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Series 7 Exam For Dummies, Premier Edition with CD, 2nd Edition by Steven M. Rice

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Chapter 11

Working with Direct Participation Programs

In This Chapter

arrow Understanding the specifics of DPPs

arrow Distinguishing a limited partner from a general partner

arrow Getting a handle on the paperwork and taxes involved

arrow Looking at the different types of DPPs

arrow Reviewing additional topics tested

Direct participation programs (DPPs) can raise money to invest in real estate, oil and gas, equipment leasing, and so on. More commonly known as limited partnerships, these businesses are somewhat similar to corporations (stockholder-owned companies). However, limited partnerships have some specific tax advantages (and disadvantages) that a lot of other investments don’t have. According to tax laws, limited partnerships are not taxed directly; the income or losses are passed directly through to the investors.

DPPs were once known as tax shelters because of the tax benefits to investors; however, tax law changes have taken away a lot of these advantages. As a result, DPPs have somewhat fallen out of ...

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