Legal Aspects of Horse Management
LESSON ONE QUIZ - HORSE BUSINESS ORGANIZATION
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1. List three advantages and three disadvantages to a sole proprietorship.
ADVANTAGES DISADVANTAGES
2. Susan and Tony want to purchase a horse together. They intend to ride the horse on alternate days. Susan and Tony have (choose one): a). A general partnership. b). A limited partnership. c). A joint venture. d). No business association.
3. Fred would like to purchase a farm and operate it as a boarding, lesson and show facility. He plans on being the person solely responsible for the business and its operations, though he intends on hiring employees to help. Fred also knows Tim and Katie who are interested in investing in his business. What is one of the possible business associations that Fred’s business could take and why? Explain your answer in detail.
4. In a limited partnership, the income of the partnership is taxed (choose one): a). Twice. b). Three times. c). To the partnership. d). Directly to the partners. 5. Describe what is meant by “double taxation.” 6. Why might a shareholder of a corporation become personally liable for a corporation’s debts?
7. The shareholder of a corporation has limited liability for the debts of the corporation because:
8. Many horse businesses are incorporated as an LLC because (choose one): a). It’s a trendy thing to do. b). It’s a more flexible corporation that limits liability and provides tax benefits. c). A c corp is too expensive to form. d). The stock can be publicly traded.
9. A publicly traded c corp. is a good business form for the following: Jeff, Ellen, and Sam pool together their efforts and capital of $5,000.00 each to purchase the horse “Hopeful” and hope to compete and sell the horse and purchase another horse with the proceeds.
True
False
Explain your answer:
10. Would a limited partnership or partnership be a better business form?
Yes
No
Why? 11. A person seeking to start a horse business might limit their personal liability by forming a sole proprietorship.
12. A partnership always requires a written document setting out the existence of the partnership and details concerning the business.
13. How might a person that is not a partner be considered a partner? 14. A corporation ends a). When the first shareholder dies. b). When the organizer dies. c). When the president wants it to. d). A corporation is perpetual. 15. Discuss what may happen if a corporation is not properly capitalized, or fails to conduct required corporate meetings?
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