Finance: What is a Master Limited Partnership (MLP)?

What is a Master Limited Partnership (MLP)? A Master Limited Partnership is a Limited Partnership that is publicly tradable, usually on the NYSE. With a few exceptions, most MLPs are created within the oil and gas industry, since MLPs do not pay Federal taxes due to the energy industry exemptions, which qualify under the IRS rule dictating that 90% of revenues must be from commodities, natural resources or real estate to qualify.

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Transcript

00:24

more popular Mlps helped the energy sector do things more

00:27

efficiently And in fact most MLP is living in and

00:31

around the energy sector That's kind of why they were

00:34

how they were designed legally to make that fool sector

00:37

a little more efficient financially Most of them started out

00:40

a small dozen member Elsie's with limited partners who gave

00:43

the general partners money to invest just like when they

00:46

were private and as when they were private profits weren't

00:49

taxed until they were distributed to the partners as ash

00:53

So then why did they want to become a mope

00:55

in the first place Well liquidity The firm itself was

00:58

doing really amazingly well and each partner wanted to get

01:01

cashed out at a big multiple of earnings as if

01:04

his seat in the partnership was worth being valued as

01:06

a business rather than just as a product And that's

01:10

how the enormous mutual fund feast and merchant bank Blackstone

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started and ended as it is now a publicly traded

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behemoth Same deal with Franklin Funds T Rowe Price in

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a bunch of other professional partnerships which wanted its key

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partners to be able to get liquid sell their holdings

01:25

and pay for divorces one into and have dough left

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over for that convertible red portion with e upgraded wheel

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rims Okay well an MLP does not pay taxes Profits

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instead are passed through the individual partners who then pay

01:40

ordinary income tax on whatever they get And yes it's

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generally ordinary income tax Sometimes they could make it be

01:46

long term gains but that's way more complicated for what

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we need to worry about For now that is an

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ML fee and so is this mutton lettuce pepperoni Delicious 00:01:56.34 --> [endTime] Yeah no