master limited partnership

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Master limited partnership (MLP)

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Master Limited Partnership

A limited partnership with ownership units that may be traded on an exchange. A limited partnership consists of a general partner, who manages the venture, and limited partners, who simply provide capital. A master limited partnership allows limited partners to buy and sell units of the venture as if they were shares in a publicly-traded company. Limited partners often receive cash distributions, which are similar to dividends, on a regular basis. This business form combines the tax advantages of a partnership, which does not pay tax on its profit, with the liquidity of a publicly-traded company. It is also called a publicly traded partnership.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

master limited partnership (MLP)

A limited partnership that provides an investor with a direct interest in a group of assets (generally, oil and gas properties). Master limited partnership units trade publicly like stock and thus provide the investor significantly more liquidity than ordinary limited partnerships. See also roll-up.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly-traded partnerships because the value of a unit of such an entity is generally determined by the unit's yield, which in turn is based on the amount of cash distributions the entity pays to a unitholder.
REITs and publicly-traded partnerships, however, would be eligible for the full deduction without regard to the wage limitation.
The publicly-traded partnerships can provide investors with attractive levels of after-tax income and the potential for capital appreciation, as well as enhanced portfolio diversification.
An exception is provided for publicly-traded partnerships that earn predominately certain types of passive income (such as interest, dividends, real property rents, and the like).
Moreover, because most of the underlying income of a hedge fund is passive income, a hedge fund can generally qualify for the exception from treatment as a corporation for publicly-traded partnerships that earn predominately certain types of passive income.
However, as a result of the publicly-traded partnership rules, the risk that such corporate tax base erosion would occur is remote.
(132) Given that the determination of whether or not a partnership falls within this provision is uncertain and fact-specific, the Treasury Regulations provide certain safe harbors in order to give comfort to partnerships not intended to be captured by the publicly-traded partnership rules.
(135) It is unlikely that, if the proposed reforms were enacted, active businesses currently run by corporations would be run, instead, by entities that could qualify for partnership tax treatment under these publicly-traded partnership rules.
Indeed, fear that this incentive would lead to erosion of the corporate tax base was the primary reason why Congress enacted the publicly-traded partnership rules in the first place.
However, likely because of the publicly-traded partnership rules, taxable investors have not organized all businesses as partnerships rather than corporations.
These include trusts, estates, tax-exempt organizations, and the rapidly-diminishing darling of the 1980s - publicly-traded partnerships.
A pension plan's share of the gross income of a publicly-traded partnership was treated as income derived from an unrelated trade or business.