Series 39 Practice Questions - Direct Participation Programs Principal Qualification Examination Exam

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A customer who bought units in a DPP starts negotiating leases and directing contractors for the program. Why should the supervising principal be concerned?

The investor may be treated as an institutional customer The investor may lose limited-liability protection by acting as a manager The investor must now receive a 1099 instead of a Schedule K-1 The investor is automatically entitled to a management fee

Correct Answer:

The investor may lose limited-liability protection by acting as a manager

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