if i am not wrong, BSM is master limited partnerships, so for non us investors, dividend tax is like 40% and when you sell they deduct another 10% based on rule changes some years back?
Yes, I am not certain the international tax consequences, but I have heard they are terriblel. BSM, UAN, ARLP fit in that category. CLCO, MPW, RILY do not.
you talk of operators being "on the hook" for increased drilling even in the face of low ng prices. have you looked into the financial strength of the operators? that is, could the drillers go belly up, obviating the value of their contractual obligations?
i think lng exports eventually will raise the value of ng, but the strength of its drillers will determine if bsm can maintain its dividend while we wait.
Aethon is private, so I can't look into their books, but as recently as May they were doing acquisitions. It is a real consideration, but on the last conference call, management said that they are currently drilling three wells and are expected to continue levels of activity. The public operators are all huge, and have very little risk or financial trouble.
Investing thru a Roth would probably alleviate the tax management hassle in owning Limited Partnerships. Same consideration would apply for ARLP. Interesting businesses, but the tax hassle is more than I care to manage - but, as always, maybe I have it wrong.
Trying hard not to give unlicensed US tax advice. High net worth people probably already have LP distributions, one more isn't terrible. Middle class people can put them in IRAs or Roth IRAs to avoid receiving a K1 form, but they lose some benefits of an LP tax passthrough, for example, some of the distribution might be depreciation, and in an IRA, you would pay income tax on that money upon withdrawal.
if you make over $1000 in pass through income in an ira you are subject to ubti. for a 10% yield that means you can't hold a position over $10k without the tax hassle.
if i am not wrong, BSM is master limited partnerships, so for non us investors, dividend tax is like 40% and when you sell they deduct another 10% based on rule changes some years back?
Yes, I am not certain the international tax consequences, but I have heard they are terriblel. BSM, UAN, ARLP fit in that category. CLCO, MPW, RILY do not.
Mate you literally stole my thunder - had this as my next piece! haha
Great job, really good insights here.
You can still do yours, my audience is tiny right now :)
you talk of operators being "on the hook" for increased drilling even in the face of low ng prices. have you looked into the financial strength of the operators? that is, could the drillers go belly up, obviating the value of their contractual obligations?
i think lng exports eventually will raise the value of ng, but the strength of its drillers will determine if bsm can maintain its dividend while we wait.
Aethon is private, so I can't look into their books, but as recently as May they were doing acquisitions. It is a real consideration, but on the last conference call, management said that they are currently drilling three wells and are expected to continue levels of activity. The public operators are all huge, and have very little risk or financial trouble.
Investing thru a Roth would probably alleviate the tax management hassle in owning Limited Partnerships. Same consideration would apply for ARLP. Interesting businesses, but the tax hassle is more than I care to manage - but, as always, maybe I have it wrong.
Trying hard not to give unlicensed US tax advice. High net worth people probably already have LP distributions, one more isn't terrible. Middle class people can put them in IRAs or Roth IRAs to avoid receiving a K1 form, but they lose some benefits of an LP tax passthrough, for example, some of the distribution might be depreciation, and in an IRA, you would pay income tax on that money upon withdrawal.
if you make over $1000 in pass through income in an ira you are subject to ubti. for a 10% yield that means you can't hold a position over $10k without the tax hassle.