Rita is the sole shareholder of an auto repair shop that is incorporated. - 2715

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Rita is the sole shareholder of an auto repair shop that is incorporated. She is at work one day when her sister comes in and tells her she needs $100 for schoolbooks. Rita looks in her wallet, and seeing that it contains no money, opens the cash register and takes out $100, which she hands to her sister. The sister looks worried, but Rita tells her, “Don’t worry; I take money out of the cash register all the time for my personal expenses. It’s my business, so I can take money out whenever I want.” Her customer, who is waiting to pick up his car, tells Rita that she is risking the piercing of the corporate veil. Is the customer correct?

 

A. No, the customer is wrong.

B. No, Rita is the only shareholder and can do what she wants.

C. Yes, Rita is not the board of directors.

D. Yes, Rita is co-mingling personal assets with corporate assets.

 

 

Solution Description

Rita is the sole shareholder of an auto repair shop that is incorporat