Question 1

LLPs may choose to be taxed like a corporation or choose pass-through taxation treatment.

Accepted Answer

A) True 
 B)False

Question 2

In an LLP,generally all partners have liability protection for _______ and liabilities of the partnership.

Accepted Answer

The answer of In an LLP,generally all partners have liability...

Question 3

Stop Now LLP manufactures brake linings and sells its product to repair and maintenance shops for use as replacements for worn brakes.Stop Now approaches Coastal Garage and offers Coastal a very good price on the brake linings.Coastal is a nationwide company,and the order would be very large.The management at Coastal is very interested in dealing with Stop Now but is concerned with the LLP's limited liability protections for Stop Now's partners.What could Coastal do to protect itself from the LLP's limited liability protections?

Accepted Answer

Coastal has two options for achieving th...

Question 4

John,Paul,Mark,and Luke have been operating an LLC,and according to the operating agreement,the term of the LLC is set to expire in the near future.What options do the four partners have?

Accepted Answer

If they wish to continue the business,they must vote to do so.If they desire to set a new term with a fixed expiration date,they must vote unanimously to do so and the business will continue until that term expires.They may also vote to continue the business at will,with no set expiration date.The at-will option requires only a majority vote-in this case,three partners agreeing.Alternatively,the members could choose to simply allow the business to go into dissolution and terminate by doing nothing.

Question 5

The process when an individual member of an LLC exercises the right to withdraw from the partnership is called _______.

Accepted Answer

The answer of The process when an individual member of...

Question 6

The designation "Smith Group,LLC" is a valid designation for an LLC.

Accepted Answer

A) True 
 B)False

Question 7

Though they may elect a different structure,for tax purposes,LLCs are typically treated as

Accepted Answer

A)   nonprofit organizations.
B)   hybrid entities.
C)   corporate tax entities.
D)   pass-through entities.

Question 8

In 1997,the IRS made LLCs

Accepted Answer

A)   more attractive by eliminating strict operating requirements for qualifying as a partnership for tax purposes.
B)   more attractive by changing the tax structure, making LLCs more profitable to operate.
C)   less attractive by increasing and redefining operating requirements to properly identify LLCs and weed out companies misfiling for tax break purposes.
D)   less attractive by eliminating taxation at the business level, making the LLC similar to the partnership for tax purposes.

Question 9

Many states have eased the filing requirements for creating an LLC,switching from requiring extensive amounts of information to now requiring minimal information similar to that required in a corporate filing.

Accepted Answer

A) True 
 B)False

Question 10

LLCs are frequently governed by an agreement of the parties called an LLC agreement or _______.

Accepted Answer

The answer of LLCs are frequently governed by an agreement...

Question 11

Explain how LLCs are capitalized.

Accepted Answer

LLCs are capitalized primarily through d...

Question 12

The ability to flow through to the investors the tax deductions and losses that are typically generated by an emerging company or a company with significant up-front debt is an advantage of a

Accepted Answer

A)   corporate tax structure.
B)   pass-through entity.
C)   member-managed LLC.
D)   manager-managed LLC.

Question 13

The ability to distribute earnings without incurring double-level taxation is an advantage of a

Accepted Answer

A)   pass-through entity.
B)   corporate tax structure.
C)   member-managed LLC.
D)   manager-managed LLC.

Question 14

Typically,day-to-day decision making in a manager-managed LLC is performed by

Accepted Answer

A)   the individual principal who filed the initial paperwork to form the business.
B)   its board of directors.
C)   the top 10 percent of the principal investors.
D)   its managing members.

Question 15

LLCs are not permitted to capitalize by selling equity ownership in the LLC itself.

Accepted Answer

A) True 
 B)False

Question 16

An LLC can last until a specified term expires.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would not generally be formed as an LLP?

Accepted Answer

A)   Three frat brothers opening a bar.
B)   Two attorneys operating a law firm.
C)   Four licensed physical therapists running a clinic.
D)   Twenty CPAs running an accounting firm. A

Question 18

In an LLP,any income is taxed

Accepted Answer

A)   when distributed to shareholders.
B)   at the end of the fiscal year.
C)   at the level of the entity.
D)   only when distributed to its partners.

Question 19

An LLC member with ownership sufficient to decide or veto internal operational matters is called a _______ member.

Accepted Answer

controlling

Question 20

Which of the following is not a characteristic of an LLC?

Accepted Answer

A)   May elect to be taxed as a corporation.
B)   Usually capitalized via debt.
C)   Its members are not personally liable for any business debt or liability.
D)   Only its managing members owe a fiduciary duty to other members.

