AL Q5

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LeTourneau University *

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4163-A

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Management

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Jun 24, 2024

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doc

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Domestic and International Aviation Law Questions for Chapter Five Seong Hyun Shim 1. What are the primary forms of business organization? Sole proprietorship / General partnership / Limited partnership / Limited liability company / Limited liability partnership / Corporation 2. From a risk management standpoint, which form or forms of business organization serve to protect the owners from personal vicarious liability for torts committed by employees acting within the scope of their employment and from business debts? both vicarious personal liability for business debts and personal liability for torts committed by workers while acting in the course of their job. 3. Can your chosen form of business protect you from personal liability for the consequences of your own negligence or intentional torts? no 4. What are owners of a corporation called? Shareholder 5. Regardless of its form, what duties does every business owe to its employees? insurance for compensation and unemployment benefits, to pay agreed-upon salaries and deduct payroll taxes, and to provide a secure workplace 6. What is the alter ego doctrine? According to that theory, if you carry on running the company as though it were a sole proprietorship or partnership after it has been incorporated, a plaintiff's lawyer may eventually be able to "pierce the corporate veil" and obtain your personal assets in order to pay off the business's debts or liabilities. 7. What test does the Internal Revenue Service (IRS) apply to determine whether a person is an independent contractor or an employee of a business? A right to control and direct test 8. Does the IRS have the authority to determine that a person is (or was) an employee of the business rather than an independent contractor even if the business had an agreement signed by that worker stating that she is an independent contractor? Indeed. In the future, the IRS may determine that, for the purposes of the company's obligation to withhold payroll taxes, a certain person was, in fact, an employee. 9. What difference does it make to a business whether the IRS considers a worker an employee of the business or an independent contractor? It is legally required of you to pay taxes whether you are an employee, independent contractor, or business . 10. Congratulations! You have been hired as a new assistant manager for an FBO. You learn that the business treats its aircraft salespersons, flight instructors, and aircraft mechanics as independent contractors. You ask your boss why and are told: “It saves us having to do all the paperwork and bear the extra expense of withholding payroll taxes and having to pay for workers’ compensation insurance and unemployment compensation insurance premiums, and it keeps them from getting any ideas about joining a union.” Do you think there’s something wrong with that? Reply thoughtfully and in detail, as a model manager would. Should one of the employees fail to promptly pay income tax, the FBO reserves the right to assert its "right to control and direct." Employee payroll taxes may not be withheld and paid, which means the IRS will have to pay the taxes plus interest and penalties. 11. In a corporation,

a. What decisions do shareholders have the right to make? Elect a board of directors to govern the corporation b. What decisions does the board of directors typically make? Elects officers and makes decisions affecting corporate policy and major business decisions c. What decisions do corporate officers typically make? Execute that policy and make the day-to-day business decisions 12. You are the vice president for finance of JetLink, Inc., a regional airline. You are convinced that it would be prudent for the corporation to order 25 turboprop aircraft and sell an equal number of its regional jets, which are much more expensive to operate. a. Who would you expect to have the authority to make the decision whether to implement your recommendation? Why? It has to be decided by the company's board of directors because it is a big business decision. b. Should there be some written record of that decision? If so, describe. The company's representative or management makes the final decision, but I believe it is crucial because maintaining a written record can serve as proof. c. You are properly authorized to sign a purchase contract for those turboprops. How should your signature appear on that contract? Illustrate. A human being acting on behalf of the corporation must sign the contract and write the check, even if the corporation can lawfully engage into contracts. Three things need to be included in this signature block: your signature, your corporate title, and the corporation's entire legal name. 13. Why is it important to keep the corporation’s money and other assets clearly separated from your own? Only corporate cash should be used to pay off corporate debt. if you use your own money to pay them. That is operating more like a sole proprietorship than a corporation. 14. Refer to the letter from the president (CEO) of Cosmic Aviation Corporation. Identify all legal errors in the letter and correct each one by editing. When signing anything on behalf of the company rather than yourself, there is only one acceptable format. Three things need to be included in this signature block: your signature, your corporate title, and the entire name of the corporation. 15. You are the director of maintenance for Great Plains Airlines, Inc. You determine that the airline could achieve significant cost savings by contracting its aircraft maintenance out to FAA-certified repair stations that would be legitimate independent contractors, instead of continuing to do the maintenance in-house with corporate employees. Who would you expect to have the authority to make the decision on your recommended change? Why? Corporate policies and important personnel-related business decisions are by no means standard business decisions. As a result, we anticipate that the board of directors will have last say over crucial business decisions.

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