Question

bls 111. quiz #10

1. rubys auto shop is a sole proprietorship owned by ruby. felix sues ruby, for selling felix

a defective vehicle. felix,
a. must sue rubys auto shop, as ruby cannot be personally liable
b. should pursue in the suit the double taxation to which ruby is subject
c. must sue both ruby, and rubys auto shop
d. may sue ruby personally

1. the double taxation of corporations,

a. is that the business, and the rate is then multiplied by 2
b. is that the business is taxed on earnings, and subsequent dividends are also taxed
c. is also performed with partnerships and sole proprietorships
d. is also performed with partnerships, but not sole proprietorships

1. the liability of a limited partner to a partnership:

a. is for all potential liabilities of a general partner
b. is limited to liability for contract, but not for tort
c. is limited to the amount of the limited partners financial investment in the partnership
d. is nonexistent, except for decisions on which the limited partner actually consults

1. ted and samira are partners of a furniture store. at the store, samira sells pete a couch.

pete sues claiming breach of contract as to this sale. pete may have a claim against:
a. samira only
b. samira and ted
c. the partnership entity as filed with the state, only
d. joe, an online shopper, if joe refuses to buy the couch from pete
bonus:

1. partners owe one another a duty of care and loyalty, such that they have a

relationship

Explanation:

1. In a sole proprietorship, the owner (Ruby) is personally liable. So Felix may sue Ruby personally.
2. Double - taxation of corporations means the business is taxed on earnings and subsequent dividends are also taxed.
3. A limited partner's liability is limited to the amount of their financial investment in the partnership.
4. In a partnership, partners are jointly and severally liable for partnership obligations. So Pete may have a claim against Samira and Ted.
5. Partners have a fiduciary relationship as they owe each other a duty of care and loyalty.

Answer:

1. D. May sue Ruby personally
2. B. Is that the business is taxed on earnings, and subsequent dividends are also taxed
3. C. Is limited to the amount of the limited partner’s financial investment in the partnership
4. B. Samira and Ted
5. fiduciary