Unit 13- Direct Participation Programs Flashcards

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1
Q

Limited Partnership

A

investment vehicle that permits economic consequences of business to flow to investor

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2
Q

Which type of LP can be traded on OTC or exchanges?

A

MLPs

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3
Q

What is another name for an LP?

A

Subchapter S corporations

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4
Q

Do LPs pay taxes?

A

No- they report income and losses to the IRS and then investors (partners) have the responsibility of paying taxes due

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5
Q

Which corporate characteristic is teh most difficult to avoid?

A

centralized management

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6
Q

Which corporate characteristic is the easiest to avoid?

A

continuity of life

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7
Q

Which two corporate characteristics are most likely to be avoided by a DPP?

A

Continuity of Life and Freely Transferable Interest

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8
Q

What is the max syndication fee?

A

10% of gross dollar amount of securities sold

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9
Q

What are the three documents required for an LP?

A
  • Certificate of LP
  • Partnership Agreement
  • Subscription Agreement
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10
Q

Certificate of LP

A

filed in the home state

-any changes must be reported in 30 days

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11
Q

Partnership Agreement

A

All partners receive this agreement

-describes arrangement btwn GP and LPs

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12
Q

Can a GP charge a management fee?

A

Yes

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13
Q

Does the GP or LP by vote determine whether cash distributions should be made?

A

GP

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14
Q

Subscription Agreement

A

all investors interested in becoming partners must complete this

  • net worth
  • annual income
  • understands related risks
  • power of attorney appointing GP as agent of partnership
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15
Q

Who has responsibility of repayment to nonrecource loans?

A

GPs (no liability to LPs unless real estate partnership)

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16
Q

Who is the person who organizes and registers a partnership?

A

The syndicator

17
Q

The rights and liabilities of GPs and LPs are listed in?

A

The agreement of limited partnership

18
Q

When is the subscription for limited partnership accepted?

A

When GP signs the subscription agreement

19
Q

What is the most speculative real estate partnership?

A

Raw Land

20
Q
Which sharing arrangement is the most common? 
Net Operating Profits Interest
Carried Interest
Functional Allocation
OVerriding royalty INterest
A

Functional Allocation