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Exam 17: Limited Liability Business Forms

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Question 21

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The management of a limited liability company must include at least one of the members.

A) True
B) False

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Question 22

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All of the statutory and common law rules governing partnerships apply to a limited liability partnership (LLP), except those modified by the applicable LLP statute.

A) True
B) False

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Question 23

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The operating agreement of a limited liability company cannot provide for the calculation of a buyout price on a member's dissociation because the event has not yet occurred.

Organizing as a limited liability company prevents the firm from attracting foreign investors.

Most states apply to a limited liability company formed in another state the law of the state in which the firm currently does most of its business.

The members of a limited liability company have considerable flexibility in managing the business of the firm.

A limited liability company is a citizen only of the state in which it was formed.

Paolo, Quito, Reyes, and Sari form Toda el Mundo LP, a limited partnership to import and sell clothing made in remote global locales. In the absence of an agreement among the partners to the contrary, profits will be shared

As in a partnership, a limited liability company may pay no taxes-profits can be passed through to the members, who pay personal taxes on the profits.

Paving LLC is a foreign limited liability company in the state of Ohio. In dealing with Paving, Ohio will apply the law of the state where the firm

Choosing a business organizational form that limits its owners' liability is associated with the potential for higher profits.

Edna, Fiona, and Gwyn form a limited partnership to make and test-market Happy Donuts and other bake-at-home pastries. To avoid a dispute in the event of the firm's dissolution about how its assets should be valued and distributed, and whether the business should be sold, the partners should seek

When the promoter of a limited liability company enters into a preformation contract on the firm's behalf, the company must adopt the contract to enforce it.

In some states, to form a limited liability company, a business must have

The extent to which a limited partner can engage in management before being exposed to liability for partnership obligations is clear.

Grape Vineyards LLC, the members of which include Howie and Ilya, can hold title to property because as a limited liability company the firm is

In a limited partnership, a general partner assumes no liability for partnership debts beyond the amount of capital contributed.

If the members of a limited liability company do not stipulate in their operating agreement how voting rights will be apportioned, in most states, only the member-managers will be entitled to vote.

Unlike a sole proprietorship or a partnership, a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.

A private and informal agreement usually suffices to form a limited partnership.