Which of the following is true about recourse loans in a limited partnership program?

An investor's basis in a limited partnership would be decreased by which of the following?

Recourse debt.
Cash distributions.
Depletion allowances.
Partnership income.
(A) I and II
(B) III and IV
(C) II and III
(D) I and IV

In an oil and gas program with a functional allocation sharing arrangement:

(A) The sponsor assumes both deductible and non-deductible costs.
(B) The sponsor pays costs that are not immediately deductible while investors pay immediately deductible costs.
(C) The sponsor pays only deductible expenses and shares in the cost of dry holes.
(D) The sponsor and the investors pay only non-deductible costs.

A younger client with a moderate amount of funds is considering the purchase of a home in the near-term future. For this reason, the investor wishes to keep their assets as liquid as possible in the event that the right deal on a home comes along. As this client's registered representative, which of the following would carry the LEAST amount of liquidity and therefore be unsuitable for this client?

(A) Investment in bonds and bond funds focused on municipal securities
(B) Investment in equity securities such as preferred stock
(C) Investment in a DPP (Direct Participation Program)
(D) Investment in CDs (Certificates of Deposit) with varying short-term maturities

If a general partner in a limited partnership also registers limited partnership interests for sale in a state(s) as securities, he may be called a(n)

(A) underwriter
(B) managing underwriter
(C) syndicator
(D) manager

A partnership which is developed to buy computers and then lease them to businesses is a:

(A) equipment leasing partnership
(B) technological partnership
(C) fixed asset partnership
(D) a pentium partnership

An equipment lease limited partnership could be done on all of the following except:

(A) rail cars
(B) airplanes
(C) computers
(D) casings and well fittings

In what order of preference will claims be paid upon dissolution of a limited partnership?

General partners' capital claims
Limited Partners' capital claims
General creditors
Secured lenders
(A) I, II, III, IV
(B) IV, III, II, I
(C) III, IV, II, I
(D) I, III, IV, II

Which of the following are true regarding a limited partner who has invested in a limited partnership tax shelter?

The limited partner flexibility concerning the types of investment made by the partnership
Limited liability for the limited partners.
Possible tax write offs against other passive income for the limited partner.
The limited partner has considerable control over management.
(A) I and II
(B) III and IV
(C) II and III
(D) All

A correct statement concerning a real estate limited partnership is that:

(A) The ordinary and necessary expenses of the general partner(s) in operating the business are completely nondeductible.
(B) Management expertise and economic soundness are among the factors that should be considered in evaluating real estate limited partnerships.
(C) Hard costs such as those incurred by a partnership in acquiring land are wholly deductible as they occur.
(D) A corporation cannot be a general partner since a corporation has limited liability.

The costs incurred with an oil and gas limited partnership which ends up as a "dry hole":

(A) must be depreciated
(B) become intangible
(C) are not deductible
(D) are returned to the limited partners

In an oil and gas DPP the deductible (intangible) expenses are taken by the investors. The nondeductible (tangible) costs are capitalized by the sponsor. This is a:

(A) functional allocation
(B) disproportionate sharing arrangement
(C) reversionary working interest
(D) overriding royalty interest

If a general partner organizes and registers the limited partnership, he is acting as:

(A) Underwriter
(B) Syndicator
(C) Property manager
(D) Partnership manager

In regard to recourse loans in a DPP

Any principal (capital) repayment reduces the investor's basis.
Any principal (capital) repayment does not reduce the investor's basis.
The investor is liable for repayment.
The investor is not liable for repayment.
(A) I and III only
(B) I and IV only
(C) II and III only
(D) II and IV only

Which of the following will be treated as income from a passive activity for federal tax purposes?

(A) Dividends received from ordinary corporate stock.
(B) Interest received from corporate bonds.
(C) Income a limited partner receives from a direct participation program which owns an equity interest in real estate.
(D) Capital gains realized on the sale of preferred stock.

A certificate of limited partnership would normally contain which of the following?

