Section 2 Biz Structure Flashcards
Liability of directors.
A director is individually liable if the director engages in illegal conduct or conduct that is a breach of fiduciary duty to the corporation: Three instances
Illegal dividend that makes corp. insolvent
Illegally buy shares of hte corp
Pay off shareholders before creditors
A ____ occurs when a subsidiary that is 90% or more controlled by another company(not parent) is merged into the parent company
Do you need shareholder approvals?
short form merger
Nope
What is an appraisal right?
What act was passed for this to happen?
minority shareholder has a right in every case to dissent and be paid the so-called fair value for their shares on the date of the merger or consolidation
(under the Revised Model Business Corporation Act)
The dissolution of a partnership does/does-not discharge the personal liability of partners for unpaid obligations of the partnership.
each partner still has/doesn’t have have the apparent authority to make contracts
Does not
Still has
Under the revised model business corporation act, a corporation may be authorized to ____its officers for liability incurred in a suit of stockholders.
Officers of a corporation can be held liable to the corporation for failure to carry out their duties in a non-negligent fashion. T/F
indemnify
True…but corp will indemnify the officer.
hich of the following may not own shares in an S corporation?
Individuals
Estates
Trusts
Corporations
Who also cannot be a holder?
Corporation
Illegal Aliens & Partnerships
Wind, who has been a partner in the PLW general partnership for four years, decides to withdraw from the partnership despite a written partnership agreement that states, “No partner may withdraw for a period of five years.” Under the Uniform Partnership Act, what is the result of Wind’s withdrawal?
Wind’s withdrawal causes a dissolution of the partnership despite being in violation of the partnership agreement.
Causes of dissolutions of partnerships (3)
Partnership agreement (non-violation) - Agreed upon time limit/completed. Partner quits w/ no duration specs. Mutual agreements. Partnership Agreement (violation) - Partner has the power, but not the right. May be liable for damages
Operation of Law - done w/o agreement of partners. Biz becomes illegal / Bankruptcy / Deaths / Court Decree
OPERATION OF LAW - DISSOLUTION
When would a partner obtain a court decree (5)
Equitable to terminate partnership Serious misconducts of partners Incapacitates of partners Business is impractical Partners continuously breach agreement
To which of the following rights is a stockholder of a public corporation entitled? T/F
The right to have annual dividends declared and paid
The right to vote for the election of officers
The right to a reasonable inspection of corporate records
The right to have the corporation issue a new class of stock
F - Dont need dividends
F - Board elects officers. Stockholders elect BoD
T
F -No rights here
Downs, Frey, and Vick formed the DFV general partnership to act as manufacturers’ representatives. The partners agreed Downs would receive 40% of any partnership profits and Frey and Vick would each receive 30% of such profits. It was also agreed that the partnership would not terminate for five years. After the fourth year, the partners agreed to terminate the partnership. At that time, the partners’ capital accounts were as follows: Downs, $20,000; Frey, $15,000; and Vick, $10,000. There also were undistributed losses of $30,000. If Frey died before the partnership terminated:
Automatic dissolve
Under the typical state partnership laws, death automatically dissolves a partnership. If the partners wanted to continue the partnership after the death of a partner, they can agree to form a new partnership.
Fairwell is executive vice president and treasurer of Wonder Corporation. He was named as a party in a shareholder derivative action in connection with certain activities he engaged in as a corporate officer. In the lawsuit, it was determined that he was liable for negligence in performance of his duties. Fairwell seeks indemnity from the corporation for his liability. The board would like to indemnify him. The articles of incorporation do not contain any provisions regarding indemnification of officers and directors. Indemnification:
may be permitted by court order despite the fact that Fairwell was found to be negligent. (Note: Not guaranteed)
A corporate officer generally may not be indemnified by the corporation if there is misconduct by the officer. This indemnification would have to be permitted by ____
court order.
Piercing the corporate veil means:
Involving personal funds/property etc in with the corporation.
