 In this presentation, we will take a look at multiple choice questions related to partnerships. First question, which of the following is generally thought of as a benefit of partnership organization? A. Limited life B. Mutual agency C. Unlimited liability D. Separate legal entity and E. Flexibility with profit sharing terms. So we'll go through this again and see if we can eliminate some options with the process of elimination. So question, which of the following is generally thought of as a benefit of partnership organization? A. Limited life Now a partnership has limited life, but it's not really thought of as a benefit because you know, a lot of times it's a benefit to have the partnership you would want the partnership to exist after your death possibly to have something so that would typically be thought of as a. So limited life is not usually thought of as a benefit, although it is a it is a characteristic of a partnership. So I'm going to remove that B says mutual agency and again there is a mutual agency issue, but we typically think so it might be good, you know, but we typically think of mutual agency problems because that typically means that there's going to be multiple individuals that that have can combine the business to different contracts and because of differences between risk versus reward and whatnot between the agents, the partners, there may be negative outcomes. And so we typically think of mutual agency problems, but there could be benefits as well as from mutual agency as well, because that's part of being a partnership, you got two individuals who are involved in the decision making process. Just the problem is that, of course, one, the individuals have, you know, if you vote on everything, it can slow things, you have a committee, basically, it can slow things down, but and if one individual is making decisions without someone else, then it could be, you know, it could cause problems as well with the other individuals because they're committing the entire partnership. C says unlimited liability. That's a characteristic, but definitely considered not good, typically. And then D says a separate legal entity, and a partnership is not a separate legal entity. A corporation is. And then E says flexibility with profit sharing terms. And that sounds pretty good. So I'm going to leave it with B and E. We'll read through it again. Which of the following is generally thought of as a benefit of a partnership organization, either B or E, mutual agency or flexibility with profit sharing terms. And of the two, I would think that B, again, could be thought of as positive or negative, probably negative for most discussions of it. And then E's flexibility, this is really a benefit of a partnership. So a partnership has a lot of flexibility with profit sharing and being able to split the profits between the partners in different ways, whatever way best suits that people involved in the partnership. So final answer and question, which of the following is generally thought of as a benefit of a partnership organization? E, flexibility with profit sharing terms. Next question. Two people form a limited liability company. Unless elected to be treated as otherwise, the Internal Revenue Service will tax the LLC, limited liability company, as. A, an S corporation. B, a C corporation. C, a non-taxable entity. D, a partnership. And E, an estate. So let's go through that again. Two people form a limited liability company unless elected to be treated otherwise, the Internal Revenue Service will tax the LLC as. So this is one of those hybrid kind of organizations, the limited liability company and really it's confusing because you really have characteristics between a partnership and a corporation. And then so the question is, is it more of a partnership or a corporation? What they're trying to do, of course, is to have liability protection as a corporation would as a separate week. And then also have elimination of the double taxation and that's going to be a benefit of a partnership. So they want to kind of have the best of both worlds. That's what an LLC does. That's what an LLC is there for. So if we go through these, then A says an S corporation. That's going to be a different type of organization similar to an LLC, but it's not going to be taxed as an S corporation. That's another one that's going to be in between a partnership and corporation. A, C corporation. B says we might leave that one because that's one of the two options. Really, we're talking about between a partnership and a corporation. That's what an LLC is. So I'll leave that one for now. C says a non-taxable entity. And again, we might think it's going to be taxed as a non-taxable entity or be treated in that way, but I'll keep that one for now. D says a partnership. And that's, again, the main option is really between B and D, you would think, because an LLC is between a partnership and a C corporation. And then E says an estate. And I don't think it's going to be an estate. So we can probably eliminate the estate. So if we go through this again, two people form a limited liability company unless elected to be treated otherwise. The internal revenue service will tax the LLC as either B, a C corporation, C, a non-tax entity, or D, a partnership. And again, I'm going to remove the non-tax entity, even though, you know, that it is kind of a flow through type of entity. And I think the major options are going to be between B and D. And between the two, the LLC will typically be taxed as a partnership. And that's typically the way it's going to end up working here. It's going to be a flow through entity in a similar fashion as a partnership. So in essence, we'll do all the accounting type of information for it in a similar fashion as we would with a partnership when we have an LLC. So final question and answer, two people form a limited liability company unless elected to be treated otherwise. The internal revenue service will tax the LLC as D, a partnership.