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Inergy, L.P. Message Board

moneyonomics 157 posts  |  Last Activity: 14 hours ago Member since: Jan 16, 2010
  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 3, 2014 2:43 PM Flag

    bob thanks for taking the time to reply. like your efforts.

    last paragraph I would not doubt at all.

    and but of course it is negative tax-basis capital account, but bet you knew all along when i said negative basis on the equity and left out tax and capital account and added on equity to differentiate between adjusted basis with non recourse debt

    also thanks for recognizing there is the possibility to slip into as risk rules when adjusting the capital account balance for non recourse debt

    again thanks for going the extra mile

  • Reply to


    by averyed510 Oct 31, 2014 12:18 PM
    moneyonomics moneyonomics Nov 3, 2014 12:32 AM Flag

    race why will shlx be the largest component?

    Tuesday night Shell Midstream Partners LPSHLX +1.48% is set to become the largest master limited partnership initial public offering in more than a decade. The offering, brought by international oil and gas conglomerate Royal Dutch Shell RDSA.LN +0.36% Plc, could raise more than $750 million, according to regulatory filings.

  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 2, 2014 2:23 PM Flag

    Bob pretty straight forward. First, you have to calculate the negative basis on equity to apply your non recourse liability to determine your adjusted basis, if you want to use your recourse liabilities as an adjustment.

    Secondly if you read the entire post at risk comes into play once you apply the non recourse liability to arrive at the adjusted bases as the losses become suspended.

    Again respectfully if you could supply your source or irs code reference on your two points it would be appreciated.

    If not please venture to the iv mlp board. It is very useful. You can read for free and at certain times iv provides basic membership for free. there is also a tubo tax board on iv but you must be a member to read.

    good luck

  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 2, 2014 11:37 AM Flag

    ...suspended losses are released (so they can go to the third filter, the PAL rules) before you sell. This requires that your at-risk amount be increased, which in turn requires that you make a capital contribution (i.e., purchase sufficient additional shares to release the losses before selling them all again). Pretty bizarre [a historical sidelight - it appears Congress first introduced the at-risk rules in the mid-70s to stop certain games being played by tax accountants in the film industry; they were not made applicable to all trades or businesses until 1986, and at that time Congress did not apparently put sufficient thought into how to coordinate these rules with the basis rules and the PAL rules].

    Thus, in a situation like yours, you can count the nonrecourse liabilities allocated to you as additional basis against which you can take distributions, but you then also have to file Form 6198 to keep track of losses suspended under the at-risk rules. Moreover, if in any year your liability allocations decrease so that they no longer cover your negative capital account, you will have a deemed distribution in excess of basis that will have to be recognized as capital gain. And when you finally dispose of your units, you will have to include the final decrease in liabilities in your gross proceeds as well (plus, as discussed above, there may be some bizarre results from the at-risk rules upon disposition of the units).


  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 2, 2014 11:36 AM Flag

    ..gains (that is, as long as you have sufficient liability allocations, the distributions will not be "in excess of basis").

    The nonrecourse liabilities also give you basis against which you can take K-1 losses - however, those losses are then suspended under the at-risk rules.

    Slight detour here: in order for you to take losses, you have to pass through three sequential filters - you have to have sufficient basis under IRC Sec. 705; you have to have sufficient amounts at risk under IRC Sec. 465; and you have to satisfy the passive activity loss ("PAL") rules of IRC Sec. 469. The vast majority of MLP investors who have positive capital accounts have basis as well as amounts at risk, and so the only place where the losses get trapped is under the PAL rules - and the losses trapped under the PAL rules are released when you fully dispose of your interest in that MLP.

    If you have a negative capital account and no liability allocations, then you have no basis, and your losses get trapped at the first filter - and you never get to take them (but at the same time your basis is not reduced below zero for those losses, so you don't have to pay for them when you sell your interest, either).

    But if you have a negative capital account and nonrecourse liability allocations, then you have basis, but no amount at risk (because you are not actually on the hook for the nonrecourse liabilities, and you have already gotten the full tax benefit of your original purchase price). In this case (which is very rare), your losses pass the first filter (and reduce your basis), but then get trapped at the second filter and suspended on Form 6198. Now this is where it hurts - when you sell your interest in the MLP, the losses suspended on Form 6198 do not get released; they simply disappear. But because they reduced your basis, you do have to pick up additional gain on the sale of your interest for them. The only way to avoid this bad result is to make sure the Form 6198...

