Series 7: Exercise

Exercise

Answer the following questions.

1. 1. Limited partnerships are defined primarily by having:
2. A. Multiple general partners and at least one limited partner
3. B. Investment in oil and natural gas wells
4. C. Income/loss that flows through to the partners
5. D. High risk potential and short life
6. 2. A DPP general partner:
7. A. Manages the business day-to-day
8. B. Has the authority to buy property for the DPP
9. C. Is personally liable in case of a bankruptcy
10. D. All of the above
11. 3. Which of the following features is almost always true of a DPP?
12. A. Continuity of life
13. B. Freely transferable assets
14. C. Limited liability for all owners
15. D. Centralized management

Answer true or false.

1. 4. _____ The DPP general partner’s scope of authority is defined in the certificate of limited partnership.
2. 5. _____ The primary defining document of a DPP, the certificate of limited partnership, is filed with the state in which the DPP does business and cannot be amended.

Answers

1. 1. C. The defining quality of a DPP is its “flow-through tax consequences.” A DPP may or may not have multiple general partners. There are various types of DPP businesses, more than just oil and natura