dvrste asked " does anyone recall what the per share UBTI was for 2006?"
The link to my 'study' on UBTI is on the IV [investor village] board at http://www1.investorvillage.com/smbd.asp?mb=5028&mn=578&pt=msg&mid=3324357
The UBTI is not per share but 'per 100 units'. The "-" is NOT a dash; it is the sign for negative amounts. The stats for BWP - EPD - ETP [the full data set is too long to post here:
BWP + 6 [1 yr lumpygravy]
BWP + 6 [1 yr factoids]
BWP + 4 [1 yr ARB}
EPD - 242 [hiksy158]
EPD - 248 [smashedthumb]
EPD - 197 [2yrs factoids]
EPD - 100 [7yrs ARB]
EPD - 153 [lumpy's dad]
EPD: -115 [dickvm]
ETP + 245 [dickvm]
ETP + 189 [2yrs old factoids]
ETP + 183 [passandshoot]
ETP + 164 [1yr old - ARB]
-------- the data summary -----------
--- distribution -- EPS per year [comments]
ARLP 1.92 while the EPS was 4.03
PAA's 2.87 while the EPS was 3.50
ETP's 2.56 while the EPS was 2.72
ETE's 0.95 while the EPS was 1.18 [the Q1 distribution was a partial distribution]
BWP's 1.32 while the EPS was 1.65 [the Q1 distribution was a partial distribution]
-------------------- all had an EPS [or earnings per unit] that was greater then the sum of distributions
-------------------- all had positive UBTIs - exception of ETE where UBTIs varied from positive to negative
TCLP 2.33 while the EPS was 2.39
MWE's 1.79 while the EPS was 2.44
-------------------- both had EPS greater than distribution but still had negative UBTIs
APU's 2.30 while the EPS was 1.21
-------------------- had distribution greater than EPS but had positive UBTI
APL's 3.37 while the EPS was 1.07
EPD's 1.80 while the EPS was 1.13
HLND 2.65 while the EPS was 1.37
KMP's 3.23 while the EPS was 1.98
NRP's 1.61 while the EPS was 1.74
OKS's 3.60 while the EPS was 3.53
PVR's 1.48 while the EPS was 1.73
TPP's 2.70 while the EPS was 1.77
XTEX 2.13 while the EPS was a loss of 0.81
-------------------- all had distributions greater than the EPS and they had negative UBTIs
-------------------- and one more time - with PVR, UBTIs varied from positive to negative
---------- end of quote from my IV message -----------
I will be solicting 2007 UBTI data on the IV board in approx 30 days, and I hope to be picking up data from some of you Yahoo 'johns' - because the more the merrier [or the better the data set - and the better the data, the better the conclusion one can draw from that data]. So please help me out. This is an opportunity for some of you near full time lurkers to make a valuable contribution.
after a brief discuuion with a representatuve of Enterprise
the situation is this: the UBTI in year 1 & probably year 2 of a partner's ownership wpuld not produce UBTI ( accelerated depreciation): after that they will produce UBTI. Fepending on the amoubt of ownership it could exceed tje $1000 threshold.
I have some EPD in an IRA for my wife however I found out that it is not a good idea to have MLP's in an IRA. This is very much the case if the dividend gained in a year is greater then 1000 dollars. I only have 50 shares in the account so this would not be a problem.
By your post it appears you possibly should not own MLPs at all. They do not pay a dividend but rather a distribution. You are a partner in a partnership in a MLP. The problem in an IRA is not when the "distribution" goes over $1000, but when the UBTI is over $1000. Suggest you read up a bit more on MLPs.
Hi, I would check with your tax man before you put EPD in an IRA. The problem is that EPD is a partnership (direct ownership of a company) and not a security. More specifically, this makes the income from EPD subject to the Unrelated Business Income Tax (UBIT) which would be reported on Form 990-T. Also, since EPD is in your IRA it's income would be taxed at the corporate income tax rate in the year that it is earned. The income is not tax-deferred as a stock dividend would be and it is not taxed at your ordinary income rate. Anyway, this is my understanding of the situation. The key word here is UBIT. I don't suggest this is something you want to deal with.
