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STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—1ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
whetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱ
ȱ
Answersȱ
1.ȱDoubleȱtaxationȱmeansȱaȱcorporationȱonlyȱpaysȱtaxesȱonȱitsȱȱ 1.ȱ______ ȱ
earningsȱforȱbothȱtheȱcorporationȱandȱtheȱshareholders.ȱȱ
2.ȱTheȱSȱcorporationȱformȱisȱnotȱavailableȱforȱalienȱcorporations.ȱ2.ȱ______ ȱ
3.ȱAnȱoperatingȱagreementȱcannotȱlistȱtheȱdistributiveȱsharesȱofȱ3.ȱ______ ȱ
ȱtheȱowners.ȱȱ
4.ȱOtherȱcorporationsȱcanȱbeȱshareholdersȱinȱanȱSȱcorporation.ȱȱ 4.ȱ______ ȱ
5.ȱOwnersȱofȱanȱLLCȱareȱknownȱasȱpartners.ȱȱ 5.ȱ______ ȱ
6.ȱAnȱLLCȱisȱformedȱbyȱfilingȱarticlesȱofȱorganization.ȱ6.ȱ______ ȱ
7.ȱSȱcorporationsȱareȱnotȱsubjectȱtoȱdoubleȱtaxation.ȱ7.ȱ______ ȱ
8.ȱAnȱSȱcorporationȱcanȱhaveȱanȱunlimitedȱnumberȱofȱstockholders.ȱ8.ȱ______ ȱ
9.ȱDistributiveȱsharesȱdoȱnotȱhaveȱtoȱbeȱequalȱpercentages.ȱ9.ȱ______ ȱ
10.ȱCorporateȱshareholdersȱmustȱagreeȱunanimouslyȱtoȱbeȱtaxedȱȱ 10.ȱ______ ȱ
asȱanȱSȱcorporation.ȱ
LegalȱApplicationsȱ
11.ȱGreg,ȱEloise,ȱandȱJanaȱHookȱdecidedȱtoȱformȱaȱskiȱrentalȱandȱrepairȱbusinessȱasȱ
anȱLLC.ȱJanaȱinvestedȱ$250,000ȱandȱEloiseȱandȱGregȱeachȱinvestedȱ$100,000..ȱTheȱ
operatingȱagreementȱindicatedȱthatȱtheyȱhadȱelectedȱperȱcapitaȱvoting.ȱTwoȱ
yearsȱlaterȱtheyȱwereȱconsideringȱopeningȱaȱsecondȱlocation.ȱȱInȱtheȱdecisiveȱ
vote,ȱJanaȱvotedȱnotȱtoȱopenȱtheȱbusinessȱbutȱEloiseȱandȱGregȱvotedȱtoȱdoȱso.ȱ
WillȱtheȱLLCȱbeȱauthorizedȱtoȱopenȱtheȱsecondȱlocationȱasȱaȱresultȱofȱtheȱvote?ȱ
Explainȱyourȱanswer.ȱ
6-42 Chapter 28 Other Business Forms and Environmental Responsibility
12.ȱMichelleȱLehmanȱownsȱaȱthrivingȱshirtȱmanufacturingȱcompanyȱinȱtheȱUnitedȱ
States.ȱSheȱplansȱtoȱformȱaȱseparateȱSȱcorporationȱinȱherȱhomeȱstateȱtoȱmarketȱ
theȱshirtsȱinȱJapan.ȱSheȱintendsȱtoȱbringȱHidekiȱMatsuki,ȱaȱresidentȱofȱTokyoȱandȱ
theȱownerȱofȱtheȱJapaneseȱdistributionȱcompanyȱsheȱintendsȱtoȱuse,ȱinȱasȱaȱ50%ȱ
stockholderȱofȱtheȱSȱcorporation.ȱCanȱsheȱdoȱso?ȱWhyȱorȱwhyȱnot?ȱȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—1ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱAȱportionȱofȱaȱmultipleȱcountȱfederalȱindictmentȱchargedȱAlbertȱPirroȱwithȱfailȬ
