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Texas Pacific Land Trust Message Board

  • stemps_23 stemps_23 Nov 20, 2012 1:22 PM Flag

    Tax Implications

    Is this stock one of those that has strange tax treatment...like a Limited Partnership, or if you hold it in an IRA you still have to pay some taxes with income earned over $1,000 (UBTI-Unrelated Business-Related Taxable Income)?

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    • It's a straight "C" corporation. No special tax issues, no K-1, just a 1099 for dividend income. It pays a relatively small dividend--23 cents a year currently---a little better than a money market these days, though! The real "growth factor"/compounding effect here is that the company's original Trust, from the 1800's, MANDATES that it buy back stock on a continual basis. Thus, the company, every year, buys back and RETIRES 300,000-400,000 shares. It's almost a musical chairs game, as in about 25 years, there will be only one share left! As such, it's a wonderful vehicle for transmitting inter-generational wealth. The only risk is that the land values (nearly one million acres of land in West Texas) and the oil and gas values will precipitously decline. This, of course, is possible, and no one knows for sure where the price of oil and gas will be 10-15- 25 years from now. That said, on a risk/reward basis, this is one of the best investments I know of etc. Happy Thanksgiving!

      Sentiment: Strong Buy

 
TPL
146.00+1.15(+0.79%)Apr 1 4:00 PMEDT