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MLPs pay their investors through quarterly required distributions, the amount of which is stated in the partnership agreement, or contract, between the limited partners (the investors) and the general partner (the managers). The distribution paid by MLPs is equivalent to the dividend paid by C corporations.
Typically, 70-100% of MLP distributions have been considered a tax-deferred return of capital, which means one does not pay taxes on that portion of the distribution until the investor sells his ...
Similar to direct MLP investment, return of capital distributions from an MLP fund structured as a corporation lower an investor’s basis, and taxes are not [...] Beyond the K-1: Tax Treatment ...
Investors have long been attracted to MLPs for their generous yields, but the tax advantages of MLPs are not well understood. MLPs serve as a highly tax-efficient way to own midstream energy ...
For example, U.S. tax law provides that trading in securities for the taxpayer's own account will not constitute a U.S. trade or business. [16] Thus foreign hedge funds formed as corporations do not generally pay corporate income tax. [17] Domestic tax-exempt entities face similar concerns when investing in funds structured as partnerships.
New York University Law School won the case because, at that point, tax-exempt organizations were not subject to income tax on their revenue from any source as long as the revenue was used towards the organization's tax-exempt purpose. [14] [15] In 1950, Congress amended the tax law to introduce the concept of unrelated business income. [17]
Here’s how a master limited partnership works, examples of MLPs and their pros and cons. Skip to main content. 24/7 Help. For premium support please call: 800-290-4726 more ways to reach us ...
Instead, we emphasize MLP-specific metrics like. Master limited partnerships are not like other stocks, and the metrics we use to compare an MLP to its peers differ from the metrics we use to ...