deuxsous

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  • Upstream MLPs and Canadian Royalty Trusts: High Return, High Risk?
    In answer to Elliot Miller: My understranding is that a limited partnership which has no debt and which distributes 100% of its net income can be held in US IRA's and similar tax-deferred programs. One which fits this description is DMLP, Dorchester Minerals LP. It pays quarterly (not monthly) on a current 9.20% TTM basis.

    www.mcdep.com/rtweek70...

    "The main tax complication of DMLP is that taxable holders must report distributions as partnership income including the separate items furnished in what is known as a K-1 form. For new purchasers, most or all of income in the early years would be sheltered by cost depletion. For depletion purposes conservative reporting of reserves is an advantage because the implied higher depletion means earlier tax shelter.



    "At the same time, DMLP deliberately shuns debt to be sure that it does not trigger unrelated business taxable income for tax-exempt or tax-deferred investors. In other words, the stock ought to be suitable for endowments, pension funds and IRAs. Such investors forego the cost depletion advantage, but get full advantage of the avoidance of taxation at the partnership level. Non-U.S. investors might face other considerations."

    Apr 29 16:00 pm |Rating: 0 0 |Link to Comment |View article

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