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View Diary: DE-Sen: Chris Coons (D) To Introduce The Master Limited Partnerships Parity Act (14 comments)

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  •  no, it doesn't. There is an error (1+ / 0-)
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    wilderness voice

    in the diarist's write up when it was said

    Forming a renewable project under such a structure would stop profits from being taxed at both the corporate and shareholder level since it would be treated as a partnership for tax purposes.
    That is wrong. In Coons words:
    An MLP is a business structure that is taxed as a partnership, but whose ownership interests are traded like corporate stock on a market. Whereas profit from publicly traded C corporations is taxed at both the corporate level and the shareholder level, income from MLPs is taxed only at the shareholder level because it is treated as a partnership for tax purposes.
    This just extends an existing tax classification to all forms of energy.
    Or just eliminate corporate tax for all companies and raise personal rates.
    I'd go along with that as long as the rates on dividends and cap gains were the same as on all other income.

    So what are you doing towords getting rid of corporate taxes?

    I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

    by samddobermann on Tue Apr 23, 2013 at 02:18:05 AM PDT

    [ Parent ]

    •  Actually it is not an error. (1+ / 0-)
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      MLPs (and REITS) receive tax advantages at the corporate level. This is a tax break of substantial value for the owners of the company, who in a traditional company would have to be "taxed twice" at the corporate level and at the individual (are we seeing a Republican meme here?).

      However, high net worth individuals are much more likely to be able to take advantage of complicated tax-avoidance measures and therefore reap additional benefits from MLP ownership. Furthermore, in many cases MLPs, because of the way they give back dividends (i.e. Return of Capital), are not suitable for ownership in IRAs that are more common for the average retail investor. Here again, advantage accrues to the wealthy. This is complicated stuff and those who are considering investing should consult a tax- and/or investment-professional before doing so.

      Its worth noting that alternative energy companies have an available structure right now in the REIT structure. REITs have to return at least 90% of net income to investors and can access the same capital markets that MLPs can. In fact, to cut their federal tax bills, many companies are considering transitioning to the REIT structure to avoid federal taxes.

      I won't believe corporations are people until Texas executes one. Leo Gerard.

      by tgrshark13 on Tue Apr 23, 2013 at 06:57:52 AM PDT

      [ Parent ]

      •  As a tax attorney before I retired (0+ / 0-)

        I can see the advantages clearly.

        Just because the wealthy can use OTHER ways of getting around taxes doesn't mean this can't be useful to many. And it would be a useful way to transition out of the current mess.

        Oh and I inherited an IRA which had a REIT. They are useful.

        I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

        by samddobermann on Thu Apr 25, 2013 at 01:15:48 PM PDT

        [ Parent ]

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