DPP Key Characteristics

What this video covers

• Why DPP income flows through to personal returns via K-1 forms, and how this avoids double taxation (unlike C corporations)
• Why passive activity rules restrict DPP losses to offsetting only passive income, never wages or portfolio income
• How at-risk rules cap deductible losses at the amount the investor actually invested plus recourse debt
• Why DPP interests have zero active secondary market and cannot be sold or transferred on an exchange
• The 7 to 12 plus year holding period investors must be prepared to accept
• FINRA's suitability requirements: verifying net worth and income, establishing reasonable grounds, and conducting due diligence before recommending a DPP
• Why compensation paid to underwriters and affiliates must be fair and reasonable