Using the corporation funds/assets for personal use
Under the Revised Model Business Corporation Act, which of the following conditions is necessary for a corporation to achieve a successful voluntary dissolution?
A recommendation of dissolution by the ____and approval by a ____entitled to vote
board of directors
majority of all shareholders
TERMINATION OF A CORPORATION
___ are filed with the secretary of state after a corporation has been dissolved.
requires the corporation to __and liquidate its __.
A corporation that is doing business can be dissolved by a ___of the directors approved by ___vote.
The ___has the power to force a corporation to dissolve involuntarily through administrative or judicial proceedings
Creditors may obtain a judicial dissolution if the corporation is _
Articles of dissolution wind up its business affairs, liquidate assets resolution, shareholder majority secretary of state insolvent.
What 4 reasons can the secretary of state dissolve a corporation?
- Fail to file annual report
- Fail to pay taxes
3 Fail to appoint a registered agent in the state - Obtain article of incorporation by fraud
A limited partnership must have ___general partners and ___limited partners.
A withdrawal of the only ___would cause the partnership to dissolve, while a withdrawal of a ___would not
T/F. A mutual agreement of all partners (versus a majority or two-thirds) may terminate the partnership.
one or more
one or more
general partner
majority of the limited partners
True
Unless prohibited by the organization documents, a stockholder in a publicly held corporation and the owner of a limited partnership interest both have the right to assign their
interest in the biz
What type of business organization may generally be formed without filing an organizational document or certificate with a state government agency or office?
how?
General Partnership
association of two or more persons to carry on as co-owners a business for profit becomes a partnership, whether or not it was the intention
A new partner is not ____for partnership liabilities which existed before he was admitted to the partnership, unless he voluntarily assumed these liabilities upon admission to the firm.
personally liable
New partners are liable for all partnership obligations that arose ___ admission, but only to the extent of their share of the partnerships’ assets.
Is the new partner’s individual assets available to satisfy these claims?
before
Can an insane person be a partner?
Can a minor be a partner?
Insane: Cant e a partner - if a person becomes insane AFTER making the contract, the other partners may dissolve
Minor: Minor can be a partner, but can disaffirm the contract
What is the correct order for the ending of a partnership?
Dissolution, winding up, termination
Dissolution: Partners decide to discontinue
Winding up: Settling partnership affairs
Termination: Winding up period ends
What is the correct order for the ending of a partnership?
Dissolution, winding up, termination
Dissolution: Partners decide to discontinue
Winding up: Settling partnership affairs
Termination: Winding up period ends
Can articles of incorporation be amended by BoD? Can BoD: 1. Repeal bylaw? 2. Declare dividend 3. Fix compensation of director?
No - its amended by shareholders
Yes to all 3
When a partner in a general partnership lacks actual or apparent authority to contract on behalf of the partnership, and the party contracted with is aware of this fact, the partnership will be bound by the contract if the other partners:
ratify the contract.
amend the partnership agreement.
Ratify contract.
Amending partnership agreement would allow partner to ahve actual authority – wouldn’t affect the contract
Downs, Frey, and Vick formed the DFV general partnership to act as manufacturers’ representatives. The partners agreed Downs would receive 40% of any partnership profits, and Frey and Vick would each receive 30% of such profits. It was also agreed that the partnership would not terminate for five years. After the fourth year, the partners agreed to terminate the partnership. At that time, the partners’ capital accounts were as follows: Downs, $20,000; Frey, $15,000; and Vick, $10,000. There also were undistributed losses of $30,000. Which of the following statements about the form of the DFV partnership agreement is correct?
It must be in writing because the partnership was to last for longer than one year.
It must be in writing because partnership profits would not be equally divided.
It must be in writing because the partnership was to last for longer than one year.
The planned termination of a partnership is unusual and would necessitate a partnership agreement. For the agreement to be enforceable, a written agreement is required under the statute of frauds.
