A direct participation program or plan (DPP) is a pooled entity that offers investors access to a business venture’s cash flow and tax benefits. DPPs are non-traded pooled investments in real estate or energy-related ventures over an extended time frame, often 3 – 5 years.

Why is it beneficial? A DPP gives an investor partial ownership of an ongoing business enterprise with income and growth potential.

A Delaware Statutory Trust (DST) is a separate legal entity created as a trust under the laws of the state of Delaware. Investors can own a small percentage of an institutional property. When used for a 1031 exchange, the DST owns the property (or properties), and each investor holds beneficial interests in the DST.

Why is it beneficial? The investor is able to change the investment without recognizing a taxable capital gain, allowing the investment to continue to appreciate, tax deferred. Using a DST the investor no longer has to be an active landlord and owns a small piece of a much larger property. In addition investors can put cash into a DST and get immediate tax benefits of owning real estate and also 1031 in the future to defer the gains.

A private placement raises capital by the sale of securities to a relatively small number of select investors. A private placement is different from a public issue in which securities are made available for sale on the open market to any type of investor.

A private placement issuer can sell a more complex security to accredited investors who understand the potential risks and rewards.

Several listed REITs are raising capital by issuing private preferred stock.

Why is it beneficial? You get high income (5-6%), stock market insulation and a short hold time. This type of security is senior to common stock, meaning it is less risky than the common stock.

Oil and Gas investments are a non-liquid investment in oil or gas that allows a reduction of taxable income based on the deposit, it also provides income from the oil or gas wells.

The year you invest, typically you can take ~75% of the investment off your taxable income and that savings is recognized the year of the investment. In addition you can have K1 income for an extended period of time. You do not get a lump sum return of your investment, nor is your investment ever liquid.