What are some recommendations?

ET? EPD? AMLP? Others…

Are the K1 forms really that big of a deal if I'm going to hand them over to a CPA?

Don't put one in your IRA. Even your Roth.
https://www.investopedia.com/ask/answers/102714/can-i-own-master-limited-partnerships-mlp-my-roth-ira.asp#:~:text=10-,The%20Bottom%20Line,advantages%20of%20this%20retirement%20account.

ET is my biggest holding. I'm a fan.

I own ETF MLPX. 1099 Tax Form

Edit: Over 4 % yield

aggiebrad16 said:

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ET is my biggest holding. I'm a fan.

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EPD & ET are both strong & very good dividends. There are a couple of REITs that look relatively strong, Ares Capital being one of them.

But, hard to beat EPD & ET. The income from the distributions is really nice.

gigemhilo said:

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CPA here. Yes they are a big deal and you are right to get a CPA involved. However, not all CPAs do them correctly so choose wisely.

Most MLPs are designed to be a long term hold and l to give you losses while you hold them. The issue is - depending on what the price is when sold - you may have to recapture some of those losses at the sale. That can be a big surprise if you're not aware.

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Exactly this as above

If you plan on holding them long term, then get a CPA and invest directly in the individual mlps. The best long term plan is to invest in a non ira, then hold till your death and get the step up basis and effectively never have to pay any taxes on the distributions.

If you plan on trading in/out or plan on only being in them for a shorter period of time, then get into one of the etfs that invest in mlps. Amlp and Kyn are 2 other suggestions

I was thinking hold until death. Sons take up the mantle then...

Would you buy both? From what I've read EPD may have better leadership. Also read a lot of places that ET is a strong buy now. Price is better on ET but I could put quite a bit in both.

This will not be in a tax advantaged account. And for sure I'll have the CPA all over it.

Thank you for the responses!

12thMan,

What is Area Capital?

OldArmyCT said:

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Don't put one in your IRA. Even your Roth.
https://www.investopedia.com/ask/answers/102714/can-i-own-master-limited-partnerships-mlp-my-roth-ira.asp#:~:text=10-,The%20Bottom%20Line,advantages%20of%20this%20retirement%20account.

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You can't own an MLP but you can own the funds like AMLP and KYN in retirement accounts because they don't generate UBTI.

KYN has performed as well or better than my MLPX and has almost twice the Yield.

Ron

EDIT: corrected ticker symbol

Imsodopey said:

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KYN has performed as well or better than my MLPX and has almost twice the Yield.

Ron

EDIT: corrected ticker symbol

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I believe that Kyn borrows money to invest/leverage more mlps, so I a time of rising interest rates or bad performance by mlps, then it will do worse.

But in a time of decreasing interest rates and mlps doing well, then it will outperform.

It is a cef, which historically trades at a discount to nav, then it is really a bargain, at least until you want to get out and have to sell for a discount as well

I own this cef and am happy to get the same exposure to companies (epd, et , etc) essentially at a discount

kyle field 94 said:

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Imsodopey said:

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KYN has performed as well or better than my MLPX and has almost twice the Yield.

Ron

EDIT: corrected ticker symbol

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I believe that Kyn borrows money to invest/leverage more mlps, so I a time of rising interest rates or bad performance by mlps, then it will do worse.

But in a time of decreasing interest rates and mlps doing well, then it will outperform.

It is a cef, which historically trades at a discount to nav, then it is really a bargain, at least until you want to get out and have to sell for a discount as well

I own this cef and am happy to get the same exposure to companies (epd, et , etc) essentially at a discount

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I also own it and would add a few things
1) in March 2020 it nearly blew up because of the leverage. The CEF has since reduced the leverage used as a % of total assets but it does add risk
2) the NAV discount is wonky for an MLP CEF because of deferred tax liabilities they have on the books that likely will never be triggered because they won't sell core holdings. The only chance they would be is if an MLP agrees to be purchased by a C-corp like Buckeye did in 2023. As a result, the NAV discount if you look at the shares owned times share price is bigger
than shown. The current deferred tax liability is $248MM total assets reported is $2,093MM so if you add that back, you would be at $2,341.

The net result is the current discount is about 20% with that method versus the 10% as reported. I personally split the difference in my considerations so I feel I am getting a 15% discount to par.
3) KYN owns some C corps as well as MLPs. I believe they all are former MLPs that changed corporate structure.

Between the choices mentioned:

If you wanted to buy/hold/reinvest distributions/pass to heirs, which would you pick? 15-20 years until retirement
One? Or a combo?

Would like to use distributions in retirement. If I don't need the extra money just keep reinvesting.

EPD

I started buying EPD in 2009. Bought batches of it from then to 2013. It is my largest holding and it is in my SEP/IRA. Pays a really good dividend.

Have used all the dividends to buy more EPD. Doubt we will ever sell it. Leave it to our kids when the last one of us dies.

FinalCylon said:

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Between the choices mentioned:

If you wanted to buy/hold/reinvest distributions/pass to heirs, which would you pick? 15-20 years until retirement
One? Or a combo?

Would like to use distributions in retirement. If I don't need the extra money just keep reinvesting.

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Another benefit with MLPs for retirement planning is most of the income is tax deferred especially for the first 5-10 years as depreciation shields the income. This decreases your tax basis as a result but if you die with it in your name, your heirs get a full step up and the tax deferral essentially become tax avoidance.

I also like EPD as mentioned by others. Another favorite of mine is MPLX. ET is a favorite of some but the CEO and I think still largest shareholder tends to make some bad moves from time-to-time but they have a great collection of assets.

I've some mention KYN in addition to EPD, MPLX and ET.

What would make someone choose that (KYN) over the others? Less expensive, higher distribution. Those would be nice. Are there other advantages KYN would have?

You guys are great! I can take out a uterus through 3 incisions the size of a dime….this is definitely not my area of competence. Thank you for taking a few minutes to share what you know!

SW AG80 said:

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I started buying EPD in 2009. Bought batches of it from then to 2013. It is my largest holding and it is in my SEP/IRA. Pays a really good dividend.

Have used all the dividends to buy more EPD. Doubt we will ever sell it. Leave it to our kids when the last one of us dies.

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Depending on the quantity that you own, are you not incurring issues with UBTI in your ira?

FinalCylon said:

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I've some mention KYN in addition to EPD, MPLX and ET.

What would make someone choose that (KYN) over the others? Less expensive, higher distribution. Those would be nice. Are there other advantages KYN would have?

You guys are great! I can take out a uterus through 3 incisions the size of a dime….this is definitely not my area of competence. Thank you for taking a few minutes to share what you know!

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If you are ok with your accountant handling k1's then I like all of the 3 mlps listed above. It also only makes sense if you plan on being invested in them for the long haul and also if you plan on having a significant amount invested over time. The increased tax accountant cost and additional effort to file is not insignificant

kyle field 94 said:

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FinalCylon said:

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I've some mention KYN in addition to EPD, MPLX and ET.

What would make someone choose that (KYN) over the others? Less expensive, higher distribution. Those would be nice. Are there other advantages KYN would have?

You guys are great! I can take out a uterus through 3 incisions the size of a dime….this is definitely not my area of competence. Thank you for taking a few minutes to share what you know!

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If you are ok with your accountant handling k1's then I like all of the 3 mlps listed above. It also only makes sense if you plan on being invested in them for the long haul and also if you plan on having a significant amount invested over time. The increased tax accountant cost and additional effort to file is not insignificant

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I see three advantages to KYN
1) no K1 - it can also be in a retirement account
2) diversification
3) it trades at a discount to fair value

Disadvantages (in the line of work of a surgeon, we will call them complications)
1) high fees
2) it has almost always traded at a discount and likely will continue to do so
3) while you are getting the three high quality names mentioned, you are also getting the crappy MLPs as well.


I don't think you can go wrong either way but would decide based on the tax filing issue/what type of account it will be held in.

Some but not enough to make me sell the stock.

Any ideas why these guys have gone crazy the last couple of days? Usually they move 5-6% a year. They have moved 1.5-2.5% a day it feels like for the last week +.

Bayou City said:

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Any ideas why these guys have gone crazy the last couple of days? Usually they move 5-6% a year. They have moved 1.5-2.5% a day it feels like for the last week +.

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The market believes pipelines and major facilities will be easier to get approved and built under Trump.

EPD is the only one I would own. Dividend cuts and failed take-over of Williams soured me on ET.

So when you reinvest or take a distribution, how is that taxed? Is a return of capital tax free up to a point? Do people live off of these things in retirement if they've acquired enough units?

Again, I will be using a CPA to make sure I don't get Capone'd…

Like any other partnership, you are taxed on the net income or loss (most often a loss) of the partnership. The distribution doesn't matter in that regard, and is most often "tax free" to you,

however, when you sell your interest, the distributions do matter and that is where it gets tricky. Often these sell with a lot of ordinary gain to recapture losses you had over the years, as well as a reduction of basis due to the distributions.

Aka, buy and don't sell

So as long as you don't sell you are good? You don't have to file anything yearly if you haven't sold anything but have received quarterly dividends into your account? No actual cash taken out.

Actually you will have to file yearly because you will receive a K1 that tells the IRS your share of the company's gain or loss for that year.

No, you get a K-1 but more tax efficient.

great...

I've just found myself in this situation as well. Bought some ET in a non-IRA without realizing what I was getting myself into. Was planning on continuing to buy and hold long term. Just use turbo tax and am now wondering if I should just sell it off this year and be done with it. Any advice?

I know a guy in a similar spot but in an actual IRA. This thread has helped him.

Go go go! Up almost 15% in a month and 8% in a week. Thats 2 years of growth in a month. Loving this!