Book Opener

CHAPTERASSESSMENTAcquiring and Evaluating InformationResearch the local requirements for starting abusiness in your state. Find out:10. What types of businesses require a license11. What the local requirements are12. How to select a fictitious name13. How to acquire an occupational license14. What type of zoning ordinances might bean issueWrite a two-page paper explaining your findings.Tax EvasionRichard and Emilio own a plumbing supplybusiness. They sell parts and tools to plumbers,irrigation specialists, and homeowners. Richardfiles the tax return each year and purposelyprovides inaccurate information so that neitherhe nor Emilio will have to pay taxes. Emilio isunaware of what Richard is doing.Debate15. Is Emilio legally responsible for the taxreturn Richard filed for their business?Why or why not?16. If the IRS decides to audit the business, isEmilio financially liable for any backtaxes? Why or why not?17. What would you do if you were Emilio andyou discovered what Richard was doing?For the following cases, give your decision andstate a legal principle that applies.18. Nancy Myers’s law office is in theprestigious Brown & Brown Law OfficeBuilding. To help her business, Myers hasbusiness cards printed that read, “NancyMyers of the Brown & Brown Law Office.”When Samuel Brown, one of the Brownpartners, discovers what Nancy has done,he laughs and tells her she is very clever.Relying on the information on the businesscard, Bob Wash loans Myers $5,000. WhenMyers does not pay the money back, Washsues both Myers and the Brown partnership.Who will be liable to Wash for the moneyMyers borrowed? Explain your answer.19. Ruth Drummond, a general partner, purchasesall merchandise for the partnership.A manufacturer gives Drummond a10-percent discount on goods she purchasesfor the partnership. Drummond never tellsthe other partners about the discount andkeeps the difference for herself. Whenthe other partners learn of the discount,they demand that Drummond turn overthe money she pocketed. Are the partnerscorrect in their demand? Explain youranswer.20. Max Massie is a general partner in theconstruction firm of Massie, Briggs, andYates. While operating a forklift at aconstruction site, Massie collides with alimousine owned by the mayor. The mayorsues all three partners. Yates and Briggsargue that because Massie was at fault, themayor has no cause of action against them.Are they correct? Explain your answer.21. Alan Gallagher and Norma Kendall eachcontribute $20,000 to begin their partnership.At one point, the venture is in trouble,so Gallagher lends the partnership an additional$10,000. Eventually, the partnershipis dissolved. After the creditors are paid,$50,000 of assets remain. Kendall claimsthat each of them should receive $25,000.Is Kendall correct? Why or why not?602 Unit 6: Starting a Business