ETFs of MLPs

Mar 11, 2013 1 Replies
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Are the tax implications for MLPs the same if I buy them in MLPs? Is there the extra bookkeeping, etc., needed in this structure?


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A

  1. See this site for a very good explanation of the tax implications of investing directly in MLPs.
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  2. And yes, the tax implications for investing in an ETF that tracks an MLP index are different. The ETF takes on all the tax issues identified in the above explanation.
  3. ETFs are not regulated investment companies and are therefore taxed as a corporation. As such, they can't always avoid double taxation. This would trigger a lower ROI in an ETF vs the actual MLPs.
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