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Linn Energy, LLC (LINE) Message Board

  • dancingbear2412 dancingbear2412 Dec 9, 2010 10:08 PM Flag

    MLP's continued existence

    Liza,
    You seem to be the tax guru here. Just wanted to capture your thoughts on future access to MLP's. They seem to be an effective tax haven for corps and their directors. More recently investors are more and more on board. Tax obligations are diluted, delayed or avoided.

    Individual investors are able to nearly completely avoid tax by using ira's, etc. in a business environment that tends to generate unmatched yields to other taxed businesses.

    From what I've read the allowance to become an MLP belongs in Energy and other related co's. Im guessing a bit of a freebie from a gov't promoting energy businesses.

    With the current and continuing deficit, how long can this haven continue? I know congress is pretty weak in effective practice and generally reacts to media topics. So far MLP's are abstract and hidden, but for how long? Will congress ultimately dissolve the MLP structure for purposes of income or satisfaction of constituents desire to capture tax income from all?

    Love MLP's

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    • Actually I'm an amateur on the taxation side, albeit have done my homework. Ruby is the board's resident tax guru. Having said that, your question is not one requiring knowledge of tax code.

      Of course, none of us know the answer to your question. My understanding is that there is nothing on the table currently aimed at limited partner interests. So perhaps the danger is in a complete overhaul of the tax system which some in Washington are pushing. If that happens who knows what would happen to MLP tax status.

    • I'm not Liza but I will take a shot at answering.

      MLP E&Ps encourage domestic production of oil and gas. Politically, it wouldn't be nice to discourage this type of activity resulting less domestic production and more imports. Unlike Canada, I doubt if the US would go that route.

 
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