oo Sprint LTE 7:44 PM Back Resources MGT 2210001 Hypotheticals due by 8:00 a.m.
ID: 2588125 • Letter: O
Question
oo Sprint LTE 7:44 PM Back Resources MGT 2210001 Hypotheticals due by 8:00 a.m. on December 6, 2017. Provide a full discussion and answer to the following. Cite your authority. 1. John, Lesa and Tabir form a limited liability company. John contributes 60 percent of the capital, and Lesa and Tabir each contribute 20 percent. Nothing is decided about how profits will be divided. John assumes that he will be entitled to 60 percent of the profits, in accordance with his contribution. Lesa and Tabir, however, assume that the profits will be divided equally. A dispute over the question arises, and ultimately a court has to decide the issue. What law will the court apply? In most states, what will result? How could this dispute have been avoided in the first place? 2. Discuss fully the differences and similarities of the Corporation, S Corporation and Professional Corporation. In your answer, provide the pros and cons of each entity. 3. The concept of limited liability is an important element of several different business entities. Why is the law designed to allow limited liability in business transactions? Do you agree with this legal concept? Does it foster or hinderExplanation / Answer
1. As John, Lisa and Tabir contributes capital in the ratio of 3:1:1 respectively but in the absence of agreement to share profits among them will result in sharing the profits evenly between the partners
John cannot take 60% share in the profit as there is no prior agreement between the partners to share profits in proportion of capital
Dispute is appealed to court then issue will be resolved by saying share profits evenly
2. Corporations will have share holders investing in the company and board managing the activities of the company
Advantages:
-owners assets were protected
-no of share holders has no limit
Disadvantages :
-more rules and regulations
More expensive in formation
S.Corporation became highly desirable entity for taxes purposes which have all advantages and disadvantages of corporations
Professional Corporations are for specific professionals like Accounting, Lawyers, Medical and Engineers etc.,
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