Accounting for MLPs

Lynn Ostrem on

Ira or Rip,

If found an MLP (Master Limited Partnership for the rest of you) that I am interested in buying. Is there any special paperwork that I would have to deal with at tax time if I were to buy it for my taxable account? How about for my tax-deferred account?

Thanks!

--
Lynn Ostrem
Resource Management Group, Inc.
4439 McAllister Av NE
St.Michael, MN 55376
Office: 763/497-5153
Fax: 763/497-5838
Cell: 612/750-4943
garbagecop@gmail.com

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Jim Thomas on

http://www.naptp.org/InvestorRelations/IRFAQs.htm is a place to start reading about this.

If found an MLP (Master Limited Partnership for the rest of you) that I am interested in buying. Is there any special paperwork that I would have to deal with at tax time if I were to buy it for my taxable account? How about for my tax-deferred account?

iras1 on

You'll receive a K-1 from the MLP (probably in mid-March, but you should be able to find out on the MLP's investor resources page). It will be similar to the K-1 you receive from your investment club except the numbers will be in different boxes. You'll (probably) have to complete one or more additional forms for your tax return. If you prepare your own return, the retail tax software should handle the MLP without any problem. If you use a professional preparer, expect to pay more for his/her services.

The biggest problem associated with MLPs is that you may be required to file state income tax returns in every state in which the MLP has operations. Jim Thomas has already recommended www.naptp.org. On that site you can find a listing of which states each MLP is in. Some states' filing requirements kick in at the first dollar of income.

If you choose to purchase the MLP in a tax deferred account, you can ignore all of the above, but will have a different concern. If the MLP generates more than $1000 in Unrelated Business Income (a term of art), your tax-deferred account will have to file a tax return (Form 990-T). UBI is reported to you on the K-1. Hope this helps.

For anyone else reading this and thinking about MLPs for their investment club - the state filing requirements described in the second paragraph will apply to your club as well as each member of the club. bivio's basic AccountSync service can't handle MLPs. I'm not sure if the ActivePartnership product can or not, but bivio's support staff can answer that question.

Ira Smilovitz

Join me at InvestEd 2010

Investor Education at Its Best^TM
Baltimore, MD August 6 - 8, 2010
http://www.investor-education2010.org/

In a message dated 12/07/09 21:18:55 Eastern Standard Time, garbagecop@gmail.com writes:

Ira or Rip,

If found an MLP (Master Limited Partnership for the rest of you) that I am interested in buying. Is there any special paperwork that I would have to deal with at tax time if I were to buy it for my taxable account? How about for my tax-deferred account?

Thanks!

Lynn Ostrem on

Boy, am I ever glad I asked! Thanks Ira and Jim. With 10,000 choices out there, I will certainly find something less "taxing"!

Thanks,

Lynn O.

_____________________________________________________________-

In a message dated 12/07/09 21:18:55 Eastern Standard Time, garbagecop@gmail.com writes:

Ira or Rip,

Thanks!

On Tue, Dec 8, 2009 at 6:23 AM, iras1 <iras1@aol.com> wrote:

You'll receive a K-1 from the MLP (probably in mid-March, but you should be able to find out on the MLP's investor resources page). It will be similar to the K-1 you receive from your investment club except the numbers will be in different boxes. You'll (probably) have to complete one or more additional forms for your tax return. If you prepare your own return, the retail tax software should handle the MLP without any problem. If you use a professional preparer, expect to pay more for his/her services.

The biggest problem associated with MLPs is that you may be required to file state income tax returns in every state in which the MLP has operations. Jim Thomas has already recommended www.naptp.org. On that site you can find a listing of which states each MLP is in. Some states' filing requirements kick in at the first dollar of income.

If you choose to purchase the MLP in a tax deferred account, you can ignore all of the above, but will have a different concern. If the MLP generates more than $1000 in Unrelated Business Income (a term of art), your tax-deferred account will have to file a tax return (Form 990-T). UBI is reported to you on the K-1. Hope this helps.

For anyone else reading this and thinking about MLPs for their investment club - the state filing requirements described in the second paragraph will apply to your club as well as each member of the club. bivio's basic AccountSync service can't handle MLPs. I'm not sure if the ActivePartnership product can or not, but bivio's support staff can answer that question.

Ira Smilovitz

Join me at InvestEd 2010

Investor Education at Its Best^TM
Baltimore, MD August 6 - 8, 2010

http://www.investor-education2010.org/

Eric Dobbs on

iras1 wrote:
> I'm not sure if the ActivePartnership product can or not, but bivio's
> support staff can answer that question.

We do not handle MLPs in either AccountSync or
ActivePartnership.

Eric Dobbs
bivio, Inc.

Etana Finkler on

This is so timely, since just today I read the Valueline,
Portfolio 4 purchased:

PORTFOLIO IV
We are purchasing units of Alliance Resource
Partners, L.P. for Portfolio IV this
week. The master limited partnership
(MLP) produces coal for use by utilities
and industrial companies. It is likely to
realize record revenues and earnings in
2009, attributable to rising pricing on
long-term contracts. The MLP offers a
yield currently just below 8.0%.

... and it caught my attention. But it seems way too
complicated even as an individual investor. thanks for the
replies... Etana

Lynn Ostrem wrote:
> Boy, am I ever glad I asked!� Thanks Ira and Jim.��With 10,000 choices out there, I will certainly find something less "taxing"!
> �
> Thanks,
> �
> Lynn O.
> _____________________________________________________________-
> In a message dated 12/07/09 21:18:55 Eastern Standard Time, garbagecop@gmail.com writes:
> �
> Ira or Rip,
> �
> If found an MLP (Master Limited Partnership for the rest of you) that I am interested in buying.� Is there any special�paperwork that I would have to deal with at tax time if I were to buy it for my taxable account?� How about for my tax-deferred account?
>
> �
> Thanks!
> On Tue, Dec 8, 2009 at 6:23 AM, iras1 <iras1@aol.com> wrote:
> �
>
>
> You'll receive a K-1 from the MLP (probably in mid-March, but you should be able to find out on the MLP's investor resources page). It will be similar to the K-1 you receive from your investment club except the numbers will be in different boxes. You'll (probably) have to complete one or more additional forms for your tax return. If you prepare your own return, the retail tax software should handle the MLP without any problem. If you use a professional preparer, expect to pay more for his/her services.
>
> �
> The biggest problem associated with MLPs is that you may be required to file state income tax returns in every state in which the MLP has operations. Jim Thomas has already recommended www.naptp.org. On that site you can find a listing of which states each MLP is in. Some states' filing requirements kick in at the first dollar of income.
>
> �
> If you choose to purchase the MLP in a tax deferred account, you can ignore all of the above, but will have a different concern. If the MLP generates more than $1000 in Unrelated Business Income (a term of art), your tax-deferred account will have to file a tax return (Form 990-T). UBI is reported to you on the K-1. Hope this helps.
>
> �
> For anyone else reading this and thinking about MLPs for their investment club - the state filing requirements described in the second paragraph will apply to your club as well as each member of the club. bivio's basic AccountSync service can't handle MLPs. I'm not sure if the ActivePartnership product can or not, but bivio's support staff can answer that question.
>
> �
>
>
> Ira Smilovitz
>
> Join me at InvestEd 2010
> Investor Education at Its BestTMBaltimore, MD August 6 - 8, 2010
>
> http://www.investor-education2010.org/
>
>
> �

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