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Legally, a corporation is not 1_________ by the death or insolvency of a shareholder. Of course, if the knowledge or skill of the deceased was the principal reason for the corporation’s success, the corporation may not 2________ profitable very long. A great advantage of the corporation in providing continuity is the ease of transferring ownership of the shares. Ownership of a family or other close corporation can be 3________ gradually by gift or sale of shares to those who will succeed the present managers. This may minimize the tax consequences at death that would otherwise result from selling the business. Those who will not participate as employees can be given a claim to income through 4_________. Two or more classes of stock can be established to separate the major share of ownership from control.
Generally, it is easier to preserve goodwill in a corporation as owners change than it is in a partnership or sole proprietorship. This results from the continuity of the corporation, which may be very important in a business that 5_______ the public.
The business of a partnership may be continued when a partner dies, becomes 6________, or wishes to retire. Nevertheless, the law treats the partnership as dissolved. Special agreements to keep the business operating must be made in advance of these events, or it may be difficult to 7________ agreement to form a new partnership. A partner can terminate an ordinary partnership at will. However, termination in violation of the partnership agreement may subject the terminating partner to liability for damages. The success of an individual 8__________ usually depends on its owner. Therefore, successful continuation of the business by a widow, widower, son, or daughter is less likely than in a partnership.