Exam 14: Limited Liability Companies and Limited Liability Partnerships

LLPs may choose to be taxed like a corporation or choose pass-through taxation treatment.

Correct Answer
verified

In an LLP,generally all partners have liability protection for _______ and liabilities of the partnership.

Correct Answer
verified

Correct Answer
verified
Coastal has two options for achieving th...
View Answer

John,Paul,Mark,and Luke have been operating an LLC,and according to the operating agreement,the term of the LLC is set to expire in the near future.What options do the four partners have?

The process when an individual member of an LLC exercises the right to withdraw from the partnership is called _______.

Correct Answer
verified

The designation "Smith Group,LLC" is a valid designation for an LLC.

Correct Answer
verified

Though they may elect a different structure,for tax purposes,LLCs are typically treated as

Correct Answer
verified

In 1997,the IRS made LLCs

Correct Answer
verified

Many states have eased the filing requirements for creating an LLC,switching from requiring extensive amounts of information to now requiring minimal information similar to that required in a corporate filing.

Correct Answer
verified

LLCs are frequently governed by an agreement of the parties called an LLC agreement or _______.

Correct Answer
verified

Explain how LLCs are capitalized.

Correct Answer
verified
LLCs are capitalized primarily through d...
View Answer

The ability to flow through to the investors the tax deductions and losses that are typically generated by an emerging company or a company with significant up-front debt is an advantage of a

Correct Answer
verified

The ability to distribute earnings without incurring double-level taxation is an advantage of a

Correct Answer
verified

Typically,day-to-day decision making in a manager-managed LLC is performed by

Correct Answer
verified

LLCs are not permitted to capitalize by selling equity ownership in the LLC itself.

Correct Answer
verified

An LLC can last until a specified term expires.

Correct Answer
verified

Which of the following would not generally be formed as an LLP?

Correct Answer
verified
A

In an LLP,any income is taxed

Correct Answer
verified

An LLC member with ownership sufficient to decide or veto internal operational matters is called a _______ member.

Correct Answer
verified
controlling

Which of the following is not a characteristic of an LLC?

Correct Answer
verified

Exam 14: Limited Liability Companies and Limited Liability Partnerships

LLPs may choose to be taxed like a corporation or choose pass-through taxation treatment.

Correct AnswerverifiedShow Answer

In an LLP,generally all partners have liability protection for _______ and liabilities of the partnership.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedCoastal has two options for achieving th...View AnswerShow Answer

John,Paul,Mark,and Luke have been operating an LLC,and according to the operating agreement,the term of the LLC is set to expire in the near future.What options do the four partners have?

The process when an individual member of an LLC exercises the right to withdraw from the partnership is called _______.

Correct AnswerverifiedShow Answer

The designation "Smith Group,LLC" is a valid designation for an LLC.

Correct AnswerverifiedShow Answer

Though they may elect a different structure,for tax purposes,LLCs are typically treated as

Correct AnswerverifiedShow Answer

In 1997,the IRS made LLCs

Correct AnswerverifiedShow Answer

Many states have eased the filing requirements for creating an LLC,switching from requiring extensive amounts of information to now requiring minimal information similar to that required in a corporate filing.

Correct AnswerverifiedShow Answer

LLCs are frequently governed by an agreement of the parties called an LLC agreement or _______.

Correct AnswerverifiedShow Answer

Explain how LLCs are capitalized.

Correct AnswerverifiedLLCs are capitalized primarily through d...View AnswerShow Answer

The ability to flow through to the investors the tax deductions and losses that are typically generated by an emerging company or a company with significant up-front debt is an advantage of a

Correct AnswerverifiedShow Answer

The ability to distribute earnings without incurring double-level taxation is an advantage of a

Correct AnswerverifiedShow Answer

Typically,day-to-day decision making in a manager-managed LLC is performed by

Correct AnswerverifiedShow Answer

LLCs are not permitted to capitalize by selling equity ownership in the LLC itself.

Correct AnswerverifiedShow Answer

An LLC can last until a specified term expires.

Correct AnswerverifiedShow Answer

Which of the following would not generally be formed as an LLP?

Correct AnswerverifiedA

In an LLP,any income is taxed

Correct AnswerverifiedShow Answer

An LLC member with ownership sufficient to decide or veto internal operational matters is called a _______ member.

Correct Answerverifiedcontrolling

Which of the following is not a characteristic of an LLC?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Coastal has two options for achieving th...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
LLCs are capitalized primarily through d...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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A

Correct Answer
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Correct Answer
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controlling

Correct Answer
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