As long as there is no dispute between the partners, it is not necessary to have an agreement in writing because partnership profits would not be equally divided, in an oral arrangement because the partners had explicitly agreed to do business together,
A limited partner, in order to maintain limited liability, can have/cant have management rights
Cant have
When two corporations merge, the merger plan must be approved by the ___ of both corporations, and also by the ___of both corporations. A unanimous vote is/isnt required.
Assuming that the approval of the shareholders is sought at a special meeting, the shareholders must be given due __ of the meeting, plus a ___ of the merger plan.
shareholders, boards of directors, isn’t required
notice, copy or summary
Case Corp. is incorporated in state A. Under the Revised Model Business Corporation Act, which of the following activities engaged in by Case requires that Case obtain a certificate of authority to do business in state B?
Hiring employees who are residents of state B
Maintaining an office in state B to conduct intrastate business
Maintaining an office in state B to conduct intrastate business
A ____is obtained primarily to avoid losing the right to use state B’s courts and to keep the corporate shield intact.
A foreign corporation engaged wholly in interstate commerce doesn’t need a .
Only the state of incorporation can regulate the ___of a corporation.
certificate of authority
certificate of authority
internal affairs
A corporation is permitted to enter into a contract for services or goods with a board member… T/F. What type of transaction is this called?
to eliminate ____, the director must disclose his or her interest in the contract to the board and refrain from voting.
T. Related party transaction
conflict of interest
What does the biz. judgment rule do? When does this rule apply (3)
Protect directors from shareholder lawsuits from a lack of due care.
- When board makes informed decision
- No conflict of interest
- Rational basis for board’s decision
Partners may/may-not sell or assign rights to partnership property
a partner may sell, assign, or pledge the individual partnership ___or “partnership interest,” UNLESS ___
A partner may assign or transfer all or part of his/her interest in the partnership to someone else. T/F
May NOT
distribution, unless the partnership agreement says they cant
True - Note: This won’t dissolve partnership
For a partner to transfer his interest in the partnership
Do they need approval from other partners?
Does the assignee automatically become a partner?
If the assignee accepts, what do other partners do?
What is the assignees share?
No - Note: Dont need approval for this, but see #3
No - they have to accept
Other partners agree for assignee to become partner
Assignee’s share is the partner’s share that transferred.
Cobb, Inc., a partner in TLC Partnership, assigns its partnership interest to Bean, who is not made a partner. After the assignment, Bean asserts the rights to:
participate in the management of TLC.
Cobb’s share of TLC’s partnership profits.
Only Cobb’s share – this is b/c they weren’t made a partner.
Carr Corp. declared a 7% stock dividend on its common stock. The dividend:
must be registered with the SEC pursuant to the Securities Act of 1933.
is includable in the gross income of the recipient taxpayers in the year of receipt.
has no effect on Carr’s earnings and profits for federal income tax purposes.
requires a vote of Carr’s stockholders.
No effect on carr’s earnings and profits for Fed income tax purpose
Can dividends be paid in property/shares?
Cash and property dividends are paid out of ___
Dividends are ___ when received
Yes
retained earnings
taxable
The articles of incorporation include the following: (7)
Name of corp Period of time the corp is in existence Purpose Share structure, # of authorized shares Address Structure of BoD - names & addresses Name and address of each incorporator
Under the Revised Model Business Corporation Act, which of the following dividends is not defined as a distribution?
Cash dividends Property dividends Liquidating dividends Stock dividends Payments to shareholders to purchase own shares Promissory notes
Stock Dividend
A liquidating distribution is a return of capital received because of a partial or complete liquidation (going out of business) of a corporation.
Where are liquidating distributions made from? (what account)
made from any account other than Retained Earnings
Which of the following parties is liable to repay an illegal distribution to a corporation?
A director not breaching his or her duty in approving the distribution and the corporation is solvent.
A director not breaching his or her duty in approving the distribution and the corporation is insolvent.
