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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]
Summary Unrelated Business Taxable Income (UBTI) is the income that can trigger Unrelated Business Income Tax (UBIT) for tax-exempt organizations and retirement accounts. Investors can own MLPs ...
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 ...
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 ...
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 There are two types of MLP funds – those structured as RICs, which own up to 25% MLPs, and those structured as corporations, which tend to be 90-100% MLPs. Similar to direct MLP ...
If a CRUT has any unrelated business taxable income (UBTI), the trust is subject to a 100% excise tax on the UBTI, but retains its tax-exempt status. [12] UBTI is generally income earned from an active business. Prior to 2007, if a CRUT received UBTI it terminated its tax-exempt status and 100% of the trust income would be taxable.
Investors have long been attracted to MLPs for their generous yield, but a recent survey of over 600 financial advisors shows that the tax advantages of MLPs — including the potential for tax ...