Business Organization Types Flashcards
7 cards from real CLA/CP Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Business Organization Types flashcards as text
What document is used to convert a corporation into an LLC in most states?
Answer: Articles of conversion or a certificate of conversion
Most states provide a statutory conversion procedure requiring filing articles of conversion (or certificate of conversion) with the Secretary of State to change entity type.
A nonprofit corporation that qualifies under IRC § 501(c)(3) must ensure that its assets, upon dissolution, are distributed to:
Answer: Another qualifying tax-exempt organization or government entity
IRC § 501(c)(3) organizations must include a dissolution clause ensuring remaining assets pass to another 501(c)(3) entity or government, preventing private inurement.
Which entity type is typically used for real estate investment and is often structured to avoid both securities registration and double taxation?
Answer: Limited liability company (LLC)
LLCs are widely used for real estate investment because they provide limited liability and pass-through taxation without the complex regulatory requirements of a REIT.
Under partnership law, what is a 'partner by estoppel'?
Answer: A person who is held liable as a partner because they represented themselves as one
A partner by estoppel is someone who, though not actually a partner, is held liable as one because they represented themselves as a partner and a third party relied on that representation.
Which of the following is a key advantage of a limited liability limited partnership (LLLP) over a traditional limited partnership?
Answer: General partners receive limited liability protection similar to limited partners
In an LLLP, general partners enjoy liability protection for the acts of other partners, unlike traditional LPs where general partners bear full personal liability.
A paralegal preparing a certificate of authority for a foreign corporation should file it with:
Answer: The Secretary of State (or equivalent) of the state where the corporation wants to do business
A foreign corporation must qualify to do business in a new state by filing a certificate of authority (or application for authority) with that state's Secretary of State.
Which of the following circumstances would most likely trigger the dissolution of a general partnership under the Uniform Partnership Act?
Answer: All partners consent in writing to dissolve
Under the UPA, a partnership is dissolved by unanimous partner consent, among other triggering events, such as expiration of a definite term or accomplishment of the stated purpose.