This same scenario is used for questions #$4,$ #$5,$ and #$6.$

Wally and Sally want to go into business together and plan on offering a tutoring service to high school and college students. Wally proposes that they share control of the business and split profits equally and not bother with a written agreement. Sally, however, is concerned about being able to pay their debts since they will have to rent tutoring space, and purchase computers and supplies. She is also concerned about parents and students who may sue if their test scores do not improve. She tells Wally that she just bought a new boat and car, and that she does not want her assets to be in jeopardy. She tells Wally that they should form a corporation to shield their personal assets. Wally, however, tells their personal assets are not in danger with his proposal because they are a business and that, furthermore, forming a corporation would even result in tax being imposed twice.

Is Wally correct that with his proposal that they share control of the business and split profits equally there could be no personal liability for debts?

Group of answer choices

Yes, because they will be considered a partnership regardless of whether any agreement is in writing.

Yes, he is correct so long as they do not reach an agreement in writing.

Yes, so long as they sign no contracts by which they agree to be personally liable.

Yes, because so long as they have nothing in writing, their arrangement will be considered a joint venture.

No$,$ he is incorrect.