ingȱtoȱreportȱtheȱ“ownershipȱinterest”ȱofȱtheȱChairmanȱofȱtheȱBoardȱofȱHudsonȱ
ValleyȱHospitalȱCenterȱ(Chairman)ȱonȱtheȱincomeȱtaxȱreturnȱofȱDistinctiveȱPropȬ
ertiesȱofȱCrotonȱ(Properties),ȱanȱSȱcorporationȱownedȱbyȱPirro.ȱAllegedlyȱPirroȱ
tionsȱneedȱbeȱlistedȱonȱitsȱtaxȱreturn.ȱOneȱhundredȱpercentȱofȱProperties’ȱsharesȱ
wereȱownedȱbyȱpartiesȱotherȱthanȱtheȱDirector,ȱallȱofȱwhomȱwereȱlistedȱonȱtheȱ
taxȱreturn.ȱShouldȱtheȱcourtȱdismissȱtheȱcount?ȱ[U.S.ȱvs.ȱAlbertȱJ.ȱPirro,ȱJr.ȱ212ȱ
ȱ
ȱ
ȱ
2.ȱLemuelȱandȱFredȱWoodsȱwereȱtheȱonlyȱshareholdersȱinȱtheȱW&WȱFertilizerȱ
Corporation,ȱaȱsubchapterȱSȱcorporation.ȱLemuelȱestablishedȱtheȱLemuelȱP.ȱ
WoodsȱRevocableȱTrust.ȱAmongȱtheȱassetsȱtransferredȱtoȱtheȱtrustȱwereȱallȱtheȱ
businessȱandȱthatȱtheȱbusinessȱmayȱnotȱhaveȱasȱaȱshareholderȱvariousȱtypesȱofȱ
trustsȱincludingȱaȱrevocableȱtrust.ȱDidȱtheȱcreationȱofȱtheȱWoodsȱTrustȱterminateȱ
theȱoperationȱofȱtheȱsubchapterȱSȱcorporation?ȱExplain.ȱ[W&WȱFertilizerȱCorp.ȱv.ȱ
6-44 Chapter 28 Other Business Forms and Environmental Responsibility
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—1ȱRETEACHȱ
Directions:ȱGiveȱeachȱstudentȱtwoȱslipsȱofȱpaper.ȱAskȱthemȱtoȱwriteȱLimitedȱLiabilityȱ
CorporationȱonȱoneȱpaperȱandȱSȱCorporationȱonȱtheȱotherȱpaper.ȱReadȱeachȱcharacȬ
teristicȱtoȱtheȱstudentsȱandȱaskȱthemȱtoȱholdȱupȱtheȱappropriateȱpaperȱforȱeachȱsituaȬ
tion.ȱ
ȱ
NonȬresidentȱaliensȱcannotȱbeȱshareholdersȱ(SȱCorporation)ȱ
Noȱlimitationsȱonȱtheȱnumberȱofȱownersȱ(LimitedȱLiabilityȱCorporation)ȱ
Chapter 28 Other Business Forms and Environmental Responsibility 6-45
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—1ȱENRICHMENTȱ
Congressȱauthorizedȱaȱnewȱcorporateȱformȱmoreȱthanȱ30ȱyearsȱagoȱintendedȱtoȱgiveȱ
smallȱbusinessȱownersȱanȱalternativeȱtoȱtheȱtraditionalȱcorporateȱform.ȱThisȱalternaȬ
tiveȱformȱisȱtheȱSȱcorporation,ȱandȱitsȱmainȱadvantageȱisȱtheȱeliminationȱofȱdoubleȱ
taxation.ȱInȱorderȱtoȱqualifyȱasȱanȱSȱcorporationȱunderȱtheȱIRSȱcode,ȱtheȱbusinessȱ
mustȱsatisfyȱseveralȱrequirementsȱasȱlistedȱbelow.ȱInterviewȱanȱownerȱofȱanȱSȱcorpoȬ