Information concerning future contributions by limited partners.
The manner in which new partners may be added.
The arrangement for sharing profits.
Definition of the general partner's role in the venture.
(A) I and II
(B) III and IV
(C) I, II and IV
(D) All

Which of the following is true of an oil and gas program with a disproportionate sharing arrangement?

(A) The sponsor will bear a specified percentage of the costs while receiving a higher percentage of the revenues.
(B) The investors pay only non-deductible costs.
(C) The sponsors share in the cost and revenues is the same percentage.
(D) The sponsor receives no revenues until the investors have recovered their original investment.

The document which specifies the areas that an individual condominium owner has exclusive use of and the common areas which are shared with all other unit owners is the:

(A) Unit Deed
(B) Association's By Laws
(C) Offer Sheet
(D) Master Deed

Compared with owning corporate stock, a person investing in a limited partnership would normally receive which one of the following?

(A) A much greater management role in the business
(B) Much greater investment security
(C) A more direct share in profits and losses
(D) Much greater liquidity

The potential advantage of a DPP investment in raw land is

(A) investment interest deduction
(B) long-term capital gains on the property
(C) Investment tax credits
(D) depreciation deductions on the property

When evaluating a limited partnership as an investment, the MOST important factor to consider is:

(A) The tax write-offs
(B) Whether the program is leveraged or non-leveraged
(C) The general partner's fees for managing the program
(D) The basic economic viability of the program

A certificate of limited partnership would be amended for all of the following reasons EXCEPT:

(A) An error is discovered in the certificate.
(B) The sharing arrangement for profits and losses is changed.
(C) A general partner's contribution is increased.
(D) A net loss for the fiscal year is realized.

Which of the following are reasons why Direct Participation Programs are formed as Limited Partnerships?

The partnership is taxed at a lower rate than the partners.
The advantages of limited liability for the limited partners
The tax advantages of the pass through of profits and losses to the limited partners
(A) I and II
(B) II and III
(C) I and III
(D) All

Which of the following are important factors in evaluating a real estate DPP?

The market value of adjoining property.
The general partner's management ability.
Tax considerations.
Economic viability of the project.
(A) I and II
(B) III and IV
(C) I, III and IV
(D) All

Corporations differ from limited partnerships in

The conduit theory
Length of life
Transferability
(A) I and II
(B) I and III
(C) II and III
(D) I, II, and III

Which two of the following are true of exploratory oil and gas drilling programs?

The programs represent drilling on unproven properties with a high risk of not discovering reserves.
The programs represent producing oil and gas properties purchased for additional exploration.
The programs are suitable for high risk investors only.
If the program is successful, potential profits realized are normally less than for other types of oil and gas programs.
(A) I and III
(B) II and IV
(C) II and III
(D) I and IV

Which of the following limited partnership oil and gas programs have the lowest capital risk:

(A) Exploratory
(B) Developmental
(C) Combined
(D) Income

One of your clients is looking into investing in direct participation programs. He is examining several different types of programs. One of the programs that he is evaluating promises a relatively high tax write-off in the immediate future with low costs for land and rights associated with the land and minerals. Of the following, which BEST describes programs with these features?

(A) This would be a developmental drilling program.
(B) This would be an exploratory drilling program.
(C) This would be a balanced drilling program.
(D) This would be an oil and gas income program.

Which of the following instruments/asset classes would generally be considered to be the least liquid?

(A) Over the counter stock
(B) Listed stock
(C) General obligation municipal bonds
(D) Direct participation program units

Which of the following features are offered to both the investors of corporations and the investors of limited partnerships?

Limitation of liability
High level of liquidity
Management by professionals
The flow-through status of profits and losses
(A) I and II
(B) I and III
(C) II and III
(D) II and IV

If a limited partnership is offered to the public under Federal securities laws:

(A) It is exempt from registration.
(B) It must be registered with the SEC.
(C) It can only be sold to persons in the highest tax bracket.
(D) It must be sold only to accredited investors.

Which of the following is true regarding a limited partnership who has invested in limited partnership tax shelter?

What is an underwriter's maximum sales charge on a limited Partnership LP )?

Which of the following is the riskiest type of oil and gas limited partnership?

What oil and gas program has the least capital risk?