A shareholder not knowing of the illegality of the distribution and the corporation is solvent.
A shareholder not knowing of the illegality of the distribution and the corporation is insolvent.
A shareholder not knowing of the illegality of the distribution and the corporation is insolvent.
Note: If a director has not breached his or her duty, then he or she is not liable to repay the illegal distribution.
A shareholder does not normally have a fiduciary duty to the corporation. However, if a shareholder furthers his or her own interests (by accepting the distribution) to the detriment of the corporation (the corporation is insolvent), they’re liable.
ich of the following actions may be taken by a corporation’s board of directors without stockholder approval?
Purchasing substantially all of the assets of another corporation
Selling substantially all of the corporation’s assets
Purchasing substantially all of the assets of another corporation
To sell assets, you need 2/3 vote of shareholder.
Who cares about purchasing
erry, Drake, and Flanigan are partners in a general partnership. The partners made capital contributions as follows: Berry, $150,000; Drake, $100,000; and Flanigan, $50,000. Drake made a loan of $50,000 to the partnership. The partnership agreement specifies that Flanigan will receive a 50% share of profits, and Drake and Berry each will receive a 25% share of profits. Under the Revised Uniform Partnership Act and in the absence of any partnership agreement to the contrary, which of the following statements is correct regarding the sharing of losses?
The partners will share equally in any partnership losses.
The partners will share in losses on a pro rata basis according to the capital contributions.
The partners will share in losses on a pro rata basis according to the capital contributions and loans made to the partnership.
The partners will share in losses according to the allocation of profits specified in the partnership agreement.
The partners will share in losses according to the allocation of profits specified in the partnership agreement.
If partners agree to share profits other than equally, losses will be shared similarly to profits, absent agreement to do otherwise.
100690
100662
100605
- Study this question
f
A partnership by estoppel is when a person represents himself to be in the partnership and a client reasonably ___
relies on that representation.
Under the Revised Model Business Corporation Act, a corporate director is authorized to:
rely on information provided by the appropriate corporate officer.
serve on the board of directors of a competing business.
Rely on information provided by the appropriate corporate officer.
Directors are not limited to any number of boards
If a corporation is harmed by someone, the directors of the corporation have the authority to bring an action on behalf of the corporation. When the corporation fails to bring such a suit, the shareholders have the right to sue on behalf of the corporation. This is called a ___
derivative suit.
Which of the following corporate shareholder rights is enforceable by means of a derivative suit?
Recovering damages from a third party
Protecting preemptive rights
Recover damages from a 3rd party
Which of the following statements best states the purpose of cumulative voting?
How many votes do treasury shares get?
Can the shareholder vote or can they get a proxy (someone to vote for them)
To allow minority shareholders to gain representation on the board of directors. (this is the only time cumulative voting occurs)*********
Get no votes
Can get a proxy
CUMULATIVE VOTING
If Mark has 1000 shares, how many votes does he have? Can he put all his votes on 1 person?
he has 1000 votes, yes he can.
Under the Uniform Partnership Act, which of the following statements is (are) correct regarding the effect of the assignment of an interest in a general partnership?
The assignee is personally responsible for the assigning partner’s share of past and future partnership debts.
The assignee is entitled to the assigning partner’s interest in partnership profits and surplus on dissolution of the partnership.
Both.
Assignment transfers rights under a contract to another (not liabilities).
Kroll, Inc., a partner in JKL Partnership, assigns its interest in the partnership to Trell, who is not made a partner. After the assignment, Trell asserts the rights to:
receive Kroll’s share of JKL’s profits and
inspect JKL’s books and records.
Onle #1 - Hes not a partner so he cant look @ books/records
For which of the following is a partnership recognized as a separate legal entity?
The liability for and payment of taxes on partnership gains from the sale of capital assets
In respect to contributions and advances made by partners to the partnership
The recognition of net operating losses
The status of the partnership as an employer for workers’ compensation purposes
The status of the partnership as an employer for workers’ compensation purposes
In general, a partnership is a voluntary legal relationship to carry on business. It is not a separate legal entity. However, it is a legal entity for workers’ compensation purposes.