ration,ȱandȱaskȱtheȱindividualȱtoȱexplainȱhowȱtheȱcorporationȱhasȱmetȱeachȱofȱtheȱ
requirements.ȱProvideȱdetailsȱinȱtheȱspacesȱprovided.ȱ
ȱ
1.ȱAȱcorporationȱwantingȱtoȱbeȱtaxedȱasȱanȱSȱcorporationȱmustȱfileȱtheȱappropriateȱ
formȱindicatingȱsuchȱanȱelectionȱwithȱtheȱIRSȱbeforeȱMarchȱ15ȱofȱtheȱtaxȱyear.ȱ
Theȱelectionȱmustȱreflectȱtheȱunanimousȱchoiceȱofȱtheȱstockholders.ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
2.ȱTheȱSȱcorporationȱisȱreservedȱforȱbusinessesȱincorporatedȱinȱtheȱUnitedȱStates.ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
3.ȱOnlyȱnaturalȱpersons,ȱestates,ȱorȱcertainȱtypesȱofȱtrustsȱcanȱbeȱshareholders.ȱ
ȱ
ȱ
ȱ
ȱ
ȱ
6-46 Chapter 28 Other Business Forms and Environmental Responsibility
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—2ȱQUIZȱ
LegalȱConceptsȱ
Directions:ȱFillȱinȱtheȱblank(s)ȱwithȱtheȱmostȱappropriateȱtermȱorȱphraseȱtoȱcompleteȱ
theȱsentence.ȱ
ȱAnswersȱ
ȱ
ȱȱȱ1.ȱ ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱmeansȱthatȱsocietyȱholdsȱaȱcorporationȱȱ
accountableȱforȱfulfillingȱitsȱdutiesȱtoȱsocietyȱjustȱasȱ
aȱnaturalȱpersonȱwouldȱbe.ȱ
ȱȱ1.__________________ȱ
ȱȱ2.ȱInȱ1970ȱamendmentsȱtoȱtheȱCAAȱledȱtoȱȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ.ȱȱȱ2.__________________ȱ
ȱȱ3.ȱPresidentȱNixonȱissuedȱanȱexecutiveȱorderȱcreatingȱ
theȱȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱtoȱprotectȱhumanȱhealthȱandȱtoȱsafeȬ
guardȱtheȱnaturalȱenvironment.ȱ
ȱȱ3.__________________ȱ
ȱȱ4.ȱTheȱȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱestablishedȱtheȱCouncilȱonȱEnvironȬ
mentalȱQualityȱ(CEQ),ȱtheȱfederalȱgovernment’sȱ
mainȱarmȱforȱdataȱcollectionȱandȱpolicyȱformationȱ
onȱpollution.ȱ
ȱȱ4.__________________ȱ
ȱȱ5.ȱAnyȱgovernmentȱagencyȱthatȱmayȱperformȱanȱacȬ
tionȱthatȱcouldȱhaveȱaȱsignificantȱeffectȱonȱtheȱenviȬ
ronmentȱmustȱfirstȱprepareȱa(n)ȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ.ȱ
ȱȱ5.__________________ȱ
ȱȱ6.ȱTheȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱprovidesȱfinancingȱforȱtheȱcleanupȱofȱ
abandonedȱtoxicȱwasteȱsites.ȱ
ȱȱ6.__________________ȱ
ȱȱ7.ȱInȱ1965ȱanȱenergyȱshortageȱledȱtoȱmassiveȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱ
