Exam 14: Business Forms and Arrangements

Income tax on corporate revenue is assessed to the corporation, while dividends and salaries are taxable in the hands of the directors.

Discuss the distribution of the profits of a corporation.

Which of the following is the term "partners" synonymous with regarding the agency relationship and the Partnership Act?

A partnership is a simple form of legal relationship that automatically arises when two or more people do business together with the objective of making a profit.

All of Canada's common law provinces have a Partnership Act modelled on the British act of the same name.

Choosing how to own a business is of little consequence to the ultimate determination of who is financially liable for the business.

What is a strategic alliance between commercial parties?

A court has been asked to resolve a matter involving the disputed interests of partners regarding partnership property and their respective rights and duties in relation to the partnership. Which of the following would immediately provide the court with a basis for a decision?

Identify and briefly explain what feature of a corporation allows for the easy transfer of ownership, how ownership is transferred, and the source of restrictions, if any, on the transfer of ownership.

The vehicle most commonly used as an investment device is a limited liability partnership, in which at least one partner has unlimited liability and the rest have limited liability.

Ellayne manages a busy law practice as a sole practitioner. Which of the following is a major risk of Ellayne's choice of business form?

A capital contribution clause in a partnership agreement would describe how profits are to be shared, how and when they are to be distributed, and rights of withdrawal.

The duration of existence of a proprietorship is limited by the life of the owner, whereas a partnership is terminated by agreement and a corporation is perpetual unless dissolved.

Glen, Dale, and Al are partners who own Fizz. Glen made a capital contribution of $5000, Dale's was $15 000, and Al's was $10 000. Glen is a general partner and he oversees the management of the Fizz business. The partnership borrowed $30 000 from the bank. The partners have no agreement relating to the sharing of profits and losses. Fizz became insolvent and unable to repay the loan. The bank sued Dale personally and recovered the full $30 000 from him. Dale then sued Glen. When Dale's lawyer provided him with advice, what amount did she likely indicate he would be able to legally recover from Glen?

Which of the following will be most influenced by restrictions contained in the incorporating documents or by a shareholders' agreement?