Frey Corp. has 1,000 shares of issued and outstanding common stock. Frey’s articles of incorporation permit a stockholder who owns 5% or more of the outstanding stock or who has owned the stock for longer than six months to inspect Frey’s books and records. Ace, who has owned 25 shares of Frey stock for four months, wants to inspect the books and records. Under the Revised Model Business Corporation Act, which of the following statements is correct regarding Ace’s right to inspect the books and records?
Ace may, after giving five days’ written notice, inspect the books and records to determine the value of Frey stock…. WHY?
he Revised Model Business Corporation Act gives stockholders the right to inspect the books and records with five days’ written notice. Ace does not need to wait two months or purchase an additional 25 shares of stock, because the rights given by law - not articles of incorp.
A partnership can be terminated for a variety of reasons, including the death of a partner. Partnerships never pay _____. Income taxes are paid by the partners.
federal income tax
Generally, under the Revised Uniform Partnership Act, a partnership has which of the following characteristics?
Unlimited duration
Obligation for payment of federal income tax
Neither
A partnership can be terminated for a variety of reasons, including the death of a partner. Partnerships never pay federal income tax. Income taxes are paid by the partners.
Which of the following must take place for a corporation to be voluntarily dissolved?
Passage by the board of directors of a resolution to dissolve
Approval by the officers of a resolution to dissolve
Passage by the board of directors of a resolution to dissolve
The officers do not have the authority to dissolve a corporation—only the board of directors does.
___ spell out how a company is to be run and operated.
included in the bylaws is a description of the rights and powers of the directors, officers, and shareholders. T/F
Bylaws
What is included in the bylaws (7)
fiscal year
timing of meetings for directors
# of directors
Description of whos responsible for the bylaws
Compensation of corp officers
How/when/who corporate books can be examined
rules regarding contract approval
Under the Revised Model Business Corporation Act, which of the following statements regarding a corporation’s bylaws is (are) correct?
A corporation’s initial bylaws shall be adopted by either the incorporators or the board of directors.
A corporation’s bylaws are contained in the articles of incorporation.
A corporation’s initial bylaws shall be adopted by either the incorporators or the board of directors.
Bylaws are separte from Article of incorp
Under the Revised Model Business Corporation Act, which of the following statements regarding a corporation’s bylaws is (are) correct?
A corporation’s initial bylaws shall be adopted by either the incorporators or the board of directors.
A corporation’s bylaws are contained in the articles of incorporation.
A corporation’s initial bylaws shall be adopted by either the incorporators or the board of directors.
Bylaws are separte from Article of incorp
____provide protection for current shareholders to maintain their proportionate ownership share when new securities are sold.
Preemptive rights
What is included in the article of incorp (8)
name of corp period of time the corp is in existence - usually perpetual Purpose Share structure address Structure of board od director Name and address of each incorporator Name of registered agent
Which of the following statements is correct regarding the declaration of a stock dividend by a corporation having only one class of par value stock?
A stock dividend has the same legal and practical significance as a stock split.
A stock dividend is a corporation’s ratable distribution of additional shares of stock to its stockholders.
A stock dividend is a corporation’s ratable distribution of additional shares of stock to its stockholders.
STATE INCORPORATION LAWS
Foreign corporations doing business in ___ must qualify to do business in the state and obtain a ____from the state. Failure to obtain a certificate results in the denial of access to the courts by the corporation as a plaintiff, a statutory penalty, and personal liability of the officers and directors.
intrastate commerce
certificate of authority
A foreign corporation engaged wholly in interstate commerce need not qualify or obtain a ___
certificate of authority.
Only the ___can regulate the internal affairs of a corporation.
Foreign corporations are treated the same as domestic corporations for ___
state of incorporation
regulation purposes.