thatȱcoveredȱmultipleȱstatesȱ
ȱȱ7.__________________ȱ
ȱȱ8.ȱȱItȱwasȱtheȱmissionȱofȱtheȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱtoȱpromoteȱ
America’sȱenergyȱsecurityȱthroughȱreliable,ȱclean,ȱ
andȱaffordableȱenergy.ȱȱ
ȱȱ8.__________________ȱ
ȱȱ9.ȱTheȱOPECȱoilȱembargoȱinȱ1973ȱledȱPresidentȱNixonȱ
toȱȱȱ
announceȱȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱ,ȱaȱprogramȱtoȱeliminateȱAmerȬ
ȱȱ9.__________________ȱ
10.ȱInȱ2007ȱaȱ60ȱMinutesȱnewsȱstoryȱsaidȱthatȱFrance’sȱ
useȱofȱȱȱȱȱȱȱȱ?ȱȱȱȱȱȱȱȱgaveȱitȱtheȱcleanestȱairȱofȱanyȱindusȬ
trializedȱcountryȱandȱtheȱcheapestȱpowerȱinȱallȱofȱ
Europe.ȱ
10.__________________ȱ
Chapter 28 Other Business Forms and Environmental Responsibility 6-47
LegalȱApplicationsȱ
11.ȱWhenȱanȱinvestigationȱbyȱtheȱstate’sȱdepartmentȱofȱhealthȱshowedȱitsȱcancerȱ
deathȱrateȱtoȱbeȱtwiceȱtheȱnationalȱaverage,ȱtheȱEPAȱwasȱcalledȱinȱtoȱAltitude,ȱ
sponsibleȱforȱtheȱminingȱandȱresultantȱpollutionȱhadȱlongȱsinceȱgoneȱoutȱofȱ
business.ȱDueȱtoȱaȱdeepȱeconomicȱdownturn,ȱtheȱstateȱofȱMissouriȱcouldȱnotȱ
bearȱtheȱcost.ȱFromȱwhatȱsourceȱcanȱtheȱfundsȱbeȱobtainedȱtoȱcorrectȱtheȱsituaȬ
tion?ȱ
6-48 Chapter 28 Other Business Forms and Environmental Responsibility
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱȱLESSONȱ28—2ȱPRACTICEȱACTIVITYȱ
Readȱtheȱfollowingȱcasesȱandȱanswerȱtheȱquestionsȱaboutȱthem.ȱAttachȱaȱpageȱifȱadditionalȱ
spaceȱisȱneededȱforȱanswers.ȱ
ȱ
1.ȱAtlanticȱResearchȱCorporationȱ(ARC)ȱretrofittedȱrocketȱmotorsȱforȱtheȱgovernȬ
mentȱofȱtheȱUnitedȱStatesȱatȱaȱfacilityȱthatȱwasȱownedȱbyȱtheȱUnitedȱStatesȱDeȬ
ShouldȱtheȱUnitedȱStatesȱhaveȱtoȱpayȱpartȱofȱtheȱcostsȱofȱtheȱcleanup?ȱWhyȱorȱ
Whyȱnot?ȱ[(UnitedȱStatesȱv.ȱAtlanticȱResearchȱCorporation,ȱ551ȱU.S.ȱ128,ȱ(U.S.ȱSuȬ
premeȱCourt,ȱ2007)]ȱ
ȱ
ȱ
ȱ
2.ȱAtȱaȱrecentȱEnvironmentalȱLawȱInstituteȱforum,ȱexpertsȱfromȱtheȱFederalȱEnergyȱ
RegulatoryȱCommission,ȱtheȱMineralsȱManagementȱServiceȱ(MMS),ȱtheȱDeȬ
partmentȱofȱEnergy,ȱandȱanȱindustryȱgroup—theȱOceanȱRenewableȱEnergyȱCoaȬ
lition,ȱexpressedȱtheȱneedȱforȱaȱspeedȱupȱinȱtheȱtestingȱofȱoffshoreȱrenewableȱenȬ
jectsȱcanȱbeȱinitiated.ȱBothȱcriticsȱandȱsupportersȱalikeȱstateȱthatȱtheȱcomposingȱ
ofȱaȱthoroughȱEISȱisȱhandicappedȱbyȱtheȱinnovativeȱnaturesȱofȱtheȱtechnologiesȱ
toȱbeȱtested.ȱAccordingȱtoȱmany,ȱasȱaȱconsequence,ȱthereȱsimplyȱisȱnoȱwayȱtoȱ
fullyȱpredictȱtheȱpositiveȱandȱnegativeȱimpactsȱofȱtheȱprojects.ȱȱShouldȱtheȱreȬ
quirementȱforȱanȱadequateȱEISȱunderȱNEPAȱbeȱwaivedȱtoȱallowȱtheseȱprojectsȱtoȱ
goȱforward?ȱWhyȱorȱwhyȱnot?ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—2ȱRETEACHȱ
ȱ
Directions:ȱUnscrambleȱtheȱlettersȱfollowingȱeachȱquestionȱandȱwriteȱtheȱanswerȱinȱ
theȱblankȱprovided.ȱȱ
ȱAnswersȱ
1.ȱWhatȱrulesȱareȱusedȱtoȱregulateȱmajorȱpollutingȱ1.ȱ________________________ ȱ
sourcesȱandȱtoxicȱchemicalȱmixesȱthatȱcanȱgetȱ
2.ȱInformedȱbodyȱthatȱisȱresponsibleȱforȱȱ 2.ȱ________________________ ȱ
establishingȱfederalȱpolicyȱonȱallȱformsȱofȱpolluȬ
3.ȱWhatȱlabelȱdoesȱsocietyȱuseȱforȱtheȱdutiesȱtheȱȱ 3.ȱ________________________ ȱȱ
4.ȱWhatȱtypeȱofȱenergyȱburnsȱcleanȱandȱhasȱ4.ȱ________________________ ȱ
littleȱimpactȱonȱtheȱair,ȱbutȱleavesȱaȱtoxicȱwasteȱ
5.ȱWhatȱenergyȱprogramȱcameȱaboutȱdueȱtoȱtheȱȱ 5.ȱ________________________ ȱ
6.ȱWhatȱgovernmentȱagencyȱpromotesȱenergyȱȱ 6.ȱ________________________ ȱ
7.ȱWhichȱagencies’ȱmissionȱstatementȱsaysȱ“toȱȱ 7.ȱȱ________________________ ȱ
ȱprotectȱhumanȱhealthȱandȱtoȱsafeguardȱtheȱ
naturalȱenvironment—onȱwhichȱlifeȱdepends”ȱȱȱ ȱȱȱ
8.ȱThisȱoccursȱwhenȱallȱtheȱpowerȱgoesȱoutȱdueȱtoȱ8.ȱ________________________ ȱȱ ȱ
9.ȱTheseȱreportsȱmustȱdetailȱtheȱpositiveȱandȱȱȱȱȱȱȱ 9.ȱ________________________ ȱ
ȱadverseȱimpactȱofȱanyȱmajorȱfederalȱactionȱthatȱ
willȱhaveȱaȱsignificantȱeffectȱonȱtheȱenvironȬ
ȱȱ10.ȱWhatȱprovidesȱfinancingȱforȱtheȱcleanupȱofȱȱ 10.ȱ________________________ ȱ
ȱabandonedȱwasteȱsitesȱforȱwhichȱtheȱEPAȱcanȱ
6-50 Chapter 28 Other Business Forms and Environmental Responsibility
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱLESSONȱ28—2ȱENRICHMENTȱ
Thisȱlessonȱfocusedȱonȱtheȱaspectsȱofȱtheȱconceptȱofȱcorporateȱresponsibility.ȱItȱexȬ
plainedȱhowȱsocietyȱcameȱtoȱexpectȱthatȱcorporationsȱwouldȱactȱtoȱfulfillȱcertainȱbaȬ
sicȱdutiesȱowedȱnotȱtoȱtheȱcorporateȱstockholdersȱbutȱtoȱsocietyȱitself.ȱTheȱfulfillȬ
