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  • DONEDEALER DONEDEALER • Oct 24, 2011 1:18 PM Flag

    Loss of pass through taxation?

    Abter,

    Thank you for your prompt response. First, I am retired and have no intention of ever selling MLP's and incurring the tax recapture. I plan to have these investments pass through my estate.

    I realize that a conversion to a C corporation would be the same as selling and a tax disaster. If there were a change in the law on MLP taxation would it permit the MLP to continue as a tax paying partnership or require the equivalent of a conversion to a C corporation? Could the assets be transferred to a corporation in a tax free transaction?

    My hope is that the discussion is academic and there will be no change in the law. But who knows?

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    • lizahuang54321 lizahuang54321 • Oct 24, 2011 5:49 PM Flag

      "If there were a change in the law on MLP taxation would it permit the MLP to continue as a tax paying partnership or require the equivalent of a conversion to a C corporation? Could the assets be transferred to a corporation in a tax free transaction?"

      Nobody could possibly answer this as it would depend on how the legislation was written. There's little point in indulging in guessing games.

      As for your earlier comment:
      "This threat continues to arise in the media and from government sources."
      I believe there is little about this coming from government sources. What rumors there have been have mostly come from the media, hedge funds looking to take advantage, etc.
      The debt supercommittee has said nothing publicly, but who knows what they are discussing in private.

 
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