07 31 2013 QUESTION ON THE TEST o Answer True Business computers are an example of tangible business property Can corporations loan money to officers No Also you do not need to know about Wills and Trusts There are no questions about them on the exam as he stated in class Property Real Property o Land and anything permanently attached Personal Property o Tangible movable property and intangible property o The rights powers and privileges a person has in things that o Government issued grant providing one with the exclusive are not real property Patent right to an invention o Duration 20 years Trademark o Distinctive word or symbol that distinguishes its goods or services from those of another o Duration Unlimited as long as use continues Renew every 10 years o 30 of a companies worth is its trademark Copyright o Right of author to exclusive use for a period of time Duration Authors life plus 70 years o Information of a business that gives it a competitive Trade secret advantage o Duration Unlimited Fee Simple Absolute o The most complete interest a person may have in land and includes the entire bundle of rights Such an estate is not qualified by any other interest and it passes upon the death of the owners to the heirs free from any conditions o No one else has a claim to it Tenancy in Common o The most usual method of two or more persons owning property at the same time o None of the formalities or unities required for other specialized forms of co ownership is essential for this method o The co owners or tenants in common may acquire their interests at different times Joint Tenancy o With the right of survivorship o When one owner dies the property passes to the survivor or survivors Tenancy by the Entireties states law provides o Special joint tenancy by husband and wife that about half the Eminent Domain Deed o The right for the government to take your property for the use of the public upon payment of just compensation o A written instrument in a special form signed sealed delivered and used to pass the legal title of real property from one person to another How the title of land is transferred o General Warranty deed Better than a special deed Gives you the rights to everything You own property and everything permanently attached the subsurface all the way down to the core of the earth and air rights to as tall as the tallest building or if no buildings then to as low as a plane can fly o Special deed Limited States the parts you do or don t own o You want to record a deed so that everyone knows that you are the new owner of the property In some states such as Florida your homestead is protected The government or anyone else cannot come after your home regardless of debts owed In the city up to a acre is protected and outside the city up to 160 acres is protected Mortgage o A conveyance of an interest in real property for the purpose of creating a security for a debt o Title Theory States title Power of sale clause Mortgage contract that the bank technically owns the Bank has power to kick you out and sell your house for not paying o Lien Theory States Bank must sue to settle their lien Forms of Business Organizations Simplest organizational form by which a business might Sole Proprietor o Advantages operate There is only one owner Not a taxable organization o Disadvantages All managing and liability is on the one owner Transferability is difficult General Partnership o A business organization consisting of 2 or more owners who agree to carry on a business and share the profits and loses Managing and liability is split 50 50 unless otherwise Not a taxable entity However each partner must file o Advantages documented personally o Disadvantages business Limited to number of people who can own such a A partnership is dissolved every time a new member is added or an old member ceases to be a member Liability of a partner is unlimited o Same thing as a General Partnership but only for a one time Joint Venture deal Limited Partnership o One or more general partners manage the business and are personally liable and one or more limited partners contribute capital and share profits and losses o Transferability is easier it can continue on o Must be in writing filed with secretary of state o For income tax purposes limited partnerships generally are treated like general partnerships with all partners individually reporting and paying taxes on their share of the profits each year Limited partners as a rule do not have to pay self employment taxes because they are not active in the business their share of partnership income is not considered earned income for purposes of the self employment tax o Same thing as a General Partnership but with limited liability o Same as a Limited Partnership but with limited liability o Has members not partners o Has no share holders o Easier to form and operate than other partnerships o Not a taxable entity But owners file individually o Losses flow to owners which can make for a beneficial tax LLP LLLP LLC situation Corporation o Its own separate entity from owners o Liability is limited to the shareholder s investment o If you don t file your 2553 form within 90 days you will be double taxed o Chap C corp o Sub chap s As many shareholders as you want Limited shareholders and not double taxed A partnership is the relationship existing between two or more persons who join to carry on a trade or business Each person contributes money property labor or skill and expects to share in the profits and losses of the business A partnership must file an annual information return to report the income deductions gains losses etc from its operations but it does not pay income tax Instead it passes through any profits or losses to its partners Each partner includes his or her share of the partnership s income or loss on his or her tax return Contracts 5 Elements of a Contract o Offer Offer must be intended to be an offer Must be communicated Definite o Acceptance Duress void Social or economic duress voidable Fraud voidable Undue influence voidable Offer is accepted when it is put in the mail in the U S Offer is accepted when received Internationally Death before acceptance makes it not valid o Consideration Must have a stake Something to lose o Legality o Capacity Minors voidable Mental void Lucidity voidable Intoxication voidable Bilateral Contract Unilateral Contract o When promises are exchanged between two people o An agreement with only a one sided promise
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