mentȱofȱtheseȱdutiesȱwouldȱhopefullyȱproduceȱaȱbenefitȱforȱsocietyȱsomewhatȱ
equivalentȱtoȱtheȱbenefitȱconferredȱonȱcorporationsȱbyȱallowingȱtheirȱexistenceȱinȱ
theȱfirstȱplace.ȱTwoȱofȱtheȱmostȱsignificantȱareasȱofȱcorporateȱresponsibilityȱwereȱ
thenȱdiscussed:ȱenvironmentalȱprotectionȱandȱenergyȱconservation.ȱ
ȱ
1.ȱInȱyourȱstate,ȱdetermineȱwhatȱagencyȱorȱagenciesȱareȱresponsibleȱforȱenvironȬ
mentalȱprotection.ȱ
ȱ
ȱ
2.ȱLocateȱaȱSuperfundȱsiteȱinȱyourȱstateȱorȱinȱanȱadjoiningȱstate.ȱȱResearchȱhowȱtheȱ
siteȱwasȱdiscovered,ȱwhatȱdamageȱtoȱhealthȱandȱpropertyȱwereȱinflictedȱbyȱtheȱ
pollution,ȱandȱhowȱtheȱcleanupȱandȱotherȱcorrectiveȱmeasuresȱwereȱcarriedȱout.ȱ
DoȱyouȱfeelȱthatȱjusticeȱhasȱbeenȱdoneȱforȱthoseȱadverselyȱaffectedȱbyȱtheȱpolluȬ
tion?ȱȱWhyȱorȱwhyȱnot?.ȱ
ȱ
ȱ
3.ȱObtainȱaȱcopyȱofȱanȱenvironmentalȱimpactȱstatementȱforȱaȱfederalȱprojectȱnearȱ
yourȱlocation.ȱReviewȱtheȱdocumentȱtoȱseeȱifȱitȱfullyȱlistsȱtheȱpositiveȱandȱadȬ
verseȱimpactsȱofȱtheȱactionȱandȱtheȱalternativesȱtoȱit.ȱCouldȱyouȱuseȱitȱtoȱbaseȱ
yourȱpositionȱinȱaȱdebateȱoverȱtheȱadvisabilityȱofȱtheȱproject?ȱȱWhyȱorȱwhyȱnot?ȱ
ȱ
ȱ
ȱ
4.ȱResearchȱtheȱhistoryȱofȱenergyȱregulationȱinȱthisȱcountyȱsinceȱ1973.ȱDoȱyouȱfeelȱ
thatȱtheȱattemptsȱatȱregulationȱhaveȱbeenȱproperlyȱandȱeffectivelyȱcarriedȱout?ȱ
ȱ
ȱ
ȱ
5.ȱResearchȱtheȱhistoryȱofȱFrance’sȱuseȱofȱnuclearȱpower.ȱIdentifyȱtheȱreasonsȱwhyȱ
theirȱprogramȱhasȱbeenȱmoreȱsuccessfulȱthanȱthatȱinȱtheȱUnitedȱStates.ȱȱDoȱyouȱ
feelȱthatȱnuclearȱpowerȱcanȱultimatelyȱplayȱaȱsimilarȱroleȱinȱthisȱcountry?ȱWhyȱ
orȱwhyȱnot?ȱ
STUDENT _______________________________________ CLASS _______________________ DATE _________
ȱ
ȱ
TESTȱ
CHAPTERȱ28
SECTION I—IDENTIFY LEGAL TERMS
Directions:ȱPlaceȱaȱTȱforȱTrueȱorȱanȱFȱforȱFalseȱinȱtheȱAnswersȱcolumnȱtoȱshowȱ
hetherȱeachȱofȱtheȱfollowingȱstatementsȱisȱtrueȱorȱfalse.ȱw
Answers
1.ȱAȱcorporationȱwishingȱtoȱqualifyȱasȱanȱSȱcorporationȱmustȱfileȱtheȱ
electionȱpaperworkȱbyȱAprilȱ15ȱofȱtheȱtaxȱyearȱinȱwhichȱtheȱelectionȱ
isȱtoȱbeȱeffective.ȱ
2.ȱNationalȱairȱqualityȱstandardsȱwereȱcreatedȱtoȱregulateȱairȱpollutionȱ
andȱholdȱpollutersȱaccountable.ȱ
