Legal Definitions - direct-participation program

A direct-participation program is a type of investment that is funded through the sale of securities that are not traded on an exchange or quoted on NASDAQ. This type of investment provides flow-through tax consequences to the investors, meaning that the investors are responsible for paying taxes on the income generated by the investment.

• Oil and gas partnerships
• Real estate investment trusts (REITs)
• Equipment leasing programs

Oil and gas partnerships are a common example of a direct-participation program. Investors can purchase a share in an oil or gas well and receive a portion of the profits generated by the well. These profits are considered income and are subject to taxation.

Real estate investment trusts (REITs) are another example of a direct-participation program. Investors can purchase shares in a REIT, which owns and manages income-producing real estate properties. The income generated by the properties is distributed to the investors, who are responsible for paying taxes on the income.

Equipment leasing programs are a third example of a direct-participation program. Investors can purchase shares in a program that leases equipment to businesses. The income generated by the equipment leases is distributed to the investors, who are responsible for paying taxes on the income.

These examples illustrate the concept of a direct-participation program, where investors purchase shares in an investment vehicle that generates income. The income is then distributed to the investors, who are responsible for paying taxes on the income.