of the following statements regarding Real Estate
Limited Partnerships (RELPs) is/are correct?
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
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
II and IV only
b) II and III only
c) I and II only
d) I and IV only
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.