3.ȱAnȱelectionȱofȱanȱSȱcorporationȱtoȱresumeȱbeingȱtaxedȱasȱaȱCȱcorpoȬ
rationȱmustȱbeȱtheȱunanimousȱdecisionȱofȱtheȱshareholders..ȱ
4.ȱTheȱSuperfundȱwillȱonlyȱbeȱutilizedȱifȱresponsibleȱpartiesȱforȱtheȱ
pollutionȱcannotȱbeȱfound.ȱ
5
.ȱAnȱSȱcorporationȱisȱsubjectȱtoȱdoubleȱtaxation.ȱ
6
.ȱNuclearȱpowerȱdoesȱnotȱburnȱcleanerȱthanȱcoal.ȱ
7
.ȱTheȱownersȱofȱanȱLLCȱareȱknownȱasȱdirectors.ȱ
8.ȱProjectȱIndependenceȱwasȱintendedȱtoȱfreeȱtheȱnationȱofȱitsȱdeȬ
pendenceȱonȱforeignȱoil.ȱ
9.ȱAnȱLLCȱisȱformedȱbyȱfilingȱtheȱarticlesȱofȱincorporationȱwithȱtheȱ
appropriateȱstateȱagency.ȱ
10.ȱTheȱdistributiveȱsharesȱofȱanȱLLCȱmustȱbeȱinȱequalȱamountsȱforȱ
eachȱstockholder.ȱ
ȱ1.ȱȱ ȱ
ȱ
ȱ2.ȱȱ ȱ
ȱ
ȱ3.ȱȱ ȱ
ȱ
ȱ
ȱ4.ȱȱ ȱ
ȱȱ
ȱ5.ȱȱ ȱ
ȱ6.ȱȱ ȱ
ȱ7.ȱȱ ȱ
ȱ8.ȱȱ ȱ
ȱȱȱ
ȱ9.ȱȱ ȱ
ȱ
ȱ10.ȱȱ ȱ
ȱ
SECTION II—THINK CRITICALLY ABOUT LEGAL CONCEPTS
Directions:ȱInȱtheȱAnswersȱcolumnȱatȱtheȱrightȱofȱeachȱstatement,ȱwriteȱtheȱletterȱthatȱ
representsȱtheȱword,ȱorȱgroupȱofȱwords,ȱthatȱcorrectlyȱcompletesȱtheȱstatement.ȱ
ȱ
ȱȱ Answers
11
.
Inȱ1965ȱanȱenergyȱshortageȱledȱtoȱaȱmassiveȱ(a)ȱoilȱembargo,ȱȱȱȱ(b)ȱ
energyȱrationing,ȱ(c)ȱpublicȱprotest,ȱ(d)ȱblackout.ȱ
11._______ȱ
6-52 Chapter 28 Other Business Forms and Environmental Responsibility
ȱȱ Answers
12
.
UnderȱmostȱLLPȱstatutes,ȱtheȱlimitedȱliabilityȱprotectionȱextendsȱ
onlyȱtoȱshieldȱagainstȱtheȱconsequencesȱofȱconductȱinvolvingȱtheȱ
tortsȱofȱothersȱinȱtheȱ(a)ȱcorporation,ȱ(b)ȱpartnership,ȱ(c)ȱproprieȬ
torshipȱ(d)ȱnoneȱofȱtheȱaboveȱ
12._______ȱ
13
.
TheȱNationalȱEnvironmentalȱPolicyȱActȱestablishedȱ(a)ȱpollutionȱ
controlȱstandards,ȱ(b)ȱwaterȱsafetyȱstandards,ȱ(c)ȱairȱqualityȱ
standards,ȱ(d)ȱtheȱCouncilȱonȱEnvironmentalȱQualityȱ
13._______ȱ
14
.
Doubleȱtaxationȱmeansȱthatȱ(a)ȱtheȱcorporationȱisȱtaxedȱonȱcorȬ
porateȱincomeȱandȱcorporateȱshareholdersȱareȱtaxedȱonȱdiviȬ
dends,ȱ(b)ȱtheȱcorporation’sȱtaxȱrateȱisȱdoubled,ȱ(c)ȱtheȱshareȬ
holdersȱtaxȱrateȱisȱdoubled,ȱ(d)ȱbothȱbȱandȱcȱ
14._______ȱ
15
.
TheȱEnvironmentalȱProtectionȱAgencyȱ(a)ȱcombinedȱmultipleȱ
programsȱfromȱdifferentȱagenciesȱintoȱone,ȱ(b)ȱsafeguardsȱourȱ
naturalȱenvironment,ȱ(c)ȱestablishesȱfederalȱenvironmentalȱpolȬ
icy,ȱ(d)ȱaȱandȱbȱareȱcorrectȱ
15._______ȱ
16
.
