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As a consequence of their pass-through status, holding MLPs in tax-exempt accounts may generate Unrelated Business Income Tax (UBIT). [2] To encourage tax-exempt investors, some MLPs set up C corporation holding companies of limited partner which can issue common equity. [3]
Here’s how a master limited partnership works, examples of MLPs and their pros and cons.
For instance, the Alerian MLP index, a market These types of investments can be a great addition to a portfolio. An Investor's Guide to Master Limited Partnerships
Instead, we emphasize MLP-specific metrics like enterprise value to EBITDA (EV/EBITDA), distribution coverage ratio, and today's focus: price to distributable cash flow (P/DCF). How the metric works
Unrelated Business Income Tax (UBIT) in the U.S. Internal Revenue Code is the tax on unrelated business income, which comes from an activity engaged in by a tax-exempt 26 U.S.C. 501 organization that is not related to the tax-exempt purpose of that organization.
Today, Gross favors a different type of income-generating investment: master limited partnerships (MLPs). Here's a look at why he prefers them over other pipeline stocks for those seeking tax ...
Structure of a private equity or hedge fund, which shows the carried interest and management fee received by the fund's investment managers. The general partner is the financial entity used to control and manage the fund, while the limited partners are the individual investors who receive their return as capital interest.
Summary MLPs are pass-through entities that enjoy special tax treatment. As pass-through entities, MLPs avoid the double taxation associated with investments in C-Corporations. Typically, 70-100% ...