Types of DPPs

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Chapters in this video

  1. 0:00 Real estate: the lowest-risk DPP neighborhood
  2. 1:37 Oil and gas: the risk-tax inverse teeter totter
  3. 3:48 Exploratory vs developmental vs income programs
  4. 5:03 Equipment leasing and the obsolescence trap
  5. 5:59 BDCs: the 1940 Act liquid platypus
  6. 7:17 Rapid-fire exam recap

What this video covers

  • Why existing income-producing real estate is the lowest-risk DPP type overall, and how to defend that choice in suitability scenarios
  • The inverse relationship between risk and tax benefits in oil and gas programs, specifically why exploratory (wildcat) drilling offers maximum intangible drilling cost (IDC) deductions
  • How to distinguish exploratory, developmental, and income oil and gas programs by both risk level and IDC availability
  • Why technological obsolescence is the unique risk identifier for equipment leasing DPPs, and how accelerated depreciation via MACRS applies
  • What makes business development companies (BDCs) structurally different: regulation under the Investment Company Act of 1940, the 90% income distribution rule, and the liquidity exception for publicly traded BDCs
  • The complete risk hierarchy across all DPP types, from lowest to highest, and why almost all DPPs share the trait of extreme illiquidity
  • How supervisors would evaluate suitability when a rep pitches high-risk DPPs to risk-averse investors

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