What would you like to do?
What are the tax consequences of owning a master limited partnership?
Assuming you mean owning a share in a master limited partnership (MLP)as an investor, he short answer is: you get tax-deferred income on a quarterly basis, and pay income tax on your share of partnership income, which is usually far smaller than the distribution. The long anwer: the important thing about an MLP, or any partnership, is pass-through taxation. That is, an MLP does not pay an entity level tax the way a corporation does. Rather, the partners--that is you and the other unitholders--are allocated their proportionate shares of all tax items, net them out, and pay the tax on the resulting taxable income. So, you will be allocated a share of the partnership's income, its depreciation deductions, etc. All this is on paper--you don't actually receive an amount equal to your share of income. You do, however, receive a quarterly distribution, which is like a dividend, except that it is treated differently for tax purposes. Because the partnership doesn't pay a tax, it can pay out more of its income to you in case than a corporation typically can. Instead of being taxed currently, the distribution is subtracted from your basis in your partnership units. When you sell your units, your taxable gain is the difference between your sales price and your adjusted basis, so the tax on the distributions is collected then. While the distributions lower your basis, your share of taxable income and other things increase it, and so it takes longer than you might think to get your basis to zero. If you ever do get to zero, the distributions would become taxable. For more information, visit the website of the MLPs' trade association, the National Association of Publicly Traded Partnerships (http://www.naptp.org)...the answer is being submitted by its executive director.
+ 33 others found this useful
Was this answer useful?
Thanks for the feedback!
Two or more individuals - also called "partners."
A partnership that has no liability limitation has all "general" partners. A limited partnership ("LP") has at least one general partner and one or more limited partners, whic…h can be individuals, corporations, partnerships, limited liability companies, or non-profit corporations.
All partners have to agree with echother when makeing business decisions.
Unlimited liability for all partners.
A limited partnership is formed upon the execution of an agreement between a limited partner (usually a financial contributor) and a general partner (responsible for the day-t…o-day operations of the business). The limited partner is only liable up to the amount of the initial investment whereas the general partner has unlimited liability. It is advisable to have an attorney draw up the agreement to ensure that it is in compliance with the laws of the jurisdiction in which the partners will conduct business.
No but they do file a 1065 income tax return and report each partners share of the taxable income to them on a schedule 1065 K-1 and each partner then reports the partner shar…e on the income tax return an pays all of the necessary taxes on it.
A partnership computes its income and files its return in the same manner as an individual. However, certain deductions are not allowed to the partnership. Go to the IRS.gov w…ebsite and use the search box for Tax Information For Partnerships Partnership Income or Loss
At the basest level (Written or unwritten, simply a handshake agreement, or even an implied partnership) you would be operating as a "General Partnership". General Partnership…s have no limits on the potential liability, you are personally responsible for your own debt, and the debts of the partnership and the partnership is responsible for all debts of all the partners, so you become liable for all the personal debts of all your partners. There is a subset of partnership arrangements known as Limited Partnerships, if you comply with all the formalities and structure it properly, a limited partnership can create 2 classes of partners: Limited Partners and General Partners. General Partners are still 100% liable for all debts. But in theory the limited partners are not liable. In practice the lines can blur. It is not title, but action that determines if you are a "General" or "Limited" partner. If you have an active participation in the management of the partnership you are a general partner. Over the last 20-30 years the courts have demonstrated that reliance on a limited partnership to preserve assets, or to limit liability, is misplaced faith.
Family Limited Partnerships are used to hand down wealth from generation to generation. You can learn more about Family Limited Partnerships online at the Wikipedia.
None. A partnership is nothing but a glorified sole proprietorship...it provides ZERO legal protection. If anyone sues you, they can take all of your assets. When it comes to …taxes, you pay an additional 15% self employment tax on any profit from the business. A limited liability company offers more legal protection, but you are still in the same boat with taxes. Legally, an LLC member is only liable up to the amount he has invested in the company. So if you only invested $10,000 in the company and someone sues you, they can only get $10,000.
The best way to get out a limited partnership is to sell your portion of the business. You can sell your portion of the business to the other person or to someone else.
yeah the owner
In Business Law
Liability Protection: In general partnerships, each participant is personally responsible for the actions of the company. This includes debts, liabilities and the wr…ongful acts of other partners. One advantage of a limited liability partnership is the liability protection it affords. Flexibility: Liability partnerships offer participants flexibility in business ownership.
Only one partner is required to be a general partner.
In Business Law
All of the partners in a general partnership are fully liable for all debts and obligations of the partnership. In a limited partnership, there is always one or more g…eneral partners and one or more limited partners. The general partner(s) in a limited partnership, like the partners in a general partnership, are fully liable for all debts and obligations of the partnership. The limited partners, on the other hand, are not liable for any debts or obligations of the partnership beyond the amount that they have contributed or committed to contribute to the partnership. In other words, limited partners can lose their entire investment in the partnership but a creditor of the partnership cannot go after the other assets of the limited partners. A limited liability partnership (LLP) is created by state statute, as is the limited partnership, but compared to the limited partnership statutes, there is much more variation in LLPs from state to state. That makes any general description potentially wrong, based on the law of the specific state in which the LLP is operating. Generally, all or some of the partners in an LLP have some degree of limited liability protection. The partners usually have to be members of a licensed profession such as CPAs, attorneys or engineers.
All partners have to agree with each other when making businessdecisions.