  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 2, 2014 11:35 AM Flag

    .Qualified nonrecourse, and Recourse); I believe your liabilities from OKS will be listed in the first line (if they are in the third line, then you have a non-tax issue, because it would mean the lender could go after your personal assets if the loan went sour). Looking back over my K-1s for the past couple of years, it appears that maybe a quarter of them have nonrecouse liability allocations (the other three-quarters don't have any liability allocations).

    In short, nonrecourse liabilities allocated to you do give you basis, but they also bring into the play the so-called "at risk rules" of Internal Revenue Code Sec. 465, which require filing of Form 6198.

    More technically, an increase in the amount of liabilities allocated to you is deemed to be a cash contribution by you to the partnership, while a decrease in the amount of liabilities allocated to you is deemed to be a cash distribution to you. Because these are only deemed contributions and distributions, they are not included in the capital account analysis (item L on the left-hand side of your K-1). As a result, your basis is not just your ending capital account, but rather the sum of your capital account and your liability allocation. But this also means that, when you sell your interest, your proceeds on the sale are not just the cash you actually get (and which your broker reports on your 1099-B), but also the decrease in your liability allocation.

    For the vast majority of MLP investors who do not have negative capital accounts, this results in a wash (both your basis and your gross proceeds are increased by the same amount), and therefore can be safely ignored - conceptually it is easiest to think of your basis simply as your capital account, because this tracks with actual cash transactions.

    However, in a case like yours where you have a negative capital account, the allocation of liabilities does give you additional basis against which you can take distributions without having to recogniz

  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 2, 2014 11:33 AM Flag

    Bob I respectfully disagree with you. Please post your references to at risk and negative. Alvin was quoting from rock and rent and extremely respected tax professional who uses terms negative basis and at risk for PTP's. Better yet join the investorvillage mlp board. It is free and discuss there. I am going to attempt to post rock and rents post in three messages.

    "Msg 12494 of 42804 at 3/24/2010 5:25:45 AM by


    The following message was updated on 3/24/2010 5:58:48 AM.

    In response to msg 12488 by porciuscato view thread
    Re: Capital Gains taxes on Distributions when basis gets to 0 -- revisited

    Ah yes, the issue of the allocation of liabilities. I did not get into this earlier, because this can get extremely technical and hairy, and applies to very very few MLP investors. However, it appears you are one to whom these rules apply, so here is the fuller explanation.

    Warning: the following is extremely technical and mind-blowing. If you are a regular MLP investor, in 99.99% of cases this will not apply to you.

    In most cases I believe an MLP will not allocate a share of liabilities to you, because in general, in order for this to happen, you have to be actually on the hook for those liabilities (and the whole idea of being a "limited partner" or "limited liability company member" is that you are not on the hook for anything beyond your original purchase price).

    However, there is a class of liabilities that can be allocated to you even if you are not on the hook for them, and these are so-called "nonrecourse liabilities" (which are liabilities for which nobody is on the hook; they are secured only by assets or collateral, and if the collateral turns out to be insufficient, the lender is SOL and does not have recourse against anyone else). If you look at item K on the left-hand side of your K-1 (which is labeled "Partner's share of liabilities at year end"), you will see three lines there (for Nonrecourse,...

  • Reply to

    Return of Capital vs Dividend

    by rogermarislives Oct 22, 2014 12:05 PM
    moneyonomics moneyonomics Nov 1, 2014 8:47 PM Flag

    go to investorvillage mlp board (it is free to read) and follow this Msg 36962 of 42800 by alvinsch00

    Re: Tracking MLP basis
    Long ago in msg #18783 I gave an example of how I keep track of basis. However, once your basis goes negative you have to calculate the items in a IRS specific order (add all positive items (including gains in non-recourse), figure any distributions in excess of basis, then if there is anything left you can utilize any negative numbers (and decreases in non-recourse), this can occur in the year of transition from positive to negative basis where you need to prorate, otherwise you need to enter zero for negative numbers on K1 as I understand).

    Yes, I'm the one who keeps pounding the table for basis including non recourse loans, while at-risk does not. By all means utilize intangible drilling costs to generate additional loss even if it ends up being deferred by passive activity limitations (note this reduces your basis). While they warn you about IDC causing AMT issues this only is an issues if IDC makes up a very large portion of your overall reported income (or if you are one of the major integrated oil companies that don't get the big fudge factor we get).

    Msg 29115 of 42800 at 3/8/2013 by alvinsch00

    Re: Need details on how to remedy a depleted Ending Capital Account, pls and tnx
    According to most tax experts I have read, (especially post 12494 by rock-n-rent), you do NOT have to pay cap gains if just your at-risk basis goes negative (i.e. your capital account), tho you will have to file form 6198 which will limit any new carry forward losses. You only have to start paying CG's for "distributions in excess of basis" when your "adjusted" basis goes negative. This adjusted basis (unlike your at-risk basis), also includes "partners share of liabilities" on your K1 for both recourse and non-recourse liabilities...."