Just open up a ROTH-IRA and you can put anything in there tax-free at the time you retire. Of course, it's after-tax money but if you invest well and it will be worth it, in the long run.
I talked to a investmetns consultant about this at FIdelity a few weeks ago and he assured me all distributions would be deferred in an IRA. I currently have 5 pipeline LP's in my IRA, (EEP,KMP,MMP,PAA,TPP), approximately 20,000 in each for a total of just under $100,000. I was looking to maybe buy EDP today. How serious of a problem might I have if any. My total distributions/dividends from all 5 would be in the neighborhood of $6,600.Any help on this matter would be greatly appreciated.
I have had both MER and Fido tell me there is no problem putting MLPs in Iras. No limits. Prior to this I had never put them into IRAs because of what I had read on this MB. Believe little of what you read on MBs.
jhgrsrch wrote: "I talked to a investments consultant about this at Fidelity a few weeks ago and he assured me all distributions would be deferred in an IRA."
Maybe you should have asked him about 'UBTI'. [grin] This is further proof that MLPs are not understood by a large portion of the investment professionals.
If one is going to invest in the old timers in the MLP universe and one wants to invest with an IRA, then one is best served [in avoiding UBTIs] using a MLP CEF that will report dividends and not on a K-1.
And both EEP and KMP [which were in the questioners portfolio] have i-units for the purpose of being held in an IRA or 401(k).
I would not specifically fault Fidelity for having someone who is giving out such erroneous advice. You will find erroneous advice EVERYWHERE.
But - as I wrote previously - these 'old timer' MLPs will overwhelming produce negative UBTIs - so while you will continue to have a 'potential' problem, you will probably not have an actual problem. But I believe the brokerage should exchange your EEP and KMP for i-units without generating a commission, because this was THEIR error and not yours.
And BTW - the CEFs tend to be poor substitutes for a portfolio of old timers - even when their portfolios are full of old timers. The fees for the CEFs are a bit high. And their price to NAV ratios do vary - so you could buy high and sell low - which is what would have happened if you bought at the first of last year and sold at the last of last year. 2007 was a bad year for MLP CEFs
I have a theory that is based on shared tax data from 2006 - that almost all MLPS that pay out more in distributions per unit than they have EPS per unit will generate negative UBTIs per unit. But even this simple rule has variations - and is dependent on the time of your purchase - because no two people will have the same UBTI amount per unit.
I have written about this on the IV [investor village] MLP board - and if you 'search' the board for 'UBTI' you will generate a lot of hits on this subject. [You can also search the Yahoo! board for UBTI]
The IV URL for the MLP board - http://www1.investorvillage.com/smbd.asp?mb=5028&clear=1&pt=m
The members of the IV community will be sharing their UBTI info in March - which is when the 2007 data comes in. Until then, the most recent data will be from 2006.
My 'theory' is based on the 2006 data - and is in contrast to the published guidance from the brokerage houses. The PTP Coalition probably still has the MLP Primers on its site - which contain a small bit of info on UBTI.
One can search the message board for prior answers - and there are a lot of them.
I would suggest you read http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_E/threadview?m=ms&bn=6201&tid=5905&mid=5912&tof=19&rt=2&frt=2&off=1
I have placed links to two MLP primers on that message.
There is nothing complicated for MLPs in an IRA IF the UBTI is under $1000. If this reads like a foreign language then you probably should not put MLPs into an IRA. The reality is if you hold small amounts there is almost never a problem. The flip side is Congress is again looking at partnership holdings inside tax deferred investments and if we have a change in Washington there could be a change in the laws. For example, a couple of MLPs (BWP the largest) do not allow holding of units by an IRA. I predict this will actually take place for new purchases in 2008.