DPPs Flashcards
T/F: DPPs report to the IRS and are taxed as a business entity
False
Although DPPs report to the IRS, they’re not taxed as a business entity
(All income/losses flow through to partners)
Are expenses deductible in a DPP?
Yes
Income is reportable and expenses are deductible
Is interest in a DPP usually considered liquid?
No, considered illiquid
T/F: In a DPP, income is reportable and expenses are deductible
True
Income reportable, expenses deductible
Do DPPs ever dissolve?
Yes, they dissolve on a predetermined date or event
When dissolve, assets are liquidated and proceeds distributed to partners
T/F: DPPs are dissolved on a predetermined date or event
True
When they dissolve, assets are liquidated and proceeds distributed to the partners
Who are the investors in a DPP?
The limited partners
Limited partners are the investors
Who has the management responsibility in a DPP?
The General Partner, although the can appoint others to manage the assets
Do limited partners in a DPP have any management responsibility?
No, they are passive investors only
[DPPs] Max liability for a limited partner
Limited liability, can’t lose more than invested
Can the general partner of a DPP lose more than invested?
Yes, GP has unlimited liability
Who has the fiduciary responsibility in a DPP?
The general partner
Fiduciary responsibility to the partners; can be sued
Do the limited partners in a DPP have any fiduciary responsibility?
No
No fiduciary responsibility
Can the general partner of a DPP compete with the partnership?
No, can’t make investments that compete with the partnership
Can the limited partners of a DPP compete with the partnership?
Yes
There’s no limitations to other investments the limited partners can make
