Question of the Week

Which of the following statements regarding Real Estate Limited Partnerships (RELPs) is/are correct?

I. A goal of the RELP is to establish a continuity of life for the partners
II. All of the profits from the RELP will pass through to the owners of the business
III. The RELP sends each partner a 1099-Misc to be used to compute their personal tax returns
IV. The limited partnership itself pays no taxes

a) II and IV only
b) II and III only
c) I and II only
d) I and IV only

Answer:

The correct answer is a):

Limited partnerships are formed to engage in a business venture for a predetermined period of time, one the business goals have been achieved the RELP is dissolved. The main tax advantage of the RELP is that the IRS treats it as a “flow-through” entity, meaning that all of the profits/losses of the RELP are passed to the owners. The RELP itself is not taxed, each partner receives a Schedule K-1 which is used to compute their individual tax return.

Professionals FAQs
  1. Where can I look for a financial planner?

    References from trusted friends or family members can help you find a financial planner; however, keep in mind that your friends' financial situations and goals may differ from yours and, therefore, their planners won't necessarily be the best fit for you.The Certified Financial Planner (CFP) Board of Standards certifies financial planners and maintains an online list of certified financial planners on its CFP Board of Standards website.
  2. If I am looking to get an Investment Banking job. What education do employers prefer? MBA or CFA?

    If you are looking specifically for an investment banking position, an MBA may be marginally preferable over the CFA. The caveat here is that the MBA would most probably need to be from a Top-20 B-School.The Chartered Financial Analyst (CFA) is well worth considering if you (a) are aiming for an entry-level position in investment banking, and/or (b) cannot afford to shell out six figures for an MBA or have to settle for a lesser-known B-school.That's because in the investment banking field, most entry-level positions are at the analyst level.
  3. Can I still pass the CFA Level I if I do poorly in the ethics section?

    You may still pass the Chartered Financial Analysis (CFA) Level I even if you fare poorly in the ethics section, but don't count on it. The CFA Institute has long emphasized that ethics is a particular area of focus for it. The seriousness with which the CFA Institute views ethics is evident from the fact that for exam candidates with borderline total scores, performance on the ethics section can mean the difference between passing and failing the exam.
  4. Under the USA, registration as an IAR includes all of the following EXCEPT:

    Under the USA, registration as an IAR includes all of the following EXCEPT: A. Minimum net capitalB. Passing a qualification examC. Filing a consent to service of processD. Posting a surety bond The correct answer is "A", since only an IA would need to prove minimum net capital requirements.