Explore BrainMass

Alter-Ego Liability

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

I am having difficulty finding a case that involves alter-ego liability on findlaw.com. I am also having troubling listing the elements the court considered when determining whether to pierce the corporate shield. Incorporate the material from the text and support your statements.

Is it ethical for a company to move its corporate headquarters overseas to avoid paying income tax?
Which duty do you believe is higher, the duty of corporations to pay tax to government or the duty of corporations to pay dividends to shareholders? Why?

© BrainMass Inc. brainmass.com October 25, 2018, 8:35 am ad1c9bdddf

Solution Preview

The alter ego concept applies in case of corporations if the owners have acted in such a way that that the business is only a shell, and not entirely separate legal entity. In such cases the court may decide that business is only an alter ego, which means that the owners should be personally held liable for the wrongful acts of the business. Courts consider several factors when deciding whether the concept of alter ego should be applied. The factors considered are if the business had corporate directors/managers who ran the business, the manner in which legal requirements were complied with, if the business was used by the owners for personal purposes, and if the owners mixed their personal finances with those of the business entity. One relevant case law is Old West Annuity and Life Ins. Co. v. Apollo Group where the Eleventh Circuit decided that that state law determined if a court ...

Solution Summary

The response provides you a structured explanation of businesses that are only a shell and not separate from their owners . It also gives you the relevant references.

See Also This Related BrainMass Solution

Incorporating a Business: Tom's Landscaping

Tom inherited his father's landscaping business, and incorporated the business after he read an article in Lawn News, advising landscaping businesses to incorporate. Tom has been sued by a customer, whose prize rose bushes were accidentally damaged by a landscaper. Tom called his attorney, Hector, to represent him in the lawsuit. When Hector asked for the corporate minutes, Tom said, "What corporate minutes?" Hector advised Tom that his personal assets could be taken if he lost the suit, but Tom said, "No, don't worry! I'm a corporation; I have no personal liability!" Is Tom correct? Identify and discuss the legal principle that would be applied by a court to resolve this issue, and predict the outcome of the suit against Tom.

View Full Posting Details