Many energy MLP’s have been hammered by months of depressed oil and gas prices. As some companies scramble to restructure debt, investors could get hit with a tax bill.
MLPs are a type of publicly traded limited partnership that qualify for certain tax benefits. In theory, it combines the tax benefits of a limited partnership with the liquidity of a publicly traded corporation.
MLPs do not pay corporate income taxes on profits. Taxes are paid when the MLP distributes the money to the partners who report that income on their tax returns. Here’s where the potential problem arises for investors, negotiations with creditors typically include debt forgiveness. While no actual income is received, partners will have to pay income taxes on the forgiven debt.
According to The New York Times,company documents for Linn Energy forewarned investors about this potential situation. The forgiveness of $1 billion created the tax for Linn Energy partners.
MLP’s are complex products and involve a significant degree of risk. The White Law Group is investigating the liability that some brokers, and the firms where they work, may have for improperly recommending MLP investments.
Brokers that sold MLPs are required to perform adequate due diligence to determine if such investment is suitable for each individual client. Investment recommendations should be in line with the client’s age, investment experience, net worth, risk tolerance, investment objectives, and income.
When a broker overlooks suitability requirements or over concentrates a client’s portfolio with MLP’s, not only are they potentially liable for investment loss, the firm that employs such brokers may also be on the hook for losses.
If you invested in a Master Limited Partnership and would like to discuss your litigation options with a securities attorneys, please call The White Law Group at 888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.
Tags: Breitburn Energy tax bill, Breitburn Energy tax consequence, MLP debt forgiveness tax, MLP income tax, MLP information, MLP investigation, MLP investment losses, MLP tax, MLP value Last modified: June 1, 2016