_____is the power or understanding created or manifested in the mind of a third party that an agent may act on behalf of the principal. Thus, any limitation on apparent authority must be communicated to third parties to be effective.
Apparent authority
The shareholders who disapprove of the merger (___shareholders) are entitled to receive an ___(i.e., to have their shares purchased by the acquiring corporation at a fair market price).
dissenting , appraisal remedy
Shareholders can dissent from the following three actions:
Merger
Consolidation
Sale of substantial all assets not in the course of business
To dissent, the shareholder must file a ___with the corporation, ___against the proposal, and make ___ demand for payment of the fair value of the shareholders’ stock within __ days of the vote.
written objection, vote, written , 10
DISSENT
Fair value is the stock value on the ____ was voted on by the ____
day before the proposal , shareholders.
The articles of incorp are prepared by the ___
promoters or incorporators.
To amend the articles of incorporation, the following must be done: (4)
(a) The board of directors adopts a resolution and submits it to the vote of the shareholders.
(b) Shareholders must be given written notice.
(c) A majority of shares entitled to vote is generally necessary for approval.
(d) The amendments must be filed with the secretary of state.
Although the corporation under a cumulative preferred stock agreement must eventually pay past undeclared dividends to preferred shareholders, that obligation does not become legally binding until the board of directors actually votes to ___such dividend
declare
Price owns 2,000 shares of Universal Corp.’s $10 cumulative preferred stock. During its first year of operations, cash dividends of $5 per share were declared on the preferred stock but were never paid. In the second year, dividends on the preferred stock were neither declared nor paid. What is price considered? (secured/unsecured creidtor , a stockholder thats owed $, etc) & for how much?
unsecured creditor for $10,000 (2000*5=10k)
Definition of a merger: One or more corporations are acquired by another and the acquired corporations go ___.
out of existence
A ____occurs when two or more corporations join together as a new corporation, thereby losing their separate corporate existence
A ___consists of disposing of substantially all the assets of a corporation not in the ordinary course of business.
consolidation
sale
BoD
The board has a ___when a majority of the number of directors is present.
The board can make an act effective if it is passed by the majority of the directors present at a meeting when a ___exists.
The board can meet anywhere. It need not be in the state of incorporation. T/F
Directors need tp be residents of the state of incorporation.
Directors need to be shareholders.
quorum quorum True False - no they dont False - no they dont
BoD
They have authority to fix their own compensation unless the articles of incorporation or bylaws say they are prohibited from doing so. T/F
The board of directors exercises corporate powers and manages the business. They are in a ___relationship with the corporation.
True
fiduciary
BoD
___a corporate opportunity is a violation of a director’s duty of loyalty. If usurpation is proven, the corporation can recover any ___made by the director or officer.[
. Usurping , profits
Model Business Corporation Act (MBCA)
The act is the model that most states use as the basis for their ___
The MBCA was first drafted in __
incorporation laws.
1946
___ are the rules, regulations, and procedures that define the rights and powers of the board of directors, company officers, and shareholders.
Bylaws
CORPORATIONS
A corporation can be punished by fine for the criminal conduct of its employees. T/F
An ____act is one beyond the scope of the powers of the corporation. An___act is not necessarily an illegal act, but an illegal act is always an___ act.
True
ultra vires
CORPORATIONS
Corporations derive their power from three sources
A shareholder may also be able to file a ___ on behalf of the corporation when the corporation has been injured. These suits require that the shareholder is either of the following: (2)
Statuatory
Express
Implied
derivative suit
- shareholder at the time the derivative suit is filed
- shareholder when the wrongful act was committed
Priority of payments on dissolution
Creditors of the partnership are paid first.
Loans made to partnership by partners are next repaid to the extent capital remains.
Return of capital contributions made by the partners is next in line of priority.
