Series 7 practice questionmediumDirect Participation Programs 447
Cash flow distributed by a real estate limited partnership is best described as:
- Apass-through income or return of capital depending on the program results✓ Correct answer
- Bguaranteed bond interest
- Cqualified dividend income in every case
- Dinterest exempt from federal income tax
Explanation
Why A — pass-through income or return of capital depending on the program results
DPP tax treatment depends on the program’s operations and allocations. Distributions are not guaranteed and may represent income, depreciation shelter effects, or return of capital.
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