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Enterprise Products Partners L.P. Message Board

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  • ngaibruce ngaibruce Nov 16, 2012 6:28 PM Flag

    Why the Gain at this Time???

    I'm tempted to sell to book my capital gains at 2012 long term rate to avoid future tax hit when tax rate goes up. I think I may have missed the ideal exit point as the politicians seem to be serious about compromise on the fiscal cliff issue. This move will require a fairly delicate touch and a bit of luck.

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    • Be careful of the tax implications when you sell. Remember the cumulative past distributions are taxed at ordinary rates, which if they are going up, do have an impact on the unit price.
      Of course you need to sell your position. Hold on beyond the current administration and things could change dramatically. In the mean time enjoy the very attractive returns and the prospects are very bright future.

      Sentiment: Buy

    • You need to educate yourself as to how your individual tax situation will be affected by a sale. It is not a simple capital gain situation as others have pointed out. This is why we saw selling the last few days, people see recommendations and simply hit buy without knowing what they are buying. This is also why traditionally you see some selling around tax time every year because for some reason their mind is blown by the k-1.

      Historically, all these chances have been good opportunities to buy more. I am very overweight in this but I still added at 50 and 49 as I would peg the price at 55-60 by the end of next year which represents a 15-20$ return on my money. Fine for me.

      A bit of free advice which is worth as much as you paid. For most people, including myself if you get to feeling that you have to sell, that you can't take the pain any more it's probably time to buy more. If you get to feeling that there's no way you would sell and start envisioning what you can buy with your profits one day, probably time to sell some.

      One last point which others have pointed out. These DISTRIBUTIONS will be unaffected by an dividend rate tax increase. As a long time holder of nearly 5 years and as someone who does his own taxes, I can attest that the distribution/k-1 has yet to increase my tax liability and one year I believe it was brought down. Now, when I sell, you pay the piper there, but for now any holder gets 5% pretty much tax fee until a unit sale.

      As for congress changing the dividend and/or MLP tax structure, keep in mind that those who set the rules set the rules for themselves. All these folks own high dividend paying equities and likely hold MLPS as it has proven to be one of the better sectors to be involved in over the last 5 years. They are not going to look to raise their own taxes substantially. What they will likely agree on is capping the mortgage interest deduction, depreciation on personal jets, things that affect the uber wealthy. And they will likely compromise on the capital gains and dividend rate somewhere between 20 and 25%, far from the end of the world. Keep in mind that the capital gains rate was as high as 70% during the Eisenhower administration to help pay for WW II. We need to pay for the two wars one day, might as well start no.

      Oh and if you think interest rates are going to to crazy anytime soon, keep in mind that if long term bond rates simply move from 2% to 4%, the national debt goes up 1 TRILLION dollars. Would u raise the rate on your own credit card if you owed a ton of money...no, so the FED will not... so the end game is BUY EPD.

      Sentiment: Buy

    • You sell... you have to recapture at ordinary rates any depreciation, etc.. that has shown up over the years. It's not all capital gain.

      • 1 Reply to rhalisd
      • The gain today is simple. There were two big sellers for 3 days. Probably hedge funds and or mutual funds. They were locking in gains and also had redemptions. That created fear from Mom and Pop so they piled in too as a sell. No real reason as Congress has never considered changing MLP status except for holding by IRAs.

    • I have learned the hard way: Never sell a portion of your position. Sell it all or sell none of it. This is critical to 'release' your suspended passive losses (treated as ordinary not capital losses) that you want to offset your ordinary gain recapture (due to accelerated depreciation) and likely capital gains (due to your reduced basis created by prior losses (practically guaranteed) and distributions). Only a suggestion.

      Sentiment: Strong Buy

 
EPD
41.10+0.55(+1.36%)Sep 19 4:06 PMEDT

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