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Instead of a Form 1099, MLP investors receive a Schedule K-1 tax form. 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]
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
ETNs use a different method to get around the K-1 problem, arguing that because they represent a debt obligation rather than a direct interest in an MLP, the income ETNs generate is interest ...
Arbitrage is the practice whereby investors take advantage of slight variations in asset valuation from its fair price, to generate a profit. It is the realisation of a positive expected return from overvalued or undervalued securities in the inefficient market without any incremental risk and zero additional investments.
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Investors who are new to the world of master limited partnerships learn quickly that they shouldn't be evaluated the same as regular C-corporations, especially when it comes to debt levels and ...
Here’s how a master limited partnership works, examples of MLPs and their pros and cons.
The following video is part of our "Motley Fool Conversations" series, in which Motley Fool contributor and financial planner Dan Caplinger discusses topics from around the investment world. Today ...