Exam 13: Choice of Business Entity, Sole Proprietorships, and Partnerships

May a limited partner ever be held liable for partnership liabilities beyond the amount of their partnership contribution? Explain.

A general partnership may be formed by:

Under the Revised Uniform Limited Partnership Act,limited partners may act as consultants and may contribute their expertise to the limited partnership.

Wayne Lewis wants to start a sole proprietorship named Lewis Plumbing Services.Because it will be a sole proprietorship,Wayne has no filing requirements other than obtaining the appropriate business license from the local and state government where the business will be located in. D.B.A. certificate naming himself as principal.

In Clancy v.King,the plaintiff and defendant had operated a general partnership to promote certain literary works.Their partnership agreement contained standard language requiring the duty of diligence and care but specifically permitted the partners to freely compete against the partnership on an individual basis.The partnership entered into a very profitable agreement to have Clancy lend his name to fictional works of other authors taking advantage of Clancy's substantial fame and marketing power.Clancy retained the right to withdraw the use of his name at any time.Subsequent to his divorce from King,Clancy withdrew the use of his name from use in the agreement despite the lucrative nature of the agreement although the Clancy/King partnership continued to operate.Clancy's only participation in the agreement was the use of his name and no labor or other duties were required of him.King sued claiming a lack of good faith and the court decided:

Name the three specific events that are deemed events of dissociation by the Revised Uniform Partnership Act considered to be the most common.

A business which exists in fact although not formally recognized is referred to as being:

General partnerships are pass-through entities regarding taxation,however; limited partnerships are not pass-through entities for taxes.

Business entities are sometimes referred to as business _______.

A "Doing Business As" certificate is also known as a ________ certificate.

What process will the courts use to resolve a dispute between principals of a limited partnership in the absence of a written partnership agreement?

Mike lends money to Kathy as a business loan to Kathy who is capitalizing her start up sole proprietorship named Kathy's Things.If Mike must sue for repayment,he would sue:

If someone successfully sues a sole proprietorship,they must exhaust the businesses assets before they may go after the principal's personal assets.

Bob,Carol and Ted have decided to go into businesses as a limited partnership importing and selling exotic spices.Bob and Carol will manage the business and Ted will have no role in the day to day operations.Bob and Carol contributed have each invested $500,000 and Ted has contributed the building and land that the business will be operated from.Alice,a customer,contracts a rare disease from a contaminated spice sold by the company and sues.Alice is awarded a judgment for $5 million.After she exhausts the assets of the partnership,having the property and building sold and seizing all other property,$3 million remains unpaid.

The duty of a partner to act in the best interests of the partnership is called a ________ duty.

If two people identify themselves as general partners and create a written partnership agreement,the law is obligated to recognize their business entity as a general partnership.

Frank and Jesse are operating as a general partnership.A question has arisen not covered under their partnership agreement and also not addressed by the Revised Uniform Partnership Act.What will the courts do to resolve the situation?

Limited partnerships are required to file a/an ________ return with the IRS each year.

Lisa and Tara are operating a business as a general partnership without an express partnership agreement.Should a dispute arise,the courts will look to ________ to resolve the issue regarding operation of the partnership.

The Revised Uniform Partnership Act mandates that with regard to partnership debts and liabilities,general partners are: