What do you need to know about an MLP

Many people are unaware of the concept of the MLP; master limited partnerships are nothing but publicly traded partnerships.  They deal in energy infrastructure MLP, oil and natural gas refined products like the NGL Energy Partners. MLP stands for Master limited partnership.

And MLP investing is quite beneficial for investors as an MLP has many tax benefits attached with them. Since they are pass through entities that are not liable to pay any income tax, they do not fall in the bracket of the State tax or any federal tax as well.  But not all the MLPs are eligible to get tax benefit from the state, and to get qualified for these the MLP has to earn at least 90 percent of their total income from the qualified sources.

And the qualified sources according to the guidelines of the Internal Revenue Service they are natural resources. And following is the list of the Natural resources they have to deal in as per as National Association for Publicly Traded Partnerships.

• Either oil, natural gas or any petroleum products.
• Any other minerals including coal.
• Timber (wood)
• Any other source that falls in the bracket of the federal tax code under the section of 613.
• MLP can be qualified even if they are in industrial source carbon dioxide.
• Even biodiesel and other fuels are allowed to be a part of the qualified sources for an MLP.

A MLP has to make a proper distribution among their unit holders; the holders include the limited partners as well as public partners. This process has to be done on quarterly basis.

If you want to diversify your investment in different sectors than you can any invest in the MLP’s they do not only help you to get exposure of the energy market but a unit holder also gets the benefits of the tax concessions a MLP gets.

Investing in an MLP is really very profitable, and investors surely should consider this as a very good opportunity to make junks of profit.