The Rising Influence of Rising Affluence

[winchem21]

MLP's will also benefit from tax bill's pass-through provision. Texas Sen. John Cornyn had a late amendment added in the bill to include MLPs in the 20% pass-through.

MLP distributions are typically 80% return of capital and 20% income. Holders of MLPs for 15-20 years will eventually have a cost basis of 0, with proceeds from subsequent sales all going into taxable income. This new provision limits the tax rate fo 29.6% for top bracket investors and makes MLPs more attractive long-term investments.

MLPs offer high yield tax deferred distributions. Right now MLP prices are dirt cheap with quality MLPs such as Enterprise Product Partners (EPD) issuing distributions of 6.5%.