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Spectra Energy Partners, LP Message Board

  • billeesands billeesands Jan 8, 2014 9:52 PM Flag

    Tax Question

    Hi. I bought into SEP for the first time today, and should probably know this, but I was wondering if it would be better to own it in a tax-sheltered account, or taxable. Most MLPs are best held in a taxable account due to the tax benefits, but I'm not sure about SEP, as it's a GP. Thank you for your info.

    Sentiment: Buy

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    • There seems be something going on with this stock. I was offered a good % to loan out my stock. If your broker needs to borrow your stock it might be better to own it in a tax sheltered account. I own mine in a taxable account.

    • For a small investor, putting SEP into an IRA is usually not bad. The bogie is to keep UBTI low. I do that, and I monitor UBTI. It is not simple to describe what is safe, but if the total of all of the POSITIVE values in your IRAs is less than $1000, you are safe from getting taxed and paying your broker to file that tax. There can be other factors, but if you can meet that criterion, you should be safe.

      SEP, like most energy MLPs (PTPs) have negative UBTI, at least in the early years that you hold them. I watch, and if any start to generate non-trivial positive UBTI, I look to sell the whole thing. It is not 100% safe, but I have not been bitten yet.

      If you bought SEP in a taxable account, you have a significant learning curve with Turbotax plus a significant annual chore, or you will pay a tax person to do it for you. I don't know what a tax person would charge to do just SEP.

    • No, SEP is not a GP (general partner). It is an MLP and is best held in a taxable account (so long as you can handle the tax accounting). Not sure why you thought SEP was a GP.

      • 1 Reply to lizahuang54321
      • Thank you, liza. I own so many different MLPs, and have for years. I always appreciate your knowledgeable posts on other boards. Like I said, I'm new to SEP, and have much to learn about it. I did buy more yesterday in a sheltered acct @ 42.53. Morningstar raised their Fair Value for SEP to 58.

        Below is an update for several of the MLPs that Morningstar covers. I inserted the ticker symbols and their Fair Values for the stocks mentioned in the update.

        Massive project spending will drive cash flow growth at Enterprise in 2014.

        Analyst Note 01/07/2014

        The resurgence of U.S. oil and gas production has been enabled by tremendous investment in midstream infrastructure. With the shale gas and tight oil boom, midstream firms have had their pick of organic growth opportunities in recent years, and investors have grown accustomed to rapid growth in midstream cash flows and distributions. But this level of organic expansion can't last forever. We believe the midstream industry has entered its midgame, where the easy wins of robust growth will be fewer and further between.

        While we expect the absolute level of industry capital spending to decelerate over the next decade, we believe slower organic growth is likely to prompt consolidation, and we still see several key areas where midstream investment spending will remain strong. These include gas processing and natural gas liquids infrastructure; liquefied natural gas and Marcellus projects; and new pipelines for tight oil and oil sands production. In our view, firms with high revenue quality, high asset quality, and solid leverage to these growth drivers are best positioned to shine while industry growth slows.

        Sentiment: Buy

43.853+0.243(+0.56%)3:43 PMEDT