Ownership forms for pooled equity investment can differ in terms of how the entity’s cash flows are distributed to its investors. Which of the following ownership structures requires cash flows to be allocated to each shareholder in proportion to his or her ownership of the entity, thereby preventing special allocations to multiple classes of investors?

Question

BlackTom AI · Accepted Answer

The prompt asks about an ownership structure in pooled equity investment where cash flows are distributed strictly in proportion to each investor’s ownership, preventing any special allocations to multiple classes of investors.
Option 1: subchapter S Corporation. This structure is characterized by pro rata allocations of cash flows based on share ownership and typically requires a single class of stock, which aligns with the idea of proportional distribution and no special allocations. This makes it the best fit for the stated requirement.
Option 2: general partnership. In a general partnership, distributions can be allocated in ways that are not strictly proportional to ownership, depending on the partnership agreement. There is flexibility for special allocations, so it does not inherently guarantee pro rata cash flows.
Option 3: limited partnership. A limited partnership often features a general partner and limited partners, with allocations that can be tailored in the partnership agreement. It frequently involves special allocations and preferred returns, which means distributions are not necessarily proportional to ownership alone.
Option 4: limited liability company. An LLC offers flexible allocation rules and can implement special allocations through operating agreements. While an LLC can be set up for pro rata distributions, it does not inherently enforce pro rata cash flows by default, so it does not automatically prevent special allocations across classes.
In sum, among the listed structures, the subchapter S Corporation most consistently enforces pro rata cash flow distribution aligned with ownership and minimizes or prohibits multiple stock classes with unequal allocations, matching the description in the question.

R E 250 A Final Exam

查看解析

登录即可查看完整答案

类似问题

Charlie, Lucy, and Sally opened a restaurant and elected to file paperwork to create and organize their restaurant as an LLC. All of the following are advantages of the LLC form of business for these three members except the following:

Which of the following is not a correct statement regarding the advantage of the partnership entity form over theC corporation form?

Which of the following entities provide personal liability protection to their owners/partners/shareholders? LLC S-Corporation Sole Proprietorship C-Corporation

In recent years, a number of pooled ownership structures have emerged that have changed the analysis of ownership form selection for many investors. Which of the following ownership structures has become the preferred ownership form for many private real estate investors?

Which of the following entities is a company?

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

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单