A _____ is entirely separate from the parties who own it.

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BlackTom AI · Accepted Answer

Kickoff with a quick read of what the question is asking: identify the option that describes a business form that is legally distinct from its owners.
Option 1: 'limited partnership' — A limited partnership does have a legal structure separate from its partners, but the owners (the partners) can still retain liability and there are distinctions between general and limited partners. This option does not capture the idea of complete separateness in the sense used in business law.
Option 2: 'unlimited proprietorship' — This term is not a standard, widely recognized form of business organization. If interpreted as a sole proprietorship with unlimited liability, it remains tied to the owner; there is no separate legal entity distinct from the owner. So this option lacks the required separation concept.
Option 3: 'corporation' — A corporation is established as a separate legal entity from its owners (the shareholders). It can own property, incur debts, sue, and be sued in its own name, independently of who owns its shares. This satisfies the criterion of being entirely separate from the parties who own it.
Option 4: 'general partnership' — In a general partnership, partners share ownership and management, and the entity is generally not treated as a separate legal entity apart from the partners. Liability is typically shared among the partners, and the business is closely tied to the owners, which means it does not meet the requirement of complete separateness.
To summarize, the key concept here is the existence of a distinct legal personality separate from the owners. The option that aligns with that concept is the one describing a corporation, where the entity stands alone in law from its shareholders. The other forms either lack independent legal personality or present ownership and liability characteristics that do not embody total separation from the owners.

KSB-111-003.2025F EXAM 1 -- KSB-111 (Liederman -003)

A _____ is entirely separate from the parties who own it.

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