Chapter 28: Other Business Forms and Environmental
Responsibility
1. The government enforces more requirements on a limited partnership than it does on a general partnership.
2. Both the Clean Air Act and the Clean Water Act have been amended to make them more effective.
3. For tax purposes, an S corporation’s earnings are treated the same as a partnership’s.
4. Like the French, the United States has used a standard design to build easily regulated and safe nuclear power
plants.
5. Despite the efforts of the EPA, individual states have been more flexible than the federal government in their
ability to take action and respond to energy related problems.
6. The owners of an LLC are known as directors.
7. The earnings of an LLC are taxed as though it were a partnership.
8. The LLP was created for professional partnerships trapped in the partnership form by tax considerations.
9. The LLP protects innocent partners from the consequences of errors and negligence stemming from all
partnership operations.
10. Corporate responsibility means that society expects corporate decision makes to adhere to the law and hold
to higher principles than solely making a profit.
11. An environmental impact statement
A. is a report detailing only the negative impact a major federal action will have on the environment
B. is not available to the public.
12. The EPA created the Superfund to make money available for
C. upgrading the national parks.
D. ending the nation’s dependence on foreign oil.
13. The Environmental Protection Agency was created
A. to coordinate and supervise federal environmental statutes.
B. as an informed body to establish a federal environmental policy.
14. Double taxation means that
C. the shareholders’ tax rate percentage is doubled.
D. both b and c.
15. S corporation earnings are
C. taxed both as corporate income and individual owner’s income.
D. none of these.
16. S corporations can have only one class of stock, but shareholders
A. have no voting rights.
B. are required to all have the same voting rights.
17. The number of shareholders in an S corporation must be
C. 25 or less.
D. unlimited.
18. Which of the following is not an advantage of the LLC?
A. members are allowed to participate in management
B. no limitation as to whom or what can be a member
19. If a partner in an LLP commits professional malpractice and the recovery from it exceeds the amount of
liability insurance coverage,
C. the partnership will be liquidated.
D. both a and c.
20. Which type of business organization is subject to double taxation?
A. subchapter S corporation
B. partnership
21. The National Environmental Policy Act was passed
A. to establish federal environmental policy.
B. to push the development of state-based environmental controls.
22. What is the limitation on the number of members or stockholders for an LLC?
C. 50 or fewer
D. 100 or fewer
23. Which of the following statements regarding a limited partnership is not true?
C. It is not subject to double taxation.
D. Limited partners that manage can be held personally liable for the partnership’s debts.
24. Why was the LLC form of business organization created in the United States?
A. to give large corporations a new option
B. to give small businesses the tax advantages of a subchapter C organization
25. If Kurt wants to establish his corporation as a subchapter S corporation, which of the following
requirements must he meet?
A. The corporation must have 100 or fewer shareholders.
26. The National Environmental Policy Act established the _________________ which has become the federal
government’s main arm for gathering data on pollution and utilizing that data in formulating policy in the
27. The _______________ is the federal government agency whose mission is to “promote America’s energy
security through reliable, clean, and affordable energy.”
28. The ____________________ status is reserved for businesses incorporated in the United States.
29. A corporation wanting to be taxed as an S corporation must file the appropriate form indicating such an
election with the IRS before ____________________ of the tax year in which the election is to be effective.
30. An S corporation must have ____________________ or fewer stockholders.
31. An LLC is formed by filing articles of ____________________ in an appropriate state office.
32. The owners of an LLC are known as ____________________.
33. After documents submitted to the state to organize an LLC, the most necessary document for an LLC is its
____________________.
34. LLC members’ shares of profits and losses are referred to as ____________________ shares.
35. An ______________________ is filed for any major federal action having a significant effect on the
environment. The report includes items such as the positive and negative impact of the proposed action on the
environment and the alternatives to it.
36. Amendments to the Clean Air Act in 1970 led to ____________________ to control all the major air
polluting sources and toxic chemical mixes.
37. The EPA’s ____________________ provides financing for the cleanup of abandoned waste sites for which
the EPA can find no responsible party.
38. The LLC form allows an assignment of ____________________ percentages among members regardless of
capital contribution percentages.
39. Many times a member with outside income will want to take a much larger percentage of the LLC’s
____________________ than profits for tax purposes.
40. Double taxation means that the corporation is taxed on corporate income and the corporate shareholder
owners are taxed on the ____________________ they receive.
41. Diane showed incredible sewing and crafting ability even as a child. When, as a young adult, she decided to
create “Crafting Creations Unlimited,” 125 of her friends and family wanted a share of her business. What form
of organization should she choose? Explain your answer.
An LLC would be the best alternative. Unlike the subchapter S form which is limited to 75, all 125 of her
42. Explain the difficulty and complexity of energy regulation in the United States.
The nation’s reliance on the marketplace resulted in an inconsistent, and ineffective policy for the nation’s first
200 years. Most people dismissed the warning signs. However, in 1965 an electric power blackout in the