AAA Unit 13

If a customer subscribes to a $20,000 public limited partnership interest, which of the following is the maximum underwriting compensation that may be charged?

10%...2000

All of the following are common to both DPPs and REITs EXCEPT: A) capital gains distributions. B) centralized management. C) pass-through of losses. D) pass-through of income

Both DPPs and REITS are professionally managed pools that pass through income and capital gains distributions to participants. REITS, unlike DPPs, do not pass through losses.

Which of the following is least likely to be part of an equipment leasing partnership? A) Oil well casing and piping. B) Aircraft. C) Computers. D) Railroad cars.

Casing and piping are materials used in oil and gas well drilling programs.

A customer buys a real estate limited partnership interest by contributing $20,000 and signing a nonrecourse note for $50,000. The customer's beginning basis is: A) 30,000. B) 50,000. C) 20,000. D) 70,000.

D) 70,000.

All of the following are types of oil and gas direct participation programs EXCEPT: A) combination. B) developmental. C) income. D) minimum guarantee wildcat.

Exploratory programs drill wildcat wells in areas where there are no proven reserves of oil and gas. The chances of success are relatively slim, so there are no guarantees. The other three choices describe types of oil and gas programs.

What might happen if a limited partner begins making business decisions for the partnership?

He might jeopardize his limited liability status.

real estate limited partnerships allows tax credits to the investor

Historic rehabilitation. Assisted housing

A nonleveraged direct participation program has all of the following risks EXCEPT:

If debt is not used by the partnership, rate risk does not exist.

When conducting a discussion with a client about the merits of investing in a DPP, all of the following could be tax advantages EXCEPT: accelerated depreciation. depletion allowances. recapture of depreciation. tangible drilling expenses.

Only intangible drilling expenses benefit the limited partner. recaptured is taxed as ordinary income

All of the following would flow through as a loss to limited partners EXCEPT: A) depletion. B) accelerated depreciation. C) principal repayment on recourse debt. D) interest payments on recourse debt.

Principal repayments are not deductible for tax purposes. The interest is deductible.

priority of payments made when a limited partnership is liquidated?

SOL-G.. dissolve secure lenders other creditors limited partners general partners

Revenues: $3 million Operating expense: $1 million Interest expense: $200,000 Management fees: $200,000 Depreciation: $3 million Cash flow A) $1.4 million. B) $1.6 million. C) a loss. D) $3 million.

Your answer, $1.6 million., was correct!.

The rights and liabilities of general and limited partners are listed in the:

agreement of limited partnership

subscription agreement

all investors must complete this. it appoints the GP to act on behalf of the LP investors net worth and income statement that investor understands risk power of atterny to GP..beneficiary to LP

Once the IRS determines that a tax shelter is abusive, it may do all of the following

back taxes take back tax credits interest penalties or prosection for fraud

The document attesting to the formation of a limited partnership, filed with designated authorities, is called

certificate of limited partnership

All of the following asset types can be depleted or depreciated EXCEPT: A) oil. B) crops. C) buildings. D) gas.

crops

partnership agreement

describes the roles of the GP and LP and guidelines of the partnerships operation.

The term "wildcatting" refers to:

drilling for oil or gas where none has occurred previously.

certificate of limited partnership

information about partnership name address length of time

The principal tax benefit of investing in an exploratory oil and gas drilling program is derived from:

intangible drilling costs

*beginning basis eqation

investment in partnership + share of recourse debt - cash distribution for real estate must add non recourse debt

Oil and gas income program.

low risk provides immediate income from sale of existing oil

what are the three contracts for a DPP limited partnership

partners get subscribed to certificates

Investing in undeveloped land satisfies which of the following primary objectives?

primary objective is capital gains Appreciation.

Depletion

provides a tax deduction AFTER natrual resource is sold

RTFQ

read the f**cing question!

All of the following are primary objectives in a DPP EXCEPT: A) deductions against other income. B) short-term capital gains. C) deferment of taxes. D) long-term capital gains.

short-term capital gains.

A taxpayer's most advantageous tax benefit is:

tax credit