Question 1

It is generally considered illegal to place restrictions on the transfer of shares of stock of a statutory close corporation.

Accepted Answer

A) True 
 B)False

Question 2

To be considered tax-exempt for federal income tax purposes, a corporation must

Accepted Answer

A)   file articles of incorporation of a nonprofit corporation.
B)   include a tax-exempt provision in its by- laws.
C)   publish an affidavit signed by all share- holders.
D)   file an application for tax-exempt status with the Internal Revenue Service pursuant to IRC § 501(c) .

Question 3

Much of modern corporate law has been derived from the decisions of the courts of Delaware.

Accepted Answer

A) True 
 B)False

Question 4

The term sister corporation is sometimes used to refer to two corporations owned or con- trolled by the same owners.

Accepted Answer

A) True 
 B)False

Question 5

Corporations do not generally offer sharehold- ers the ability to

Accepted Answer

A)   limit their personal liability for the corpora- tion's debts and obligations.
B)   avoid double taxation.
C)   transfer their shares of ownership.
D)   elect directors to oversee the management of the corporation.

Question 6

Failure to hold regular shareholders' and directors' meetings may be a factor taken into consideration in support of piercing the corporate veil.

Accepted Answer

A) True 
 B)False

Question 7

To be eligible for S Corporation status, a cor- poration must have

Accepted Answer

A)   at least 75 shareholders.
B)   at least one corporation as a shareholder.
C)   no more than 100 shareholders.
D)   at least two classes of stock issued.

Question 8

All corporations must have their tax year end on December 31.

Accepted Answer

A) True 
 B)False

Question 9

Statutory close corporations typically

Accepted Answer

A)   have more than 50 shareholders.
B)   are managed by a board of directors with at least five directors.
C)   are managed by the shareholders of the corporation.
D)   may not have restrictions on the transfer of shares of their stock.

Question 10

Because the corporation is a separate entity, the corporation itself is liable for any debts and obligations it incurs.

Accepted Answer

A) True 
 B)False

Question 11

Professionals from several different fields, such as doctors, lawyers, and accountants, can consolidate their businesses to form one professional corporation.

Accepted Answer

A) True 
 B)False

Question 12

A business corporation is not an

Accepted Answer

A)   entity created by law.
B)   organization that can exist perpetually.
C)   organization with certain rights and powers granted by statute.
D)   entity that is disregarded for income tax purposes.

Question 13

The corporation's state of domicile is the state where its articles of incorporation are filed, regardless of where it transacts its business.

Accepted Answer

A) True 
 B)False

Question 14

In smaller statutory close corporations, the corporation is usually managed by the board of directors, with little input or interference from the shareholders.

Accepted Answer

A) True 
 B)False

Question 15

When a court disregards the corporate entity to prevent an injustice, it is referred to as

Accepted Answer

A)   piercing the corporate veil.
B)   corporate liability.
C)   unlimited shareholder liability.
D)   shareholder responsibility. A

Question 16

A____________ corporation is a corporation that owns stock in another corporation sufficient to control that corporation.

Accepted Answer

A)   sister
B)   parent
C)   subsidiary
D)   control

Question 17

To become an S Corporation, the corporation's shareholders must

Accepted Answer

A)   file an election with the secretary of state or other appropriate state official.
B)   designate the corporation as an S Corpora- tion in the articles of incorporation.
C)   publish notice of S Corporation status.
D)   file an election to be treated as an S Corpo- ration, approved by all shareholders, with the IRS. D

Question 18

Corporations have the right to own property, including real estate, in the corporate name.

Accepted Answer

A) True 
 B)False

Question 19

Shareholders usually elect the corporation's

Accepted Answer

A)   directors.
B)   managers.
C)   officers.
D)   members. A

Question 20

The primary source of business corporation law is

Accepted Answer

A)   the statutes of the corporation's state of domicile.
B)   the Internal Revenue Code.
C)   common law.
D)   federal statutes.

Exam 7: Corporations

It is generally considered illegal to place restrictions on the transfer of shares of stock of a statutory close corporation.

Correct AnswerverifiedShow Answer

To be considered tax-exempt for federal income tax purposes, a corporation must

Correct AnswerverifiedShow Answer

Much of modern corporate law has been derived from the decisions of the courts of Delaware.

Correct AnswerverifiedShow Answer

The term sister corporation is sometimes used to refer to two corporations owned or con- trolled by the same owners.

Correct AnswerverifiedShow Answer

Corporations do not generally offer sharehold- ers the ability to

Correct AnswerverifiedShow Answer

Failure to hold regular shareholders' and directors' meetings may be a factor taken into consideration in support of piercing the corporate veil.

Correct AnswerverifiedShow Answer

To be eligible for S Corporation status, a cor- poration must have

Correct AnswerverifiedShow Answer

All corporations must have their tax year end on December 31.

Correct AnswerverifiedShow Answer

Statutory close corporations typically

Correct AnswerverifiedShow Answer

Because the corporation is a separate entity, the corporation itself is liable for any debts and obligations it incurs.

Correct AnswerverifiedShow Answer

Professionals from several different fields, such as doctors, lawyers, and accountants, can consolidate their businesses to form one professional corporation.

Correct AnswerverifiedShow Answer

A business corporation is not an

Correct AnswerverifiedShow Answer

The corporation's state of domicile is the state where its articles of incorporation are filed, regardless of where it transacts its business.

Correct AnswerverifiedShow Answer

In smaller statutory close corporations, the corporation is usually managed by the board of directors, with little input or interference from the shareholders.

Correct AnswerverifiedShow Answer

When a court disregards the corporate entity to prevent an injustice, it is referred to as

Correct AnswerverifiedA

A____________ corporation is a corporation that owns stock in another corporation sufficient to control that corporation.

Correct AnswerverifiedShow Answer

To become an S Corporation, the corporation's shareholders must

Correct AnswerverifiedD

Corporations have the right to own property, including real estate, in the corporate name.

Correct AnswerverifiedShow Answer

Shareholders usually elect the corporation's

Correct AnswerverifiedA

The primary source of business corporation law is

Correct AnswerverifiedShow Answer

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A

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D

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A

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