ShareholdersȱinȱLLCsȱ(a)ȱhaveȱnoȱvotingȱrights,ȱ(b)ȱmustȱhaveȱallȱ
theȱsameȱvotingȱrights,ȱ(c)ȱmayȱhaveȱperȱcapitaȱvotingȱ(d)ȱnoneȱ
ofȱtheȱaboveȱ
16._______ȱ
17
.
TheȱnumberȱofȱshareholdersȱinȱanȱSȱcorporationȱmustȱbeȱ(a)ȱ75ȱ
orȱless,ȱ(b)ȱ60ȱorȱless,ȱ(c)ȱ30ȱorȱless,ȱ(d)ȱnoneȱofȱtheȱaboveȱ
17._______ȱ
18
.
Whatȱareȱenvironmentalȱimpactȱstatementsȱusedȱfor?ȱ(a)ȱCEQȱ
policyȱformation,ȱ(b)ȱdetailingȱpositiveȱandȱadverseȱimpactsȱofȱ
proposedȱactionsȱonȱtheȱenvironment,ȱ(c)ȱinformingȱtheȱpublicȱ
aboutȱproposedȱprojectsȱandȱtheirȱpotentialȱenvironmentalȱimȬ
pact,ȱ(d)ȱallȱofȱtheseȱ
18._______ȱ
19
.
IfȱaȱpartnerȱofȱanȱLLPȱcommitsȱprofessionalȱmalpracticeȱandȱtheȱ
recoveryȱfromȱitȱexceedsȱtheȱamountȱofȱliabilityȱinsuranceȱcoverȬ
age,ȱ(a)ȱtheȱotherȱpartnersȱwillȱhaveȱtheirȱpersonalȱfortunesȱenȬ
dangered,ȱ(b)ȱtheȱotherȱpartnersȱwillȱnotȱhaveȱtheirȱpersonalȱforȬ
tunesȱendangered,ȱ(c)ȱtheȱpartnershipȱwillȱbeȱliquidated,ȱȱȱȱȱ(d)ȱ
bothȱaȱandȱcȱ
19._______ȱ
Chapter 28 Other Business Forms and Environmental Responsibility 6-53
SECTION III—APPLY LEGAL PRACTICES
20.ȱDianeȱshowedȱincredibleȱsewingȱandȱcraftingȱabilityȱevenȱasȱaȱchild.ȱWhen,ȱasȱaȱ
youngȱadult,ȱsheȱdecidedȱtoȱcreateȱ“CraftingȱCreationsȱUnlimited,”ȱ125ȱofȱherȱ
friendsȱandȱfamilyȱwantedȱaȱshareȱofȱherȱbusiness.ȱWhatȱformȱofȱorganizationȱ
shouldȱsheȱchoose?ȱExplainȱyourȱanswer.ȱ
Chapter 28 Other Business Forms and Environmental Responsibility
6-54
ANSWERS
Lessonȱ28—1ȱ
Quiz
ȱ
11.ȱYes.ȱȱAsȱtheȱdecisionsȱareȱtoȱbeȱmadeȱbyȱperȱcapitaȱvoting,ȱnotȱbyȱtheȱamountȱofȱ
Practice Activity
1.ȱYes.ȱȱTheȱcourtȱheldȱthatȱtheȱwordingȱofȱtheȱcountȱhadȱtoȱbeȱstrictlyȱconstruedȱ
againstȱtheȱprosecutionȱasȱtheȱprosecutionȱhadȱdraftedȱit.ȱTheȱInternalȱRevenueȱ
2.ȱYes,ȱtransferȱofȱtheȱsharesȱtoȱtheȱtrustȱviolatedȱtheȱrulesȱforȱbeingȱaȱsubchapterȱSȱ
corporation.ȱLemuelȱarguedȱthatȱtheȱfederalȱgovernmentȱshouldȱlookȱthroughȱ
Chapter 28 Other Business Forms and Environmental Responsibility 6-55
