200+ Free Series 22 Practice Questions

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What is a Direct Participation Program (DPP)?

A publicly traded stock investment

A pooled investment vehicle where investors participate directly in cash flow and tax benefits

A government bond issued by municipalities

A money market fund for short-term investments

to track

2026 Statistics

Key Facts: Series 22 Exam

65-70%

First-Time Pass Rate

Industry estimate

70%

Passing Score

35/50 questions

40-60 hrs

Study Time

Recommended

$100

Exam Fee

FINRA

1h 30m

Exam Duration

FINRA

SIE Required

Prerequisite

FINRA

The Series 22 exam has an estimated 65-70% first-time pass rate. It requires 70% (35/50 questions) to pass. The exam covers DPP characteristics, real estate programs, oil and gas programs, equipment leasing, suitability, and regulations. Plan for 40-60 hours of study over 4-6 weeks.

Sample Series 22 Practice Questions

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1What is a Direct Participation Program (DPP)?

A.A publicly traded stock investment

B.A pooled investment vehicle where investors participate directly in cash flow and tax benefits

C.A government bond issued by municipalities

D.A money market fund for short-term investments

Explanation: A Direct Participation Program (DPP) is a pooled investment vehicle that enables investors to participate directly in a business venture's cash flow and taxation benefits. Unlike publicly traded securities, DPP interests are not traded on exchanges, and investors receive the tax benefits and cash flows directly rather than through a corporate structure.

2Which of the following is a characteristic of limited partnership interests in DPPs?

A.Unlimited liability for all partners

B.Limited liability for limited partners and unlimited liability for the general partner

C.Double taxation at both partnership and investor levels

D.Daily liquidity through public exchanges

Explanation: In a limited partnership structure, limited partners have liability limited to their investment amount, while the general partner(s) have unlimited liability and manage the operations. DPPs use pass-through taxation, meaning income/losses flow through to investors without taxation at the entity level. DPP interests are illiquid and not traded on public exchanges.

3What is the primary tax advantage of investing in a DPP?

A.Tax-free income upon distribution

B.Pass-through of income, gains, losses, deductions, and credits to investors

C.Deferral of all taxes until the program is sold

D.Exemption from capital gains tax

Explanation: The primary tax advantage of DPPs is pass-through taxation. The partnership itself does not pay federal income tax; instead, all tax items (income, gains, losses, deductions, and credits) pass through to the individual partners who report these items on their personal tax returns. This avoids double taxation that occurs with C corporations.

4Under NASD Rule 2810, what must be disclosed to DPP investors regarding fees and expenses?

A.Only the maximum possible return

B.All compensation, fees, and expenses in the public offering

C.Only the minimum investment amount

D.The names of all other investors

Explanation: NASD Rule 2810 (now FINRA Rule 2310) requires full disclosure of all compensation, fees, and expenses in public offerings of DPPs. This includes organization and offering expenses, acquisition fees, management fees, and any other charges that reduce the amount of investor capital actually invested in the underlying assets.

5Which of the following is typically true regarding the liquidity of DPP investments?

A.They are highly liquid with daily pricing

B.They are illiquid with no established secondary market

C.They can be redeemed at any time at NAV

D.They trade on major stock exchanges

Explanation: DPP interests are generally illiquid investments with no established secondary market. Unlike publicly traded securities, DPP interests cannot be easily sold, and any transfer typically requires the general partner's consent. Investors should be prepared to hold DPP investments for the entire program duration, which often spans 7-10 years or longer.

6What is the purpose of the "at-risk" rules for DPP investments?

A.To guarantee a minimum return on investment

B.To limit the amount of losses an investor can deduct to the amount actually at risk

C.To eliminate all tax benefits from DPP investments

D.To require daily marking-to-market of DPP interests

Explanation: The at-risk rules limit the deductible losses from DPP investments to the amount the investor has actually placed at risk. This includes cash contributions and borrowed amounts for which the investor is personally liable. Nonrecourse financing generally does not count as at-risk capital, preventing investors from deducting losses exceeding their actual economic exposure.

7A limited partner in a DPP receives a Schedule K-1 showing a passive loss. Under current tax rules, how can this loss typically be used?

A.To offset all types of income without limitation

B.To offset only passive income, subject to certain exceptions

C.To carry forward indefinitely but never deduct

D.To offset only wages and salary income

Explanation: Under passive activity loss rules, losses from passive activities like DPPs can generally only be used to offset income from other passive activities. Unused passive losses are suspended and carried forward to future years when passive income is generated or when the activity is disposed of in a taxable transaction.

8Which statement regarding DPP due diligence is MOST accurate?

