BADM300 Chapter 17: LLC Exam Questions with Correct Answers
Question 1:
Limited Liability Company (LLC)
corporation and the tax advantages of a partnership.
-entity of choice for businesses
Answer:
A hybrid entity that combines the limited liability of a
Question 2:
-governed by state law What are the owners of an LLC called and what is their ownership
called? "members"
Answer:
-Owners are called
Question 3:
-Ownership is called "interest" Limited liability of members
Answer:
LLC members are shielded from personal liability in most
Question 4:
situations and any liability of members is normally limited to the amount of their investments.
When may liability be imposed upon LLC? loan to the LLC.
Answer:
-An individual guarantees payment of a business
Question 5:
-The courts may "pierce the corporate veil" to achieve justice or hold its members personally
liable in circumstances that are clearly extraordinary. How are LLC's similar to corporations?
-Can hold property separately
Answer:
-Separate legal entity from owners
, Question 6:
-"Foreign LLC" designation if doing business in state other than the one where LLC was formed.
How is a LLC formed?
members' names, and how LLC will be managed.
-Must include the words /Limited Liability Company/ or the initials LLC
Answer:
-Must be filed with a central agency (usually secretary of state's office).-Must usually include
business name, principal address, name and address of registered agent,-Majority of states
permit one-member LLCs, but some states require at least two members.-Must include the
words /Limited Liability Company/ or the initials LLC
-Must be filed with a central agency (usually secretary of state's office).-Must usually include
business name, principal address, name and address of registered agent,-Majority of states
permit one-member LLCs, but some states require at least two members.
-Must include the words /Limited Liability Company/ or the initials LLC
-Must be filed with a central agency (usually secretary of state's office).
-Must usually include business name, principal address, name and address of registered agent,
-Majority of states permit one-member LLCs, but some states require at least two members.
-Must include the words /Limited Liability Company/ or the initials LLC
-Must be filed with a central agency (usually secretary of state's office).
-Must usually include business name, principal address, name and address of registered agent,
-Majority of states permit one-member LLCs, but some states require at least two members.
Question 7:
What are the jurisdictional requirements to form a LLC?
Answer:
1. LLC is a legal entity separate from
Question 8:
2. For /federal diversity jurisdiction/, the LLC may be treated differently than a corporation.
Answer:
its owners.
Question 9:
-No diversity exists if any member of LLC Defendant is citizen of same state as Plaintiff.
Advantages of LLC
owner wishes to be taxed as corporation.
Answer:
-*Limited liability*: Members are liable up to amount of investment only.
-*Flexibility in taxation*: Two or more members can choose to be taxed as partnership
Question 1:
Limited Liability Company (LLC)
corporation and the tax advantages of a partnership.
-entity of choice for businesses
Answer:
A hybrid entity that combines the limited liability of a
Question 2:
-governed by state law What are the owners of an LLC called and what is their ownership
called? "members"
Answer:
-Owners are called
Question 3:
-Ownership is called "interest" Limited liability of members
Answer:
LLC members are shielded from personal liability in most
Question 4:
situations and any liability of members is normally limited to the amount of their investments.
When may liability be imposed upon LLC? loan to the LLC.
Answer:
-An individual guarantees payment of a business
Question 5:
-The courts may "pierce the corporate veil" to achieve justice or hold its members personally
liable in circumstances that are clearly extraordinary. How are LLC's similar to corporations?
-Can hold property separately
Answer:
-Separate legal entity from owners
, Question 6:
-"Foreign LLC" designation if doing business in state other than the one where LLC was formed.
How is a LLC formed?
members' names, and how LLC will be managed.
-Must include the words /Limited Liability Company/ or the initials LLC
Answer:
-Must be filed with a central agency (usually secretary of state's office).-Must usually include
business name, principal address, name and address of registered agent,-Majority of states
permit one-member LLCs, but some states require at least two members.-Must include the
words /Limited Liability Company/ or the initials LLC
-Must be filed with a central agency (usually secretary of state's office).-Must usually include
business name, principal address, name and address of registered agent,-Majority of states
permit one-member LLCs, but some states require at least two members.
-Must include the words /Limited Liability Company/ or the initials LLC
-Must be filed with a central agency (usually secretary of state's office).
-Must usually include business name, principal address, name and address of registered agent,
-Majority of states permit one-member LLCs, but some states require at least two members.
-Must include the words /Limited Liability Company/ or the initials LLC
-Must be filed with a central agency (usually secretary of state's office).
-Must usually include business name, principal address, name and address of registered agent,
-Majority of states permit one-member LLCs, but some states require at least two members.
Question 7:
What are the jurisdictional requirements to form a LLC?
Answer:
1. LLC is a legal entity separate from
Question 8:
2. For /federal diversity jurisdiction/, the LLC may be treated differently than a corporation.
Answer:
its owners.
Question 9:
-No diversity exists if any member of LLC Defendant is citizen of same state as Plaintiff.
Advantages of LLC
owner wishes to be taxed as corporation.
Answer:
-*Limited liability*: Members are liable up to amount of investment only.
-*Flexibility in taxation*: Two or more members can choose to be taxed as partnership
