{"id":2288,"date":"2022-01-04T09:00:11","date_gmt":"2022-01-04T09:00:11","guid":{"rendered":"https:\/\/moneymakersandsavers.com\/?p=2288"},"modified":"2022-01-04T09:18:49","modified_gmt":"2022-01-04T09:18:49","slug":"master-limited-partnerships","status":"publish","type":"post","link":"https:\/\/moneymakersandsavers.com\/master-limited-partnerships\/","title":{"rendered":"What Are MLPs or Master Limited Partnerships?"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_55 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6618c9617d83c\"><span class=\"\"><span style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #4ff74c;color:#4ff74c\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #4ff74c;color:#4ff74c\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6618c9617d83c\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/moneymakersandsavers.com\/master-limited-partnerships\/#What_are_MLPs_or_Master_Limited_Partnerships\" title=\"What are MLPs or Master Limited Partnerships?\">What are MLPs or Master Limited Partnerships?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/moneymakersandsavers.com\/master-limited-partnerships\/#How_are_MLPs_taxed\" title=\"How are MLPs taxed?\">How are MLPs taxed?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/moneymakersandsavers.com\/master-limited-partnerships\/#What_are_some_examples_of_MLPs\" title=\"What are some examples of MLPs?\">What are some examples of MLPs?<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"what-are-mlps-or-master-limited-partnerships\"><span class=\"ez-toc-section\" id=\"What_are_MLPs_or_Master_Limited_Partnerships\"><\/span>What are MLPs or Master L<strong>imited Partnerships?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p>MLP stands for a master limited partnership. An MLP basically is a type of<a href=\"https:\/\/moneymakersandsavers.com\/what-are-stocks\/\"> stock<\/a> that exists as a publicly traded limited partnership. Everyone who invests in shares, or rather \u201cunits\u201d, of an MLP is technically considered a \u201climited partner\u201d. Master Limited Partnerships have two different types of partners. One type of partner is the \u201climited partner\u201d which are the investors that buy shares or units of the master limited partnership. The other type of partner is called \u201cgeneral partner\u201d, who are the people who manage the master limited partnership like hedge fund managers that manage the investments in other investment companies like <a href=\"http:\/\/vanguard.com\" target=\"_blank\" rel=\"noreferrer noopener\">Vanguard<\/a>, <a href=\"http:\/\/charlesschwab.com\" target=\"_blank\" rel=\"noreferrer noopener\">Charles Schwab<\/a>, <a href=\"http:\/\/fidelity.com\" target=\"_blank\" rel=\"noreferrer noopener\">Fidelity<\/a>, and others.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"275\" height=\"183\" src=\"https:\/\/moneymakersandsavers.com\/wp-content\/uploads\/2021\/09\/image-7.jpeg\" alt=\"master-limited-partnerships\" class=\"wp-image-3212\"\/><\/figure><\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-are-mlps-taxed\"><span class=\"ez-toc-section\" id=\"How_are_MLPs_taxed\"><\/span><strong>How are MLPs taxed?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p>Quarterly distributions from the master limited partnership are similar in nature to quarterly common stock dividends. But they are treated as a return of capital, as opposed to dividend income. So, the unitholder does not pay income tax on the returns. Most of the earnings are tax-deferred until the unitholder sells their shares\/units. Then, the earnings are taxed at the lower capital gains tax rate, rather than at the higher personal income rate, thus offering significant additional tax benefits. In order to achieve this tax status, the master limited partnership must get at least 90% of its income from its investments in real estate or natural resources.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>The fact that investors can receive tax-sheltered dividends from MLPs until the shares are sold is one of the biggest draws for people to invest in them. MLPs are considered low-risk, long-term investments, providing a slow but steady income stream, but unfortunately, they are limited to the natural resources and real estate sectors. So how well this type of stock does is dependent on how the market in these two sectors is doing at any given time.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/encrypted-tbn0.gstatic.com\/images?q=tbn:ANd9GcQ6jdnsmU3aVq7a09KBCrKq-RRGAs2Ph3m7-Q&amp;usqp=CAU\" alt=\"master-limited-partnerships-2\"\/><\/figure><\/div>\n\n\n\n<p><\/p>\n\n\n\n<p>One significant disadvantage to investing in master limited partnerships is that their tax filing requirements are noticeably more complex than the average stock. Each year you need to file an Internal Revenue Service (IRS)&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f1065sk1.pdf\" target=\"_blank\">Schedule K-1<\/a>&nbsp;form that is sent to the investor. Unfortunately, this form tends to be sent to investors much later in the year than all the other tax documentation that you or your tax preparer need to use in order to properly file your taxes.