  • iv bry board Msg 151276 of 151276 at 10/30/2014 9:27:13 PM by


    financial hedging caused recent oil losses
    Financial Hedging Caused Recent Oil Losses: MS -- Market Talk

    Published: Oct 30, 2014

    There's been a lot of murmuring in crude markets that large put option volume contributed to the sell off that has brought oil prices down about 25% in recent months. Now Morgan Stanley is out with a note to quantify that: The last $10 decline in oil prices was caused not by fundamental shifts in supply-demand balance but rather complex option trades that forced futures selling volume into the market. Banks and other traders sold puts to producers to help them guard against falling prices. As prices fell and those options came into the money, banks were forced to sell even more futures to hedge their position. "Options markets have distorted oil prices in recent months," firm says

  • Reply to

    For the Board of Directors

    by nymarv10956 Oct 29, 2014 12:24 PM
    moneyonomics moneyonomics Oct 29, 2014 11:36 PM Flag

    ny good choice as they will pick up at least 50% on newest acuitison also. have you looked at dpm

  • go to investorvillage mlp or bry board to view or to rrc site presentations

  • Reply to

    For the Board of Directors

    by nymarv10956 Oct 29, 2014 12:24 PM
    moneyonomics moneyonomics Oct 29, 2014 1:55 PM Flag

    dreiser and ake hold gel if i remember correctly

  • moneyonomics moneyonomics Oct 28, 2014 9:49 PM Flag

    iv mlp board Msg 42715 of 42717 at 10/28/2014 6:58:21 PM by


    In response to msg 42691 by whatdoiknow view thread
    Re: Eroc restarts distributions at $.28 (.07 quarter) an effective 8.2% yield. To buy back $100 mm in units
    YES, YES and again YES.

  • moneyonomics moneyonomics Oct 28, 2014 9:48 PM Flag

    ed from my 25 years of Oil and Gas industry experience, the incremental well economics IRR is generally greater than 20% and in many many cases approaching 100%. this is needed to capture costs not included in incremental well drilling economics such as leasehold costs, G&G, dry holes, G&A, etc

  • moneyonomics moneyonomics Oct 28, 2014 7:25 PM Flag

    hi jdm. simplified value creation model for year ending 2013 put BBEP at the top of the E&P MLP's and with consolidation with QRE should make it financially stronger. ARP is a potential turn around story. I own both. Sold VNR and LInn in past few months

  • moneyonomics moneyonomics Oct 28, 2014 7:22 PM Flag

    more comments on how totally expensive buying back units are at 8.2% yield

    iv mlp board Msg 42691 of 42717 at 10/28/2014 6:04:01 AM by


    In response to msg 42683 by moneyonomics
    Re: Eroc restarts distributions at $.28 (.07 quarter) an effective 8.2% yield. To buy back (up to) $100 mm in units

    they are going to buy back their own units @8.2% yield when other e+ps are trading at 13%+?
    ok, i have to ask, do this management have rocks in their heads?

  • Is it a 2015 dropdown.

    From RBN on Oct 28

    Devon Energy is a leading North American oil and gas producer with drilling acreage in several oil and gas shale plays as well as heavy oil production in Western Canada. Devon holds significant acreage in the condensate and wet liquids window of the Eagle Ford in DeWitt and Lavaca Counties that the company expects to produce an average of 46 Mb/d of oil in 2014 (mostly condensate). During September 2014, Devon brought online the $70MM Victoria Express Pipeline. Devon owns 100% of this 56 mile crude pipeline that connects the Blackhawk delivery terminal in DeWitt to a barge terminal at the Port of Victoria (see map in Figure #1). Victoria is about 86 miles North East of Corpus, linked by a canal to the Gulf Coast Waterway system at Port Lavaca. With Corpus Christi marine docks crowded with barges and tankers, Port Lavaca is an increasingly popular alternative with Eagle Ford shippers – our friends at ClipperData estimate average volumes over 100 Mb/d leaving Lavaca so far in 2014. The initial capacity of the Victoria Express pipeline is 50 Mb/d – expandable to 100 Mb/d. The Devon Victoria terminal has 300 MBbl of storage capacity and can load crude onto coastal barges that navigate the Gulf Coast waterway to Houston, Beaumont, Louisiana as well as the East Coast. Devon expects to drop the Victoria Express asset into their recently formed Master Limited Partnership (MLP – see Masters of the Midstream for more on MLP structures) Enlink Midstream – a combination of the former Crosstex Energy and Devon’s midstream business

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