1. Your friend starts a clothing business and organizes it as an LLC. You invest in her business and receive a 15% membership interest in return. The clothing business does poorly and your friend shuts it down. The LLC's liabilities exceed its assets. What do you stand to lose?

Answer

a. Your initial investment.

b. The entire amount of the different between the LLC's liabilities and assets.

c.Nothing.

d.15% of the difference between the LLC's liabilities and assets.

2. Elon, Bill, and Steve start a company in the AI and big data space. Elon contributes $3 million and several patents to the partnership, Bill contributes $10 million to the partnership, and Steve contributes $2 million and a number of physical servers to the partnership. They do not have a written partnership agreement. How will profits be split?

Answer

a. As determined by a third-party arbitrator.

b. 20% to Elon, 66.7% to Bill, 13.3% to Steve.

c. Not enough information is provided.

d. 33.3% to Elon, 33.3% to Bill, 33.3% to Steve.

3. Xiao asks Jenelle to go into business with her. Xiao offers to compensate Jenelle with either a percentage of profits or a (smaller) percentage of revenue. Jenelle views the two offers as otherwise equal. If Jenelle does not want to be in a partnership with Xiao, which percentage should she take?

Answer

a. Profits.

b.Revenue.