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Linn Energy, LLC (LINE) Message Board

  • kjastromb2001 kjastromb2001 Nov 12, 2008 3:16 PM Flag

    Question about MLPs

    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.

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    • Eventually is one thing. The third Friday in January is quite another.

    • 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?

      • 1 Reply to pilsyd65
      • << 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.

    • 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.

    • How much is too much LINE? I don't think I can add anymore without too much concentration.

      I am damn near 40% LINE right now. Everything I had that was a "spec" holding was dumped and put into LINE.

      Smallish position in EVEP (10%).

      About 30% COS-UN.to and 10% PBG.to.

      Remainder spread between POT, RIG, UPL and GDX puts sold short and covered part with cash and part with margin. Once the puts expire or whatnot I'll probably try to add LGCY assuming oil starts to put in a "bottom."

    • 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.

    • Bernanke... what is your position in LINE? Are you long both the common stock and call options?

    • I am more in the April and July calls, so I understand your strategy. The most you lose is $2.80/unit and upside is limited only by the dismal market.

      LINE probably has the best hedges of any MLP for the next 2 years. By then the economy will have either rebounded a bit or the US dollar will be so valueless that oil and NG prices should be "better" due to the depreciated currency.

    • 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.

    • 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.

    • I appreciate the responses but I was really wondering about a normal, taxable account. But it sounds as if most on this board aren't doing that.......

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