REG mod 25g

Question 1

Describe the length of the partnership’s holding period for assets that were contributed.

Answer 1

The holding period is the length of time the partnership owned the asset plus the length of time the asset was held by the contributor of the asset.

Question 2

Members of an LLC may participate in the management of the company. However, this results in the loss of limited liability for any member who participates in management. True / False

Answer 2

False. Members may manage the LLC and retain limited liability.

Question 3

Describe the voting rights of preferred stockholders.

Answer 3

In general, preferred stockholders do not have the right to vote.

Question 4

Describe a merger.

Answer 4

One corporation absorbs another corporation. For example, Company A + Company B = Company A

Question 5

What is the maximum allowable number of shareholders that an S Corporation may have?

Answer 5

100. Note: a husband and wife count as just one shareholder

Question 6

In order to form a corporation the state must receive the Articles of Incorporation. What information is typically contained in the Articles of Incorporation?

Answer 6

Name and address of the corporation, name and address of the corporation’s agents and incorporators, the purpose and powers of the corporation, and the number of shares of authorized stock.

Question 7

Describe the liability of general partners in a partnership.

Answer 7

General partners have Joint & Several Liability. The partners, as a group are liable, and each partner is individually liable for the debts of the entity.

Question 8

What document must be filed with the state to dissolve a general partnership?

Answer 8

Nothing needs to be filed with the state to dissolve a general partnership. Remember, nothing must be filed with the state in order to form a general partnership.

Question 9

Describe at-risk basis.

Answer 9

At-risk basis is the partner’s basis in the property plus liabilities for which the partner is personally liable.

Question 10

Describe some of the common characteristics of a complex trust.

Answer 10

The distribution of income is optional. The accumulation of income permitted. Charitable contributions may be made. Distribution of the corpus is permitted. A personal exemption is allowed.

Question 11

What must be filed with the secretary of state in order to create a Limited Partnership?

Answer 11

The Certificate of Limited Partnership

Question 12

What are the two types of distributions that may be taken by a partner?

Answer 12

Non-liquidating and Liquidating