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Exam 17: Limited Liability Business Forms

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Question 41

Multiple Choice

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As the promoter of Glassworks LLC, Hans enters into a contract with Interstate Transport Company. Once formed, Glassworks can

A) forego an adoption process and simply enforce the contract.
B) adopt the contract through novation.
C) obtain the benefits of the deal without obligation.
D) pierce Interstate's "corporate veil" to hold Hans liable on the contract.

E) A) and D)
F) A) and B)

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Question 42

Multiple Choice

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Singh, a member of Trucking LLC, ceases to be associated in the carrying on of the business of the firm. Despite the dissociation

A) the member's duty of care continues with respect to prior events.
B) the member's duty of loyalty continues until the firm dissolves.
C) the member does not lose the right to participate in management.
D) the member does not lose the right to act as an agent for the firm.

E) None of the above
F) All of the above

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Question 43

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Nature's Power L.P. is a limited partnership dedicated to the research and development of renewable sources of energy. Nature's Power has $100,000 in declared but unpaid profits. Its creditors include Omni Credit Corporation for $5,000 and Pinto, one of Nature's Power's limited partners, also for $5,000. When Quint, one of Nature's Power's general partners, decides to retire, the other general partners vote to liquidate and dissolve the firm. The limited partners, who are not asked their opinions, want Nature's Power to continue in business and file a suit against the general partners to compel this result. Can the court order the firm to continue? If not, what is the priority of the distribution of its assets on dissolution?

The operating agreement of a limited liability company and a state's LLC statute can be applied together to determine the outcome of a dispute between the firm's members.

Data Analytics LLC is a limited liability company. Unless the firm's articles of organization specify otherwise, it will most likely be assumed that the firm is

If a member of a limited liability company dissociates from the firm in violation of the operating agreement, the member can be held liable for any loss to the business resulting from the withdrawal.

The major features of an LLP are that it limits the personal liability of the partners and

Nell is considering forms of business organization for Optic Center, a medical eye clinic. An advantage of a limited liability partnership is that, depending on the applicable state statute, partners can avoid personal liability for

With respect to taxes imposed on limited liability companies, most states

To open and operate Boo! City, a Halloween costume and paraphernalia shop, Dwayne and Erica form a business organization that combines the limited liability aspects of a corporation with the tax advantages of a partnership. Their form of business organization is

A limited liability company is an aggregate of its members, not a separate legal entity.

When a limited liability company is dissolved, the members may preserve the assets for a reasonable time to optimize their return during the winding up process.