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Flashcards in direct participation programs Deck (21):
1

what is a direct participation program (DDP)?

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

2

all tax consequences of DDPs flor through to?

owners

3

what is reportable to the IRS?

income

4

what is deductible to the IRS?

expenses

5

investments in partnerships are considered to be?

illiquid (not easily transferable)

6

describe partnership dissolvement

-dissolves on predetermined date
-assets are liquidated
-proceeds distributed to partners

7

describe general partners

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

8

describe limited partners

-two or more owners
-no management responsibility
-limited liability (cannot lose more than invested)
-no fiduciary responsibility

9

describe raw land real estate programs

-appreciation only objective

10

describe new construction real estate programs

-no immediate cash flow
-appreciation major objective

11

describe existing properties real estate programs

-immediate cash flow potential

12

describe government assisted housing real estate programs

-tax credits
-minimal appreciation and cash flow potential

13

describe equipment leasing programs

-airplanes, railroad cars, computers, etc
-high depreciation potential

14

describe oil and gas drilling: exploratory

-drilling in new areas
-high risk and reward

15

describe oil and gas drilling: developmental

-drilling in areas where resources have been previously found

16

describe oil and gas drilling: balanced

-buying existing producing wells
-immediate production and income
-safest of all oil and gas partnerships

17

describe disproportionate sharing arrangements

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

18

describe beneficial tax considerations

-cost recovery systems
-tax credits
-losses flow through to investors

19

describe risks relating to taxes of DDP

-IRS audits

20

who are DDPs suitable for?

-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

what is an REIT?

-real estate investment trust
-invest in portfolio of operating real estate