts for real property land)
Contracts for intangible property (Stock)
Contracts for fixtures (buildings attached to land)

Question 17

DO you use FMV or Adjusted basis for liquidating distributions out of a corp?

Answer 17

FMV - which is always a taxable event

Question 18

Do S-Corps recognize a loss on distributions for a nonliquidating operating distribution?

Answer 18

No

Question 19

How do S-Corps recognize gain on appreciated property when distributed?

Answer 19

Recognize Gain on Appreciated Property as though property was sold just prior to distribution

Question 20

How are net section 1231 losses deducted?

Answer 20

Allowed to be deducted as as an ordinary loss

Question 21

C-Corp Formation:
Section 351

Answer 21

Shareholders must have 80% or more ownership not including services rendered by individual

Does not have to recognize gain