Question

mith Services, Inc., was a trucking company established in 2000 and owned by Tony Smith as the sole shareholder. Smith Services, Inc., had an account with Laker Express, a fuel provider, and often would charge fuel purchases for the company trucks to that account. Smith’s employees would fuel their vehicles and sign the account slip with a notation that the purchase was for Smith Services, Inc. Laker Express would bill Smith Services regularly for the charges on the account. After several months of low business, Smith Services ceased doing business and was dissolved in 2013, with its assets being distributed to creditors. Laker Express only recovered a small part of the amount owed by Smith Services, Inc. Tony Smith then opened up a new trucking service business as a sole proprietor. Laker Express sought to recover Smith Services' unpaid fuel charges, which amounted to about $35,000, from Smith. He argued that he was not personally liable for a corporate debt. Should a court hold Tony Smith personally liable?

Answer 1

Answer:

Answers for related statements are given below.

Explanation:

1. Corporation

2.  Is

3.  Smith services

4.  Did

5. Was and was not

6. Was

7. Limited

8.  Their investment in the corporation

9.   Lost

lo. Might

11. Pierce the corporate veil

12.Abused and indistinguishable

13.Does not appear

14.Does not appear and does not appear

15.Is no and is no

16. Should not

Answer 2

Answer:

No, since he didn't pierce the corporate veil. He personally didn't mix personal activities with business activities. Piercing the corporate veil refers to actions taken by the owners or shareholders themselves, not the employees.

Explanation:

Smith Services Inc. was a limited liability company, and as such was a separate legal entity from its sole owner Tony Smith. The problem is that since it was a single member LLC, limited liability might or might not apply. The IRS directly disregards single member LLCs and directly taxes the owner, but state laws generally protect the owner's personal assets from any of the company's liabilities.

A state court will find Tony Smith personally liable if he pierced the corporate veil, i.e. if he mixed personal matters with the company's matters, then a court might rule against limited liability.

In this case, Smith's best argument would be that he personally didn't pierce the corporate veil by charging fuel on Laker Express gas station. His employees did charge fuel, but apparently he didn't. The corporate veil doctrine is invoked when owners blur the distinction between the company and themselves. Courts only impose personal liabilities to the parties that acted wrongfully, not to innocent parties.