Products & RisksQuestion 27 of 125
A key characteristic of a direct participation program (DPP), such as a limited partnership, is that:
a.It is taxed as a corporation at the entity level
b.Investors have no liability beyond guarantees they sign
c.Income, gains, losses, and deductions flow through directly to the individual investors
d.Units are highly liquid and trade actively on exchanges
Explanation
A DPP is a flow-through (pass-through) entity: tax items pass directly to the limited partners' individual returns rather than being taxed at the entity level. Limited partners have limited liability but DPP interests are generally illiquid, and losses are typically passive.
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