Treasury Department to monitor MLPs, but mostly looks like jawboning


In the wake of Kinder Morgan‘s absorption of its MLP subsidiaries, the Treasury Department has decided to look into the rise in MLP-related transactions and their effects on future tax revenues.

Daniel Clifton of Strategas Research is not impressed, citing Treasury’s recent "regulatory jawboning” about tax inversions and saying the agency has similarly flimsy regulatory authority over MLPs.

The IRS has been reviewing the MLP approval process since April after going through a similar review process for REITs in 2013 and concluding the approvals were in line with the law, and the same results were expected for MLPs; timed with the Kinder Morgan news, Strategas thinks Treasury is engaging in an "attempt to jawbone companies in the future from seeking MLP approvals."

ETFs: AMLP, AMJ, MLPL, YMLP, MLPI, MLPA, ENY, MLPN, MLPG, EMLP, MLPS, MLPX, MLPY, MLPJ, AMU, YMLI, ATMP, ZMLP, MLPW, IMLP, ENFR, MLPC

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Comments (1)
  • stary kozel
    , contributor
    Comments (214) | Send Message
     
    This morning, I wrote this for a friend of mine:

     

    I wrote yesterday about the MLPs. I have to talk about it more, because the whole Master Limited Partnership is very pertinent.
    The reason is the talk about US corporations as being some of the highest taxed in the word. This is starting to result in corporations looking into the MLP setup, which would result in no taxes to the corporation; the stock holders would carry the burden instead.
    Jumping back to bit of history; until a' 2006, I was investing in Canadian Royalty Funds (mostly oil, but other avenues like shopping malls etc as well). This was great income vehicle for the Canada citizens and for those like us as well. Until 2005 or so, when then newly elected government (Canada) decided to substantially increase the tax on dividend we foreigners had to pay to their country; I liquidated our investments in those CANROYs and never looked back. By the way, Canadian government later destroyed the CANROY system totally and I assume the Canada retirees got screwed royally.

     

    Back to the MLPs - will they end the same way as the CANROYs? I do not know. Will government permit the MLPs to cover the whole gamut of US corporations? FORGET ABOUT IT!
    12 Aug 2014, 08:51 PM Reply Like
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