Profits or losses are then divided among the partners as
Which of the following rights is a holder of a public corporation’s cumulative preferred stock always entitled to? T/F
Conversion of the preferred stock into common stock
Voting rights
Dividend carryovers from years in which dividends were not paid, to future years
Guaranteed dividends
False - this not always an option
False - Voting rights are not always promised
True
False - Dividends are not guaranteed
PARTNERSHIP
a formula for sharing losses will not be applied to sharing profits T/F
a formula for sharing profits will not be applied to sharing losses T/F
True
False - yes it will
Drain Corp. has two classes of stock—100,000 shares of authorized, issued, and outstanding voting common stock and 10,000 shares of authorized, issued, and outstanding nonvoting 5% cumulative, nonparticipating preferred stock with a face value of $100 per share. In 20X1, Drain’s officers and directors intentionally allowed pollutants to be discharged by Drain’s processing plant. These actions resulted in Drain having to pay penalties. Solely as a result of the penalties, no dividends were declared for the years ended December 31, 20X1, and December 31, 20X2. The total amount Drain paid in penalties was $1,000,000. In 20X2, Drain was able to recover the full amount of the penalties from an insurance company that had issued Drain a business liability policy. Drain’s directors refused to use this money to declare a dividend and decided to hold the $1,000,000 in a special fund to pay future bonuses to officers and directors.
liable for abuse of discretion.
The board of directors has a fiduciary relationship to the corporation. To have violated their responsibility by knowingly allowing pollution, restricting dividends because of the fines and penalties, recovering the loss from insurance, then setting aside the money for bonuses to themselves would certainly be an abuse of discretion. They may not be liable financially because of the insurance recovery. They would not be immune to liability recovery if their actions were illegal or a breach of fiduciary duty.
Improper use of the corporation.
using the corporation to perpetrate a fraud (t/F)
___ of the corporation; here the corporation is formed as a “dummy” entity with insufficient capital to meet reasonably expected business obligations.
Shareholders looting the corporation t/f
True
Thin capitalization
True
Under the Revised Model Business Corporation Act, a merger of two public corporations usually requires all of the following, except: (MCQ)
an affirmative vote by the holders of a majority of each corporation’s voting shares.
receipt of voting stock by all stockholders of the original corporations.
A merger of two corporations requires a formal plan of merger that is approved by both the board of directors and the shareholders of both corporations.
There is no requirement that stockholders of the original (surviving) corporation receive voting stock from the other corporation.
T/F
A partner’s interest in specific partnership property is assignable to the partner’s individual creditors.
A partner’s interest in specific partnership property is
subject to attachment by the partner’s individual creditors
False - it is not
False – it is not
Unless prohibited by the organization documents, a stockholder in a publicly held corporation and the owner of a limited partnership interest both have the right to:
ownership of the business’ assets.
control management of the business.
assign their interest in the business.
an investment that has perpetual life.
Assign their interest
Neither shareholder nor limited partner has ownership of the business assets.
By definition, a limited partnership has a definite life.
If the property distributed to a shareholder has a fair market value in excess of the adjusted basis on the corporate books, ____
The difference between fair market value and the basis in the corporation may be ___
a gain is recognized by the corporation
taxable to the shareholder.
Dissolution requires shareholder ___
Approval (vote)
Alteration of the business plan or its capital structure
Creditor assignment of partnership property
Confessing judgment
Amending the articles of partnership
Undertaking any act that would make the conduct of the business impossible
The disposal of the partnership goodwill
These are examples of what?
Unanimous partner approval
Which of the following statements is correct concerning liability when a partner in a general partnership commits a tort while engaged in partnership business?
The partner committing the tort is the only party liable.
The partnership is the only party liable.
Each partner is jointly and severally liable.
Each partner is liable to pay an equal share of any judgment.
Each partner is jointly and severally liable.
This means that any one of the partners could be held liable for the full amount of the obligation if the partnership fails to pay the debt. Since the general partnership is not a legal entity separate and distinct from the partners regarding legal liability, the partnership cannot be held legally liable.
