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
What is the safest of all oil and gas partnerships?
Oil and Gas Income
- Buys existing producing wells
- Immediate production and income
Oil and gas blind pool offering (aka non specified program)
Money is raised without a specific property being stated, and the general partner selects the investments.
