Software to Track Master Limited Partnership Basis?


W

W

Is there any Excel template, or commercial software, that would help to
track cost basis and tax issues related to master limited partnerships? I
would also like to be able to simulate multi-year holding scenarios and try
to understand the tax effects in different scenarios.

In general, if you hold an MLP:

* The earnings are taxed at your highest marginal tax rate and increase your
cost basis?
* The distributions in excess of basis are not taxed and reduce your basis?
* Any pass through of interest or capital gains is taxed in those income
categories, but do they also increase your basis?
* If your cost basis ever goes to zero, then any distributions in excess of
earnings are taxed as long term capital gains?
* After several years of holding the investment, with your basis adjusted
down, when you sell the investment are you paying long term capital gains on
the sale price minus the adjusted basis?

Final thought: if the holder is a non US resident:

* The tax on earnings is at the maximum marginal rate of 35%?
* Will the MLP withhold that tax for a non US resident automatically, and
avoid the need to file a tax return?
* Distributions in excess of basis are not taxed?
* If the cost basis goes down to zero, then distributions are still not
taxed (since capital gains is not taxed)?
* When a non US resident sells the investment after many years, there is no
tax on gain from the sale price minus the adjusted basis?

If I had to track multiple positions in such investments, for both US and
non US residents, it would be nice to have some software that is dedicated
to that purpose.
 
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W

W

W said:
Is there any Excel template, or commercial software, that would help to
track cost basis and tax issues related to master limited partnerships? I
would also like to be able to simulate multi-year holding scenarios and try
to understand the tax effects in different scenarios.

In general, if you hold an MLP:

* The earnings are taxed at your highest marginal tax rate and increase your
cost basis?
* The distributions in excess of basis are not taxed and reduce your
basis?

This should have read

"The distributions in excess of *earnings* are not taxed and reduce your
basis?"
 
L

LoTax

Template? Commercial software?

....to track basis in a partnership...

A sheet of columnar paper has served me quite well for over fifty
years. Is there supposed to be something better on the market now?
 
D

DF2

Template? Commercial software?

...to track basis in a partnership...

A sheet of columnar paper has served me quite well for over fifty
years. Is there supposed to be something better on the market now?
Yes, there should be. It should be smart enough to generate the
numbers that would be put onto (or approximate what would go onto)
your income tax forms if you were to sell now. With the splitting of
sale proceeds into ordinary income and capital gain/loss it's very
complex. Reading Instructions for Form 4797 doesn't make things
clear.

I suspect that over your 50 years your technique evolved with the
tax code. I have not seen a clear explanation of what a pencil
should do to the columnar paper. If you are trying to figure out the
effect of the sale beforehand, it seems very complex without waiting
to see what the final K-1 actually looks like.
 
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L

LoTax

"I have not seen a clear explanation of what a pencil should do to the columnar paper."

That's where my experience and professional acumen separate me from
the "tax preparers" who enter numbers into a box and then sell the
result to their awed clients.

And you proudly claim to have never found an explanation of how to
compute the gain or loss on the sale of a partnership interest, an
explanation that you can understand. Why do you trust the programmer
of some purchased software to know how to do it *and* to have captured
that in the software?
 

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