Limited Partnership / Direct Participation Program
A flow-through structure with a managing general partner and passive limited partners.
What is Limited Partnership / Direct Participation Program?
The general partner manages the business and has unlimited liability. Limited partners are passive investors whose liability is limited to their investment. Income, losses, and deductions flow through to partners' own tax returns; passive losses can generally offset only passive income. Most limited partnership interests are highly illiquid. Common programs are real estate, oil and gas, and equipment leasing. Master limited partnerships (MLPs) trade on exchanges.
Limited Partnership / Direct Participation Program: a worked example
An oil and gas program passes drilling-cost deductions through to its limited partners.
More terms in Equities, Funds & Alternatives
Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.