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19 Cards in this Set
- Front
- Back
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Characteristics of LPs
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1.Agreement must be in writing
2.Intent must be to carry on business for a profit 3.Profits and losses may be shared in any percentage agreed upon 4.A certificate of LP must be filed with the SOS to protect the LPs |
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Certificate of LP must contain
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1.Info about future contributions from LP
2.Manner in which new partners may be added 3.Arrangement for sharing profits and losses 4.Explanation of the GPs role |
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Certificate of LP must be AMENDED if:
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1.There is an inc in contr from the LPs
2.There is a change in the profit sharing arrangements 3.An error is discovered in the original certificate *A net loss for the year does NOT require the filing of an ammendment |
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Proceeds from the sale of interest in LPs may be used for
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1.Selling costs
2.Offering costs 3.Organization costs 4.Acquisition costs |
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T or F
A DPP offered to the puclic must be registered with the SEC |
T
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Syndicator
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AKA wholesaler-A GP who organizes a LP and registers LPs inters as a security for sale in a state
-Must be reg w FINRA(NASD) |
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Managed offering
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LP interests are distributed by wholesalers(syndicators)
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T or F
A 10% max underwriting spread is permitted for DPP program |
T
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RR must determine that a DPP is suitable by inquiring about the customers:
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1.Income, NW and liquidity
2.Inv obj 3.Intention to hold the inv LT 4.Inv exp and tax bracket 5.Risk tolerance 6.Understanding of the risk and benefits 7.Need for tax adv inv |
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Subscription agreement
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A signed application submitted by an inv to become a LLP
-sale becomes final when signed by G |
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Subscription agreement must contain
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1. inv has read the prospectus and understands the risk
2.General partner will act as agent 3.Inv ss# and tax ID # 4.Inv has sufficient annual income and net worth *Would NOT require a statement of the source of funds from the inv |
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LPs rights do NOT include:
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1.Sell partnership assets
2.Take part in management of LP |
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T or F
When an LP makes a loan to the partnership, the partner would become a general creditor and the partnerships interest would increase |
F
Partners interest would remain unchanged |
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GPs CANNOT,w.out approval of LPs
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1.Admit other GPs and LPs
2.Confess a judgement agaisnt the partnership 3.Violate partnership agreement 4.Prevent the ordinary business of the partnership 5.Assign or possess partnership property for other than partnership reasons 6.Continue the business on the death, retirment, or insanity of a GP 7.Compete w the LP |
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Partnership democracy
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AKA pertnership provisions
-When an LP approval is required for a GPs actions |
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A LP may be dissolved by
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1.Loss of a Gp
2.Avctions by LP such as a class action suit for damages 3.Bankruptcy, fraud 4.Canceling of the certifficate of LP by the SOS |
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Dissolutions sequence
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1.Creditors- secured, then general(unsecured)
2.LPs- profit claims, then capital claims 3.GPs- profit claims, then capital claims |
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Tax reform act of 1986
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1.Losses from passive activities may be deducted against income from passive activites but may.If the losses exceed the income, the excess loss may NOT be deducted from a taxpayer's other income
2.Any excess loss is suspended and carried forward to reduce passive activity income in future years. Any unused, suspended deductions may be deducted in full WHEN AND IF THE TAXPAYER SELLS their interest in the passive activity in a taxable transaction * the exeption to this allows up to $25k to be deducted each year from rental real estate activities. Must be an individual and must actively participate in the rental real estae activity(be a GP) |
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If the IRS determines the tax shelter is abusive:
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1.Deductions are disallowed
2.Taxpayer is charged interest on backed taxes 3.taxpayer is charges penalties 4.Taxpayer may be charged with intent to fraud |
