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Atlas Energy, L.P Message Board

  • tuckerl1985 tuckerl1985 Aug 11, 2011 9:44 AM Flag

    Deferred taxes with a GP?

    Are the distributions, at ATLS, tax deferred in the same as APL?

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    • From ATLS 10K

      http://phx.corporate-ir.net/phoenix.zhtml?c=197317&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDExOTMxMjUtMTEtMDQ3NDY1L3htbC9zdWJkb2N1bWVudC8xL3BhZ2UvNjI%3d

      Our ratio of taxable income to cash distributions will be much greater than the ratio applicable to holders of common units in APL.
      Our ratio of taxable income to cash distributions will be much greater than the ratio applicable to holders of common units in APL. Other holders of common units in APL will receive remedial allocations of deductions from APL. Although we will receive remedial allocations of deductions from APL, remedial allocations of deductions to us will be very limited. In addition, our ownership of APL incentive distribution rights will cause more taxable income to be allocated to us from APL than will be allocated to holders who hold only common units in APL. If APL is successful in increasing its distributions over time, our income allocations from our APL incentive distribution rights will increase, and, therefore, our ratio of taxable income to cash distributions will increase. Because our ratio of taxable income to cash distributions will be greater than the ratio applicable to holders of common units in APL, our unitholders allocable taxable income will be significantly greater than that of a holder of common units in APL who receives cash distributions from APL equal to the cash distributions our unitholders would receive from us.

    • No, and there is no taxable IDR income.

      The IDRs are really just a special class of partnership income interest. APL allocates its overall taxable income or loss among all of its partners, including the GP that holds the IDRs.

      So if (as expected) APL this year shows a 1231 gain on the sale of the Marcellus properties, and an ordinary taxable loss on operations, those exact amounts will get allocated among the LPs and the GP, including the IDRs. There is no income created by the IDR payment.

      Not that it matters just now, but the IDRs are related to the carried interest that President Obama has proposed to tax as ordianry income. They weren't specifically targeted, like the carried interest in investment partnerships, but they are related.

    • I could not answer that. It is not a big deal IMO, just something to be aware of. When APL starts kicking out a large amount of IDR's then more and more of ATLS's distribution will not be be tax deferred compared to APL's. This could result in more UBTI for those holding ATLS in a tax deferred account (IRA) then holding a similar amount of APL. It could also mean paying taxes in the current year instead of when you sell the stock in a taxable account.

    • Yes, but obviously the numbers will be different.

      ATLS is a partnership and you get a K-1. A significant portion of the ATLS K-1 will consist of pass-thru's from APL, so that's just a pass-thru.

      But ATLS has operations of its own, and I don't know if those operations show income or losses for tax purposes. I would suspect the operations that ATLS acquired from the old ATLS in February show tax losses, but I also suspect the O&G investment services show income.

      And there is a rule that you can't offset losses from 1 MLP against income from another MLP, even if they are related. So, my K-1 from ETE last year showed separate income/loss for ETE and each of its MLPs (ETP and RGNC). Same thing for EPD/EPE. So maybe ATLS K-1 will show the APL stuff separately. Very confusing, but at least the investment is working out well so far.

      • 1 Reply to jrad52
      • They are taxed the same but APL holders have more income sheltered from APL account the IDR's do not come with the offsetting depreciation ect.
        Most likely when APL starts kicking out lots of money then ATLS will be passing through more taxable income to holders than APL.
        Both are still good buys but ATLS has more natural gas exposure. With gas prices very low there will eventually be a time when ATLS's natural gas reserves add significantly to it's value.

 
ATLS
8.44-0.15(-1.75%)Mar 6 4:02 PMEST

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