direct participation programs Flashcards
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
all tax consequences of DDPs flor through to?
owners
what is reportable to the IRS?
income
what is deductible to the IRS?
expenses
investments in partnerships are considered to be?
illiquid (not easily transferable)
describe partnership dissolvement
- dissolves on predetermined date
- assets are liquidated
- proceeds distributed to partners
describe general partners
- unlimited liability (can lose more than invested)
- fiduciary responsibility to investors (can be sued)
- may not compete with the partnership
describe limited partners
- two or more owners
- no management responsibility
- limited liability (cannot lose more than invested)
- no fiduciary responsibility
describe raw land real estate programs
-appreciation only objective
describe new construction real estate programs
- no immediate cash flow
- appreciation major objective
describe existing properties real estate programs
-immediate cash flow potential
describe government assisted housing real estate programs
- tax credits
- minimal appreciation and cash flow potential
describe equipment leasing programs
- airplanes, railroad cars, computers, etc
- high depreciation potential
describe oil and gas drilling: exploratory
- drilling in new areas
- high risk and reward
describe oil and gas drilling: developmental
-drilling in areas where resources have been previously found