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Question 1

Chapter 7

Answer 1

Liquidation: Trustee appointed
-debts are wiped out

Question 2

Chapter 13

Answer 2

Adjustments of debts of individuals with regular income
-repays all or a portion of his debts over a 3 year period to a maximum of 5

Question 3

Chapter 11

Answer 3

Organization: No liquidation, trustee not required
-debtor remains in possession of his or her assets and a plan of reorganization is adopted

Question 4

when to have a trustee

Answer 4

chapter 7 & 13

Question 5

When will they dismiss or convert chapter 7

Answer 5

1. if income is over state medium; then
2. means test or look for general abuse bc the debtor has sufficient funds to pay off debts

Question 6

What is the means test?

Answer 6

(Avg monthly income - allowed expenses ) * 60
If the amount is less than $9075 can continue with Chapter 7

Question 7

Who can not file for chapter 7? (RIBS)

Answer 7

Railroads
Insurance companies
Banks
Savings Institutions

Question 8

Who can not file for chapter 11? (BIBS)

Answer 8

Brokers
Insurance companies
Banks
Savings Institutions

Question 9

What is an automatic stay?

Answer 9

stops almost all collection efforts
-does not apply to criminal, paternity, spousal/child support

Question 10

In an involuntary case who must join the petition?

Answer 10

Only creditors who are owed individually or in aggregate at least $18,600 in unsecured, undisputed debt
- < 12 creditors: one or more owed $18,600
- > 12 creditors: at least three owed $18,600 in aggregate must join the petition

Question 11

What is the property included and DIII at the time of bankruptcy?

Answer 11

The property included and DIII within 180 days after filing
-Divorce property received
-Income rent, dividends, interest
-inheritance
-Insurance

Question 12

a family farmer cannot seek relief under this chapter.

Answer 12

7

Question 13

Under Chapter 7 of the federal Bankruptcy Code, what effect does a bankruptcy discharge have on a judgment creditor when there is no bankruptcy estate?

Answer 13

The debtor is relieved of any personal liability to the judgment creditor

Question 14

A preferential payment is:

Answer 14

• a transfer made to or for the benefit of a creditor
  -on account of an antecedent debt of the debtor
• made within 90 days prior to filing of the petition
  -made while the debtor was insolvent
  -results in the creditor receiving more than the creditor would have received under the bankruptcy code

Question 15

The two ways to prevent discharge:

Answer 15

-Raise objections against discharge
-Nondichargable debts WAFTED

Question 16

What are the objections to discharge?

Answer 16

-Debtor is not an individual
-fraudulent transfers or concealment of property
-unjustifiably failed to keep books and records
-prior discharge within 8 years

Question 17

What are the 6 nondischargeable debts? WAFTED

Answer 17

Willful and malicious injury
Alimony
Fraud
Taxes
Educational Loans
Debts undisclosed in the bankruptcy petition

Question 18

What is the order you have to pay your debts?

Answer 18

1. Secured claimants
2. Priority claimants
3. General creditors who filed their claims on time

Question 19

Priority Claimants SAG WEG CTI

Answer 19

Support obligations owed to spouse and children
Expenses of bankruptcy administration, including fees
Gap claims that accrue in the ordinary course of business
Wage claims of employees
Sums owed for the employee benefits
claims of GRAIN farmers and fisherman
Consumer deposits up to $3,350
Tax claims
Personal injury claims from intoxicated driving

Question 20

FICA % for employees

Answer 20

Gross wages

Question 21

FICA % for self-employed

Answer 21

Net Profits
-self employed 1/2 deductible

Question 22

The most important things to remember about social security for the exam are:

Answer 22

-the employer must pay the tax and collect the emplyees portion of the tax
-all income dervied from labor is taxed; unearned is not taxed

Question 23

Unemployment compensation FUTA

Answer 23

payroll tax against employer
6% of first 7k
excludes the self employed

Question 24

Do all employers pay FUTA?

Answer 24

No, only if it pays an employee for 20 weeks or paid $1,500 in a quarter

Question 25

Who must use the Affordable Care Act?

Answer 25

Employers who have more than 50 employees are considered ALEs

Question 26

Fiduciary duties owed to other partners

Answer 26

Loyalty Obedience Reasonable care Account

Question 27

A limited partnership is made up of

Answer 27

1 or more general partners who have personal liability for all partnership debts and 1 or more limited partners whose liability is generally limited to investment

Question 28

What is a joint venture?

Answer 28

A joint venture is an association of persons engaged as co-owners in a single (special transaction) undertaking for profit. A joint venture is treated as a partnership for most important legal respects.

Question 29

For the partnership agreement to be enforceable, it must be in writing if

Answer 29

A transaction which cannot be completed within a year must be in writing to be enforceable.

Question 30

The Revised Uniform Partnership Act (RUPA) requires that any partnership matters not in the ordinary course of business be approved by

Answer 30

all the partners unless there is an agreement to the contrary in the partnership agreement.

Question 31

Will bankruptcy result in a dissociation?

Answer 31

Yes

Question 32

Is a partner in a LP personally liable for wrongful acts committed by employees?

Answer 32

No, A partner in an LLP is personally liable for tort liabilities arising from his own negligence and the negligence of his direct subordinates. He is NOT personally liable for the negligent actions committed by his partners.

Question 33

What form must be filled out to form an LLC?

Answer 33

The Articles of Organization must be filed with the secretary of state.

Question 34

What is the purpose clause (Ultra Vires Act)?

Answer 34

If a corporation has a narrow purpose clause and undertakes business outside the clause, it is said to be acting "ultra vires"

Question 35

What are the 3 ways to pierce the corporate veil? IC Fraud

Answer 35

Inadequate capitalization Commingling personal funds with corporate funds Fraud committed on existing creditors

Question 36

What are the fundamental changes that require shareholder approval? DAMS

Answer 36

Dissolution Amendments to the articles of incorporation Mergers Sale

Question 37

What are bylaws?

Answer 37

The bylaws are adopted by the incorporators or directors, are not required to be filed, and generally will contain rules desired regarding the operation of the corporation.

Question 38

Shareholders have the right to

Answer 38

vote to elect (typically annually) or remove directors. They also have the right to vote on whether to approve fundamental changes to the corporation, such as dissolution

Question 39

Stock dividends are

Answer 39

dividends in the corporation's own authorized but unissued shares. No assets are distributed. The stockholder's wealth and percentage of ownership are not increased. A stock dividend has no affect on earnings and profits for federal income tax purposes.

Question 40

What is The business judgment rule?

Answer 40

protects corporate directors from personal liability for acts performed in good faith on behalf of the corporation is known as: