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Finance: What is a Master Limited Partnership (MLP)? 3 Views
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Description:
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
- 00:00
Finance Allah Shmoop What is a master Limited partnership or
- 00:06
MLP are multi It's just an LLC that is a
- 00:13
well generally publicly traded like every now and then in
- 00:16
a huge bull market an investment company goes public A
- 00:20
VC firm a private equity firm the firm and even
Full 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
- 01:13
started and ended as it is now a publicly traded
- 01:16
behemoth Same deal with Franklin Funds T Rowe Price in
- 01:20
a bunch of other professional partnerships which wanted its key
- 01:22
partners to be able to get liquid sell their holdings
- 01:25
and pay for divorces one into and have dough left
- 01:28
over for that convertible red portion with e upgraded wheel
- 01:32
rims Okay well an MLP does not pay taxes Profits
- 01:36
instead are passed through the individual partners who then pay
- 01:40
ordinary income tax on whatever they get And yes it's
- 01:43
generally ordinary income tax Sometimes they could make it be
- 01:46
long term gains but that's way more complicated for what
- 01:50
we need to worry about For now that is an
- 01:52
ML fee and so is this mutton lettuce pepperoni Delicious 00:01:56.34 --> [endTime] Yeah no
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