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Flashcards in direct participation programs Deck (21)
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1
Q

what is a direct participation program (DDP)?

A

-it is a business structure that reports to the IRS but is not taxed as a business entity

2
Q

all tax consequences of DDPs flor through to?

A

owners

3
Q

what is reportable to the IRS?

A

income

4
Q

what is deductible to the IRS?

A

expenses

5
Q

investments in partnerships are considered to be?

A

illiquid (not easily transferable)

6
Q

describe partnership dissolvement

A
  • dissolves on predetermined date
  • assets are liquidated
  • proceeds distributed to partners
7
Q

describe general partners

A
  • unlimited liability (can lose more than invested)
  • fiduciary responsibility to investors (can be sued)
  • may not compete with the partnership
8
Q

describe limited partners

A
  • two or more owners
  • no management responsibility
  • limited liability (cannot lose more than invested)
  • no fiduciary responsibility
9
Q

describe raw land real estate programs

A

-appreciation only objective

10
Q

describe new construction real estate programs

A
  • no immediate cash flow

- appreciation major objective

11
Q

describe existing properties real estate programs

A

-immediate cash flow potential

12
Q

describe government assisted housing real estate programs

A
  • tax credits

- minimal appreciation and cash flow potential

13
Q

describe equipment leasing programs

A
  • airplanes, railroad cars, computers, etc

- high depreciation potential

14
Q

describe oil and gas drilling: exploratory

A
  • drilling in new areas

- high risk and reward

15
Q

describe oil and gas drilling: developmental

A

-drilling in areas where resources have been previously found

16
Q

describe oil and gas drilling: balanced

A
  • buying existing producing wells
  • immediate production and income
  • safest of all oil and gas partnerships
17
Q

describe disproportionate sharing arrangements

A

-the split of income and expenses between general and limited partners

18
Q

describe beneficial tax considerations

A
  • cost recovery systems
  • tax credits
  • losses flow through to investors
19
Q

describe risks relating to taxes of DDP

A

-IRS audits

20
Q

who are DDPs suitable for?

A
  • investors who understand and can afford the capital risk associated with different types of programs
  • investors who position themselves to benefit from the tax consequences associated with different programs
21
Q

what is an REIT?

A
  • real estate investment trust

- invest in portfolio of operating real estate