Which of the Following Is a Disadvantage of an LLC

question 39

Multiple Choice

Which of the following is a disadvantage of an LLC?

• A)For security law purposes, an ownership interest in an LLC is not necessarily a security.
• B)There is no general partner requirement.
• C)Taxable income and losses pass through to the owners.
• D)The states are not uniform in their treatment of limited liability companies.

---

Definitions:

Sole Proprietorship

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.

Dissolve

The process by which a solid, liquid, or gas forms a solution in a solvent, becoming evenly dispersed and losing its distinct form.

Automatically Transferred

A process where ownership or rights shift from one party to another without the need for manual intervention, often by operation of law or contractual agreement.

Franchise Rule

The Franchise Rule is a regulation created by the Federal Trade Commission (FTC) that mandates franchisors to provide all potential franchisees with a disclosure document containing essential information to help in making an informed decision about the investment.