Unit 13- Direct Participation Programs Flashcards
Limited Partnership
investment vehicle that permits economic consequences of business to flow to investor
Which type of LP can be traded on OTC or exchanges?
MLPs
What is another name for an LP?
Subchapter S corporations
Do LPs pay taxes?
No- they report income and losses to the IRS and then investors (partners) have the responsibility of paying taxes due
Which corporate characteristic is teh most difficult to avoid?
centralized management
Which corporate characteristic is the easiest to avoid?
continuity of life
Which two corporate characteristics are most likely to be avoided by a DPP?
Continuity of Life and Freely Transferable Interest
What is the max syndication fee?
10% of gross dollar amount of securities sold
What are the three documents required for an LP?
- Certificate of LP
- Partnership Agreement
- Subscription Agreement
Certificate of LP
filed in the home state
-any changes must be reported in 30 days
Partnership Agreement
All partners receive this agreement
-describes arrangement btwn GP and LPs
Can a GP charge a management fee?
Yes
Does the GP or LP by vote determine whether cash distributions should be made?
GP
Subscription Agreement
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
Who has responsibility of repayment to nonrecource loans?
GPs (no liability to LPs unless real estate partnership)