Direct Participation Program or DPP
Direct Participation Program, also known as Direct Participation Plan or DPP, is a business venture which allows investors to participate directly in cash flow and tax benefits of underlying security. DPPs are considered alternative investment instruments for long-term passive investments. Most direct participation programs are for real-estate and energy related business ventures.
Direct participation programs are traded as public registered securities through brokerage firms, over-the-counter markets like OTCBB and as restricted securities. Most DPPs are offered as limited partnerships. In the past, direct participation programs were treated as excellent tax shelters. The tax benefits were substantially reduced in 1987. But still DPPs offer a few tax breaks, and this is the main reason for their popularity.
The returns from a direct participation program would be proportional to the amount of cash flow to the underlying venture/security and to the amount invested. The returns are calculated on either cash on cash basis (dividing income by invested amount) or on internal rate of return basis (also considered time value of the money). The returns are distributed either as a percentage of the net income generated by the underlying security or as fixed monthly/timely payments. DPPs are risky investment instruments as the investors can lose as much as the total amount they invested.
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Direct participation programs are traded as public registered securities through brokerage firms, over-the-counter markets like OTCBB and as restricted securities. Most DPPs are offered as limited partnerships. In the past, direct participation programs were treated as excellent tax shelters. The tax benefits were substantially reduced in 1987. But still DPPs offer a few tax breaks, and this is the main reason for their popularity.
The returns from a direct participation program would be proportional to the amount of cash flow to the underlying venture/security and to the amount invested. The returns are calculated on either cash on cash basis (dividing income by invested amount) or on internal rate of return basis (also considered time value of the money). The returns are distributed either as a percentage of the net income generated by the underlying security or as fixed monthly/timely payments. DPPs are risky investment instruments as the investors can lose as much as the total amount they invested.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
5:40 AM
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