REG mod 25a Flashcards
Absent an agreement, how are profits shared among the members of an LLC?
Profits are shared equally if there is no agreement otherwise
What is a Personal Holding Company?
A corporation that has the following: (a) 5 or less individuals own more than 50% of the value of the outstanding stock AND (b) a minimum of 60% of the corporation’s income is from dividends, interest, rent, royalties, or other passive income.
Which type of partner may use their name in a limited partnership?
General partners may use their name in the partnership’s name, but limited partners are prohibited from doing so. The partnerships name must also indicate the entity is a limited partnership. Note: if a limited partner uses his name in the partnership’s name, he may lose his limited liability.
What is a partnership syndication fee?
Fees related to the sale of partnership interest.
If a partnership plans to buy and sell significant amounts of real estate, is the partnership agreement required to be in writing?
No. The partnership agreement is only required to be in writing if the partnership’s undertaking cannot be completed in one year. This is due to the statute of frauds.
Name the major limitations imposed on an S Corporation.
Only one class of stock is permitted; no more than 100 stockholders are permitted; there can be no foreign ownership.
Is it permissible for an estate to be an owner of an S Corporation?
Yes. Estates, trusts, and individuals are all permitted to be owners of an S Corporation.
Describe the deductibility of partnership syndication fees.
Syndication fees are not deductible.
What is required to be filed in order to form a Limited Liability Partnership?
The Articles of LLP with the Secretary of State.
Who selects the board of directors for a corporation?
The shareholders
The names of all partners must be listed on the Certificate of Limited Partnership. True / False
False. Only the names of the general partners are listed on the Certificate of Limited Partnership.
A partnership will terminate, for tax purposes, when 50% or more of the partnership interests are exchanged within a year. True / False
True. A partnership will also terminate if there is less than 2 partners (per the definition of a partnership).
Describe a consolidation.
Two corporations are combined to create a new corporation. For example, Company A + Company B = Company C
What must be done prior to admitting a new partner into a limited partnership?
All partners must agree. This includes all limited partners.
What is a guaranteed payment to a partner?
Payment to partners that is not contingent upon the income / loss of the partnership.