A.Due diligence is only required for institutional investors

B.Representatives must conduct due diligence on the program, sponsor, and underlying assets before recommending

C.Due diligence is optional for publicly offered DPPs

D.Only the general partner needs to perform due diligence

Explanation: FINRA and SEC rules require registered representatives to conduct reasonable due diligence before recommending DPP investments. This includes examining the program's structure, the sponsor's track record and financial condition, the underlying assets, fee arrangements, and risk factors. Due diligence must be documented and ongoing throughout the offering period.

9What is a "disproportional sharing arrangement" in an oil and gas DPP?

A.An arrangement where all partners share costs and revenues equally

B.An arrangement where the sponsor pays a lower percentage of costs but receives a higher percentage of revenues

C.An arrangement where investors receive no share of revenues

D.An arrangement where the general partner takes all losses

Explanation: A disproportional sharing arrangement (also called a "promote") occurs when the sponsor pays a lower percentage of program costs but receives a higher percentage of revenues after investors recover their costs. For example, the sponsor might pay 10% of costs but receive 30% of revenues after payout. This structure incentivizes the sponsor while allowing investors to recover their capital first.

10Under the passive activity loss rules, which investors may be able to deduct up to $25,000 of rental real estate losses against active income?

A.All DPP investors regardless of income level

B.Investors who actively participate in the management and meet certain income limitations

C.Only institutional investors

D.Investors with no other sources of income

Explanation: Under IRC Section 469, investors who actively participate in rental real estate activities and have modified adjusted gross income of $100,000 or less may deduct up to $25,000 of rental real estate losses against non-passive income. This allowance phases out between $100,000 and $150,000 of MAGI. Active participation requires involvement in management decisions but not necessarily regular, continuous activity.

About the Series 22 Exam

Qualifies representatives to sell direct participation programs including real estate limited partnerships, oil and gas programs, and equipment leasing. Covers DPP characteristics, tax treatment, suitability, and regulatory requirements.

Questions

50 scored questions

Time Limit

1 hour 30 minutes

Passing Score

70%

Exam Fee

$100 (FINRA)

Series 22 Exam Content Outline

20%

DPP Characteristics and Structure

Limited partnerships, pass-through taxation, liability, and structure

25%

Real Estate Programs

Affordable housing, development, operating properties, land, and mortgage programs

25%

Oil and Gas Programs

Exploratory, development, income programs, IDCs, depletion, and interests

15%

Equipment Leasing

Leasing structures, residual value, tax treatment, and risks

15%

Regulations and Suitability

NASD Rule 2810, suitability, due diligence, and disclosure requirements

How to Pass the Series 22 Exam

What You Need to Know

Passing score: 70%
Exam length: 50 questions
Time limit: 1 hour 30 minutes
Exam fee: $100

Keys to Passing

Complete 500+ practice questions
Score 80%+ consistently before scheduling
Focus on highest-weighted sections
Use our AI tutor for tough concepts

Series 22 Study Tips from Top Performers

1Master pass-through taxation and how it differs from corporate taxation

2Understand passive activity loss rules and when losses can offset other income

3Learn the differences between real estate, oil and gas, and equipment leasing programs

4Study NASD Rule 2810 requirements for fees, expenses, and disclosure

5Know suitability factors and which investors are appropriate for each DPP type

Frequently Asked Questions

What does the Series 22 exam cover?

The Series 22 exam covers Direct Participation Programs including real estate limited partnerships, oil and gas programs, equipment leasing, DPP structure and taxation, suitability requirements, and regulations including NASD Rule 2810.

How many questions are on the Series 22 exam?

The Series 22 exam has 50 scored multiple-choice questions plus 5 unscored pretest questions (55 total). You have 1 hour and 30 minutes to complete the exam, and you need 70% (35 correct) to pass.

What can I sell with a Series 22 license?

The Series 22 license qualifies you to sell direct participation programs including real estate limited partnerships, oil and gas drilling and income programs, equipment leasing programs, and other DPP interests. It does not qualify you to sell stocks, bonds, or mutual funds.

How hard is the Series 22 exam?

The Series 22 exam is moderately difficult with an estimated 65-70% pass rate. It requires understanding of complex tax concepts (pass-through taxation, passive loss rules), different program types with varying risk profiles, and regulatory requirements. Plan for 40-60 hours of study.

How long should I study for the Series 22 exam?

Plan for 40-60 hours of study over 4-6 weeks. Focus on understanding DPP structure, tax treatment (IDCs, depletion, passive losses), different program types and their risks, and suitability requirements. Complete all 200 practice questions before scheduling your exam.

Do I need the SIE before taking Series 22?

Yes, you must pass the SIE exam and have firm sponsorship before taking the Series 22. The SIE provides foundational securities industry knowledge, while Series 22 focuses specifically on direct participation programs.