Exam 24: Corporate Formation, financing, and Termination

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Starr Cardio,Inc.,is a small business.Ted,Uma,and eleven other members of the Starr family own all of its stock.Currently,Starr's income is taxed at the corporate level and,after being distributed to the family members,at the shareholder level.Can Starr retain its corporate status but oth-er-wise avoid this double taxation? If so,how?

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Question 1

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Starr can re-form as an S corporation to avoid this dou-ble taxation of income.S corporations were created specifi-cally to permit small businesses to avoid this sort of taxa-tion.Any small business that meets certain re-quire-ments can qualify.The requirements are (1) the firm must be a domestic corporation, (2) the firm must not be a member of an affili-ated group of corporations, (3) the firm must have less than a certain number of share-holders, (4) the shareholders must be individu-als,es-tates,or qualified trusts (or corporations in some cases), (5) there can be only one class of stock,and (6) no shareholder can be a nonresi-dent alien.Based on the facts presented in this question,it would appear that Starr would qualify.

When a corporation is dissolved voluntarily,the corporation must file articles of dissolution with the state.

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Question 2

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True

A sale of all of a corporation's assets requires the approval of its shareholders.

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Question 3

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True

A corporate director is an "owner" of the corporation

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Question 4

The date when the principal of a bond is returned to the investor is called the maturity date.

(True/False)

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Question 5

The U.S.Postal Service is a public corporation.

(True/False)

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Question 6

Only a board of directors can initiate the dissolution of a corporation.

(True/False)

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Question 7

O.K.Oil holds itself out to others as being a corporation but makes no attempt to incorporate.In this circumstance,O.K.is most likely

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Question 8

Smalltown,Alabama is incorporated by the government.Smalltown is

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Question 9

Luke is an owner of Lucky Luke's Corporation.Luke uses the corporate entity of Lucky Luke's to perpetuate fraud.In this case,a court is likely to expose Luke to personal liability by

(Multiple Choice)

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Question 10

Eagle Financial Corporation merges with First Bank Corporation,with Eagle Financial absorbing First Bank.After the merger

(Multiple Choice)

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Question 11

Erin is a shareholder in African Adventures.As a shareholder,Erin

(Multiple Choice)

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Question 12

State laws regarding corporations are uniform.

(True/False)

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Question 13

An alien corporation is a corporation formed in another country.

(True/False)

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Question 14

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.Mall Stores combines with Niche Retail,but only Mall Stores continues to exist.This transaction was

(Multiple Choice)

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Question 15

The day-to-day business of a corporation is managed by officers employed by the board of directors.

(True/False)

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Question 16

Pola and Quincey want to form and do business as River Tours Corporation.A corporation can consist of

(Multiple Choice)

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Question 17

A corporation does not possess the same right of access to the courts as natural persons.

(True/False)

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Question 18

A state constitution may resolve a conflict among documents involving a corporation.

(True/False)

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Question 19

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

(True/False)

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Question 20

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Exam 24: Corporate Formation, financing, and Termination

When a corporation is dissolved voluntarily,the corporation must file articles of dissolution with the state.

A sale of all of a corporation's assets requires the approval of its shareholders.

A corporate director is an "owner" of the corporation

The date when the principal of a bond is returned to the investor is called the maturity date.

The U.S.Postal Service is a public corporation.

Only a board of directors can initiate the dissolution of a corporation.

O.K.Oil holds itself out to others as being a corporation but makes no attempt to incorporate.In this circumstance,O.K.is most likely

Smalltown,Alabama is incorporated by the government.Smalltown is

Luke is an owner of Lucky Luke's Corporation.Luke uses the corporate entity of Lucky Luke's to perpetuate fraud.In this case,a court is likely to expose Luke to personal liability by

Eagle Financial Corporation merges with First Bank Corporation,with Eagle Financial absorbing First Bank.After the merger

Erin is a shareholder in African Adventures.As a shareholder,Erin

State laws regarding corporations are uniform.

An alien corporation is a corporation formed in another country.

Mall Stores Corporation owns 95 percent of the shares of Niche Retail Corporation.Mall Stores combines with Niche Retail,but only Mall Stores continues to exist.This transaction was

The day-to-day business of a corporation is managed by officers employed by the board of directors.

Pola and Quincey want to form and do business as River Tours Corporation.A corporation can consist of

A corporation does not possess the same right of access to the courts as natural persons.

A state constitution may resolve a conflict among documents involving a corporation.

Any person who buys preferred stock has priority over a holder of common stock to payment on the corporation's dissolution.

The Legal and Constitutional Environment of Business

Courts and Alternative Dispute Resolution

Ethics and Business Decision Making

Tort Law

Intellectual Property

Internet Law,social Media,and Privacy

Criminal Law and Cyber Crime

Nature and Classification

Agreement in Traditional and E-Contracts

Consideration, capacity, and Legality

Defenses to Contract Enforceability

Third Party Rights and Discharge

Breach and Remedies

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Warranties and Product Liability

Negotiability, transferability, and Liability

Checks and Banking in the Digital Age

Secured Transactions

Creditors Rights and Bankruptcy

Agency Relationships

Employment Law

Sole Proprietorships, partnerships, and Limited Liability Companies

Corporate Directors, officers, and Shareholders

Investor Protection, insider Trading, and Corporate Governance

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, wills, and Trusts

Liability of Accountants and Other Professionals

International Law in a Global Economy

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