Question

1. Which form of compensation is a partner entitled to receive from a partnership? A. Weekly salary for work performed.

      B. Fair market value for services rendered.

C. A share of partnership profits.

D. A reasonable management fee for managing the business.

2. In Finch v. Raymer, the court ruled that the plaintiff and defendant had formed a partnership to renovate real property because:

A. Title to the real property was held in the names of both parties.

B. Defendant had drafted the partnership agreement and therefore any ambiguity regarding the parties’ relationship had to be construed against her.

C. Plaintiff proved that the parties had agreed to combine their assets, labor, and skill with the understanding that profits would be shared between them.

D. All of the above.

3. Which of the following is NOT a characteristic of a limited liability company (“LLC”)?

1. Members are jointly and severally liable for all LLC obligations.
2. Members of an LLC may elect to have the LLC treated as a partnership or corporation for income tax purposes.
3. An LLC may be member-managed or manager-managed.
4. An LLC may only be formed in accordance with a statute authorizing the formation of such entities.

Answer 1

1. Option C

Unless otherwise agreed, profits are shared equally among the partners (by number).Unless otherwise agreed, losses are shared in the same manner as profits.If partners have agreement as to how to split losses, but no agreement on profit split, then profits will be shared equally. Sharing of profits is versy essential in Partnership. If two people don't share the profits of the business, they are not partners.

2.Option D

The trial court found that all of the disputed property was partnership property and that each party held a one-half undivided interest in the property. Accordingly, the court declared that the parties owned the disputed real property as tenants in common, and it awarded the plaintiff a judgment for one-half of the value of certain personal property. The court also awarded attorney’s fees to the plaintiff. The court further concluded that the defendant had fraudulently conveyed partnership property to her father, a co-defendant, and the court set aside the sale and held that the defendant was responsible for repaying to her father the amount he paid for the fraudulently conveyed property.

3.Option D

Limited liability companies are corporate structures in the United States where owners are not personally liable for the company's debts or liabilities.Regulations surrounding LLCs vary from state to state.Any entity can form an LLC including individuals and corporations; however, banks and insurance companies cannot.