Are their any MLP funds and do they have to deal with the K-1 at taxtime. Thankyou, Porciuscato, BadB , and anyone else that contributes to this board. You guys are way out of my league.
For a retiree who files a standard deduction tax return, is there a possibility of a tax impact greater than the LINE distribution? If so, can I avoid this by not being a unit holder at the end of the year?
<< retiree tax >>
You can't avoid MLP tax consequences by selling the MLP before year end. MLP tax reporting makes allocations to you based on your holding period.
In fact, in some circumstances, selling can result in the capture of formerly tax deferred distributions, although the ability to take a deduction for previously suspended passive losses can ameliorate that.
LINE holders will undoubtedly have some capital gains allocated to them (but who doesn't have plenty of tax capital losses this year?). The indications from the company are that LINE will have an ordinary tax loss from operations again this year.
The fees for MLP funds are way too high, and the new MLP funds have no track record. Why not just go to Yahoo and get top funds in MLP industry, thats what I did and am much better off.
And the K1 problem is not much of a problem at all. My tax preparer gets info from brokerage summary and files, or easy to do yourself on Turbotax.
as for Line, what states are you deemed to have taxable income? I tried to get info from their web site but it asked me for my holder info and did not own any in 2007. the line that I do own is in a taxable account but what would happen if I bought line in my ira?
At the moment I own a bundle of LINE units, I am long calls for a much smaller number of units and I just sold some in the money puts betting on a rebound or at least getting the units for a net of a little over $1 per unit less than an outright purchase.
Thanks a lot for the feedback, appreciate it.
I know oil is low (right now) but can't believe how this stock has underperformed compared to others recently. I couldn't resist and bought some Jan calls for $2.80 today - gotta believe this will move eventually.
40% sure is a lot of trust in one company - but it all depends on 40% of what amount you can afford to potentially lose. I know what you mean though - really is undervalued now. Plus, if you look at how this behaves in the few weeks before ex-dividend, you know there is going to be some big up days.....only question is up from where!! I am buying calls for next year at prices close to today's selling price, so I think things will rebound. Good luck.
<< No one typically owns these MLP's in non-taxable accounts due to UBTI problem in IRA type accounts >>
That isn't quite accurate. LINE, as but one example, has been throwing off UBTI losses, not generatiung taxable UBTI. The LINE losses can be setoff against the UBTI of other MLPs or carried forward to setoff UBTI in future years.
It is not a simple matter to answer your question -- most tax advisors seem to say "ignore the state tax returns." That is often safe since the MLP distributions are partly non-taxable return of capital (LINE was 100% non-taxable return of capital in 2007), one major producing state (TX) reputedly has no income tax, virtually every state has a standard deduction, personal exemptions and other odds and ends that eliminate taxable income from partnerships unless you are a big holder.
The difficulty of responding for any one individual's situation is compounded by the fact that every MLP reports different amounts of return of capital, every partnership has varying operations by state, your holding period in a year affects the allocation, etc.
This is where the "consult with your tax advisor" caveat is always appropriate.