Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 7 by Chapter > Direct Participation Programs > Flashcards

Direct Participation Programs Flashcards

1
Q

What program generates no cash flow and is based on the speculation of land value appreciation?

A

Raw Land Program

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What benefit will a tax deduction provide for an investor?

A

Deductions reduce an investor’s taxable income with a tax savings found by multiplying the deduction by the tax bracket.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

General Partners must contribute at least ____% of the capital.

A

General Partners must contribute at least 1% of the capital.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What document is filed with the state of legal domicile to create a partnership?

A

Certificate of Limited Partnership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Is income generated by a limited partnership taxed once or twice?

A

Only once, and it is at the partner’s level. The program itself is not a taxable entity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What’s the difference between straight-line depreciation and accelerated depreciation?

A

Straight-line has the same deduction each year, while accelerated has larger deductions in the early years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Over-development and high leverage are the risks associated with a ____ _____________ Program.

A

Over-development and high leverage are the risks associated with a New Construction Program.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

True or False: DPPs are pass-through investments.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What are the two types of partners in a limited partnership?

A

General partner and limited partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Regarding limited partnerships, what is the difference between a managed and non-managed offering?

A

Managed use an underwriting syndicate; non-managed offerings use a wholesaler rather than a syndicate.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

True or False: Limited partnership units are illiquid and require permission of the general partner to sell.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the order of liquidation for a limited partnership? 4

A

1) Secured Creditor 2) General Creditor 3) Limited Partner 4) General Partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Name some of the different types of Direct Participation Programs (DPPs). 4

A
  1. General partnerships,
  2. limited partnerships,
  3. joint ventures,
  4. Subchapter S corporations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does the Partnership Agreement define?

A

The rights, liabilities, and obligations of each partner

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

__________ is the deduction allowed for naturally wasting assets.

A

Depletion is the deduction allowed for naturally wasting assets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

A limited partner could lose limited liability status for what reasons?

A

Taking an active role in the management of the program (hire/fire employees or negotiate contracts)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

When a partner sells his interest in a partnership, what can he do with the remaining losses?

A

Passive losses can be deducted against any type of income (passive or non-passive).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

The _________ partner is in charge of management and decision-making for the partnership.

A

The general partner is in charge of management and decision-making for the partnership.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are some of the acceptable actions for the limited partner? 4

A
  1. Inspecting partnership books,
  2. suing the general partner,
  3. voting on major issues affecting the partnership,
  4. competing
20
Q

What does it mean to say “a limited partnership is a pass-through investment?”

A

The results of the business venture (profits and losses) flow through directly to the investor.

21
Q

What does a limited partnership’s Subscription Agreement state in regard to a purchaser? 4

A

The purchaser:

  1. Is aware of the risks,
  2. Can meet suitability standards,
  3. Has read disclosure document, and
  4. Knows the required investment.
22
Q

What happens when an investor’s passive losses exceed her passive income?

A

She is able to carry forward the passive losses.

23
Q

________________ Drilling Programs drill in proven areas.

A

Developmental Drilling Programs drill in proven areas.

24
Q

____% of the gross proceeds represents the maximum allowable underwriting compensation for a limited partnership.

A

10% of the gross proceeds represents the maximum allowable underwriting compensation for a limited partnership.

25
Q

What type of oil and gas program drills for new oil reserves in unproven areas?

A

Exploratory (wildcatting)

26
Q

A major advantage to investing in Government Assisted Housing Programs is the availability of _____________.

A

A major advantage to investing in Government Assisted Housing Programs is the availability of tax credits.

27
Q

Exploratory drilling is also referred to as _______________.

A

Exploratory drilling is also referred to as Wildcatting.

28
Q

The ____________________ is the point at which a program stops losing and starts making money.

A

The cross-over point is the point at which a program stops losing and starts making money.

29
Q

____________ Partners are the primary contributors of capital to a limited partnership.

A

Limited Partners are the primary contributors of capital to a limited partnership.

30
Q

To become a limited partner, the _______ ________’s signature is required on the Subscription Agreement.

A

To become a limited partner, the general partner’s signature is required on the Subscription Agreement.

31
Q

What is the role of a wholesaler when dealing with limited partnerships?

A

A wholesaler assists in marketing the partnership to other BDs as well as educating RRs.

32
Q

Name the program where the areas to be drilled have not been defined at the time the program is created?

A

Blind Pool

33
Q

___________ Drilling Programs drill in proven areas and also look for new oil.

A

Balanced Drilling Programs drill in proven areas and also look for new oil.

34
Q

To invest in a limited partnership, an investor must complete the _____________ __________.

A

To invest in a limited partnership, an investor must complete the Subscription Agreement.

35
Q

Describe the liability of the two partners in a limited partnership.

A

General partners have unlimited liability, while limited partners have limited liability.

36
Q

True or False: Raw land is not a depreciable asset.

A

True

37
Q

To whom does the limited partner make her check payable?

A

The party named in the Subscription Agreement

38
Q

What is the primary disadvantage to Government Assisted Housing Programs?

A

The historic lack of potential appreciation

39
Q

Name some natural resource wasting assets.

A

Oil, gas, gold, and timber; but not wheat

40
Q

A general partner would be in violation of a limited partnership if they took what actions? 4

A
  1. Admit another general partner,
  2. change the partnership,
  3. compete with the program,
  4. personally use partnership assets
41
Q

A limited partnership could be formed by a minimum of how many individuals?

A

Two (one general partner and one limited partner)

42
Q

True or False: Income Programs purchase already producing wells, but offer few intangible drilling costs.

A

True

43
Q

True or False: Investment Tax Credits are applied directly against an investor’s tax liability.

A

True. Tax Credits provide a dollar-for-dollar tax savings.

44
Q

Prior to selling a DPP, passive losses can only be used as deductions against ____________________.

A

Prior to selling a DPP, passive losses can only be used as deductions against passive income.

45
Q

True or False: Passive income is income derived from dividends and interest generated by securities in a portfolio.

A

False. Passive income is derived from an investment in a direct participation program (e.g., limited partnership).

Series 7 by Chapter (24 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions