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Linn Energy, LLC Message Board

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  • sollid_companiess_only sollid_companiess_only Dec 10, 2012 1:34 PM Flag

    Question About Tax Advantages of LINE vs LNCO

    Linda, you post, "...My LINE units will never be taxed to my beneficiaries after my death (units in partnerships are inherited at their current market value without regard to my cost or previous distributions received)."

    If this is true, then all elderly LINE/LNCO investors should go with the LINE investment strategy. Taking myself as an example, I'll shortly be 65 years of age. If I stick with my current LINE investment that I made 6 months ago, with a 7.5% dividend rate, then I'll have approximately 13 years of dividends before I reach the cost basis of my investment. That would put me at the age of 78, a little past the average life expectancy for a male in this country. This means that I would receive all the dividends tax-free and then be able to leave the LINE investment to my heirs, tax-free.

    If I switched to LNCO, I'd lose 15% (at current capital gains tax rates) of all my dividends to taxes for that 13 year duration period. And that doesn't make sense, when I have a chance to pay no taxes on the investment.

    Linda, you state that you are qualified to compute your taxes from LINE's K-1. I, myself, have over 5 years of experience with H&R Block and AARP as a tax preparer. So I won't have any difficulty computing taxes for a K-1 either.

    Thanks for your input.

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