Podcast
Questions and Answers
- All of the following are benefits for the limited partners in a direct participation program (DPP) except
A. passive losses
B. flow-through of income
C. unlimited liability
D. an investment managed by the general partner (GP)
- All of the following are benefits for the limited partners in a direct participation program (DPP) except A. passive losses B. flow-through of income C. unlimited liability D. an investment managed by the general partner (GP)
- Which of the following statements regarding a general partnership is correct?
A. Partners participate in the gains and losses of the business and are fully liable for the business's liabilities.
B. Partners participate in the gains and losses of the business and are partially shielded from the business's liabilities.
C. Partners participate in the gains and losses of the business and are fully shielded from the business's liabilities.
D. Partners participate in the gains but not the losses of the business and are fully shielded from the business's liabilities.
- Which of the following statements regarding a general partnership is correct? A. Partners participate in the gains and losses of the business and are fully liable for the business's liabilities. B. Partners participate in the gains and losses of the business and are partially shielded from the business's liabilities. C. Partners participate in the gains and losses of the business and are fully shielded from the business's liabilities. D. Partners participate in the gains but not the losses of the business and are fully shielded from the business's liabilities.
- All of the following would be considered tax advantages relating to a DPP investment except
A. depreciation recapture
B. depletion
C. intangible drilling costs
D. accelerated depreciation
- All of the following would be considered tax advantages relating to a DPP investment except A. depreciation recapture B. depletion C. intangible drilling costs D. accelerated depreciation
- Each limited partner's share of partnership losses
A. may be used to reduce ordinary income
B. may be used to offset passive income
C. is deductible up to $3,000 per year
D. causes a dollar-for-dollar decrease in the market value of the limited partnership units
- Each limited partner's share of partnership losses A. may be used to reduce ordinary income B. may be used to offset passive income C. is deductible up to $3,000 per year D. causes a dollar-for-dollar decrease in the market value of the limited partnership units
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- A private, unregulated investment company organized in such a way so as to invest and achieve high returns utilizing debt leverage and derivative products such as options and margin is best described as
A. a mutual fund
B. a direct participation program (DPP)
C. a real estate investment trust (REIT)
D. a hedge fund
- A private, unregulated investment company organized in such a way so as to invest and achieve high returns utilizing debt leverage and derivative products such as options and margin is best described as A. a mutual fund B. a direct participation program (DPP) C. a real estate investment trust (REIT) D. a hedge fund
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Study Notes
Direct Participation Program (DPP)
- Limited partners benefit from passive losses and flow-through of income, but not unlimited liability.
General Partnership
- Partners participate in gains and losses, and are fully liable for business liabilities.
Tax Advantages of DPP
- Depreciation recapture, depletion, and intangible drilling costs are tax advantages.
- Accelerated depreciation is not a tax advantage of DPP.
Partnership Losses
- Limited partners' share of losses can be used to reduce ordinary income or offset passive income.
- Limited partners' share of losses is not limited to $3,000 per year and does not decrease the market value of limited partnership units.
Hedge Fund
- A private, unregulated investment company that invests and achieves high returns using debt leverage and derivative products is a hedge fund.
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Description
Test your knowledge on the benefits for limited partners in a Direct Participation Program (DPP). Identify the exception among passive losses, flow-through of income, unlimited liability, and investment management by the general partner (GP).