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<p>While K-1 forms create extra work for investors or their tax preparers, the structure of master limited partnerships allows investors to avoid the double-taxation that you typically see in investments in C-Corporations.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-are-some-examples-of-mlps\"><span class=\"ez-toc-section\" id=\"What_are_some_examples_of_MLPs\"><\/span>What are some examples of MLPs?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p>Here are some examples of companies whose stocks are master limited partnerships:<\/p>\n\n\n\n<p><\/p>\n\n\n\n<ul><li>PAGP &#8211; We start the list of best MLP and pipeline stocks to buy now with Plains Gp Holdings, LP. The company focuses on providing midstream energy infrastructure in the United States and Canada. Plains handle more than 6 million barrels per day of crude oil and NGL in its transportation segment.<\/li><li>ENB &#8211; nbridge, Inc. was established in 1949. It is an energy infrastructure company that focuses on transportation and the generation of energy. They operate the longest crude oil and liquid hydrocarbons transportation in North America.<\/li><li>EPD &#8211; Enterprise Production generally provides products that are used as feedstocks in petrochemical manufacturing. The company was ranked 105<sup>th<\/sup>&nbsp;in the 2018 Fortune 500 list of largest United States corporations by revenue.<\/li><li>ENBL &#8211; Enable Midstream is a publicly traded master limited partnership formed in May 2013 that owns, operates and develops strategically located natural gas and crude oil infrastructure assets.<\/li><\/ul>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Click here to start investing with M1 Finance!<\/strong> <a href=\"https:\/\/m1finance.8bxp97.net\/4edv5o\" target=\"_blank\" rel=\"noreferrer noopener sponsored\">https:\/\/m1finance.8bxp97.net\/4edv5o<\/a><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Click here to start investing with Robinhood!<\/strong> <a href=\"https:\/\/robinhood.c3me6x.net\/qny0Bg\" target=\"_blank\" rel=\"noreferrer noopener sponsored\">https:\/\/robinhood.c3me6x.net\/qny0Bg<\/a><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Note: This page contains affiliate links that will, at no cost to you, earn me a commission. You are in no way obligated to click on the links!<\/strong><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><strong>Disclaimer: I am not any sort of investment or financial professional giving any sort of legal advice. I\u2019m just some guy trying to teach other people about how they might navigate the financial world.<\/strong><\/p>\n\n\n\n<p><\/p>\n\n\n<form role=\"search\" method=\"get\" action=\"https:\/\/moneymakersandsavers.com\/\" class=\"wp-block-search__button-outside wp-block-search__text-button wp-block-search\"    ><label class=\"wp-block-search__label\" for=\"wp-block-search__input-1\" >Search<\/label><div class=\"wp-block-search__inside-wrapper \" ><input class=\"wp-block-search__input\" id=\"wp-block-search__input-1\" placeholder=\"\" value=\"\" type=\"search\" name=\"s\" required \/><button aria-label=\"Search\" class=\"wp-block-search__button wp-element-button\" type=\"submit\" >Search<\/button><\/div><\/form>","protected":false},"excerpt":{"rendered":"<p>What are MLPs or Master Limited Partnerships? MLP stands for a master limited partnership. An MLP basically is a type of stock that exists as a publicly traded limited partnership. Everyone who invests in shares, or rather \u201cunits\u201d, of an MLP is technically considered a \u201climited partner\u201d. Master Limited Partnerships have two different types of&#8230;<\/p>\n","protected":false},"author":159998696,"featured_media":2289,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_kadence_starter_templates_imported_post":false,"_kad_post_transparent":"","_kad_post_title":"","_kad_post_layout":"","_kad_post_sidebar_id":"","_kad_post_content_style":"","_kad_post_vertical_padding":"","_kad_post_feature":"","_kad_post_feature_position":"","_kad_post_header":false,"_kad_post_footer":false,"footnotes":""},"categories":[1362,1428],"tags":[1435,1520,1519,1434],"_links":{"self":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts\/2288"}],"collection":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/users\/159998696"}],"replies":[{"embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/comments?post=2288"}],"version-history":[{"count":0,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/posts\/2288\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/media\/2289"}],"wp:attachment":[{"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/media?parent=2288"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/categories?post=2288"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/moneymakersandsavers.com\/wp-json\/wp\/v2\/tags?post=2288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}