sandovals2 - Scott Sandoval AEB3144 Practice Problem 2 May...

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Scott Sandoval AEB3144 Practice Problem 2 May 18, 2009 1. Some of the benefits of a limited liability company include an easier way to transfer ownership as well as an unlimited lifetime for the company. On the liability side of the issue, as an LLC all of the Tanners stand to only lose the shares that they hold. If the apples are found to have arsenic in them and someone dies from it, the Tanners personal assets can not be pursued, just the assets of the LLC. From John’s point of view (expansion) the LLC would be a larger benefit as raising cash would only require selling new shares of stock. There really aren’t any disadvantages to the LLC as long as the IRS does not consider them a corporation. The reason LLC are founded are to have the benefits of partnerships while eliminating double taxation of a corporation. 2. The primary disadvantage to a corporation is double taxation. This is a large drawback for Craig and Wayne as they are not thinking long term and they would like to maximize their personal profits now, instead of giving them away to Uncle
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sandovals2 - Scott Sandoval AEB3144 Practice Problem 2 May...

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