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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.
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.