Master limited partnerships are attractive total-return vehicles for investors, but their tax treatment can be intimidating.
ThinkAdvisor spoke with Abby Woodham, a fund analyst with Morningstar’s Passive Fund Research group in Chicago, about what issues investors should keep in mind when mulling MLP purchases and sales.
Can you briefly summarize the rather complex issue of MLP taxation?
Individual MLPs, which are partnerships and are not seen as separate from their owners, pass their tax liability onto unitholders, so you—the investor—would owe taxes on your portion of an MLP’s taxable income, which is stated on a K-1 tax form.
If your MLP investment generates high enough income in a state other than your own, you could have to file a tax return in that state. Luckily, some states (Texas, for instance) do not levy a state income tax.
This can be a bit of a pain for some people.
Can you explain what makes MLP taxation complicated?
Top Sliver Companies To Own For 2015: Vitamin Blue Inc (VTMB)
Vitamin Blue, Inc. (Vitamin Blue), incorporated on May 25, 1999, is engaged in designing, manufacturing and distributing surf wear board shorts, t-shirts and fleece jackets) and surfing accessories (surf boards bags, roof rack pad and surf backpacks). The Company focuses on four types of retail outlets: surfboard manufacturers, surf shops, specialty stores and department stores. Vitamin Blue distributes the majority of its products through surfboard manufacturers and surf shops. The primary focus of Vitamin Blue is surf wear and surfing accessories. The Company’s primary distribution focuses on retail outlets in North America (the United States, Canada and Mexico). Vitamin Blue manufactures most of its surfing accessories and all of its surfwear in-house.
The Company’s surfboard manufactures retail outlet generally consists of single shops, where surfboards are designed, manufactured and marketed. It is the source for surfing accessories. This distribution channel focuses on the core surf market. The Company has relationships with manufacturers, such as Hap Jacobs, Bing Surfboards, Bark Boards and Ron House Shapes, Dewey Weber, Stewart Surfboards. Vitamin Blue surfing accessories are sold through this channel.
The Company’s surf shops are generally single to multiple shops located in or near beach cities, focused on the central surf market. It tends to be privately owned. Surf shops also focus on the core surf market and provide an authentic retail source for complete lines of surfwear and surfing accessory products. The Company has relationships with manufacturers, such as Freeline Design (Santa Cruz, California), The Frog House (Newport Beach, California), Infinity Surfboards (Dana Point, California), Legends Surf (Carlsbad, California), Hi-Tech Surf Sports (Maui, Hawaii), Second Wind Sail and Surf (Maui, Hawaii), Hawaiian Island Surf and Sport (Ma ui, Hawaii) Kennedy Surfboards (Woodland Hills, California),! Malibu Surf Shack, (Malibu, California), E.T. Surf (Hermosa Beach, California), Spyder (Hermosa Beach, California), Costa Azul (Laguna Beach, California), Icons of Surf (San Clemente, California), Encinitas Surfboards (Encinitas, California), Nor Easter Surf Shop (Scituate, Massachusetts), Air & Speed Surf Shop (Montauk, New York), Xtreme Surf & Sport (East Northport, New York) and Marsh’s Surf Shop (Atlantic Beach, North Carolina). The complete line of Vitamin Blue products (surfwear and surfing accessories) is distributed through this channel.
The Company’s specialty stores type of retail outlet generally consists of single, regional and nationwide stores, and tends to be located in or near beach or resort communities, shopping centers, and shopping malls. Specialty stores distributing surf products primarily include tourist/vacation shops, sporting good stores (including Sports Chalet, Inc. – SPCHB), and regional and nation al retail stores (including Pacific Sunwear of California-PSUN and Zumiez, Inc.-ZUMZ). Vitamin Blue intends to use this type of retail outlet to distribute its surfwear.
The Company’s department stores type of retail outlet generally has stores located nationwide. It is located in shopping malls, such as Bloomingdale’s, Macy’s, Saks Fifth Avenue and Nordstrom. Vitamin Blue intends to use this type of retail outlet to distribute its surfwear.
Vitamin Blue’s surfing accessories include surfboard travel bags, which offer surfboard protection and can be used daily or for long distance surf trips; surf gear travel bags, which are duffle bags used to carry surfing essentials on surf trips; surf backpacks, which are specially, designed wet bag backpacks for wetsuit storage, and roof-rack pads, which is used on existing car roof racks for surfboard protection and security on daily surf outings.
The Company competes with Quicksilver, Inc., Billabong Intl, Hurley and! Volcom I! nc.
- [By Peter Graham]
Small cap marijuana stocks Smart Ventures Inc (OTCMKTS: SMVR) and Vitamin Blue Inc (OTCMKTS: VTMB) jumped 40.28% and 38.6%, respectively, while hemp stock Astika Holdings Inc (OTCBB: ASKH) fell 13.75% on Friday. Moreover, only one of these small cap stocks seems to have been the subject of a few paid promotions or investor relations types of activities. So will all three of these marijuana or hemp stocks keep producing highs or lows for investors and traders alike? Here is a quick reality check:
- [By Peter Graham]
Small cap stocks Green Endeavors Inc (OTCMKTS: GRNE), Global Links Corporation (OTCMKTS: GLCO) and Vitamin Blue Inc (OTCBB: VTMB) were all making noticeable moves at the end of last week. On Friday, Green Endeavors Inc rose 8.11% and Global Links Corporation rose 13.96% while Vitamin Blue Inc fell 10%. Of course, small cap OTC stocks making large single digit or double digit moves in either direction aren’t all that unusual. Moreover, all of these small caps have been the subject of paid promotions. With that in mind, here is a closer look at all three to help you decide on an investing or trading strategy:
Top Sliver Companies To Own For 2015: TransAtlantic Petroleum Ltd (TAT)
TransAtlantic Petroleum Ltd. is an international oil and gas company engaged in the acquisition, exploration, development and production of crude oil and natural gas. The Company holds interests in developed and undeveloped oil and gas properties in Turkey, Bulgaria and Romania. As of March 1, 2012, it held approximately 5.4 million net onshore acres. As of March 1, 2012, it was producing an aggregate of approximately 2,638 net barrels of oil per day. As of March 1, 2012, it held interests in 57 onshore exploration licenses and nine onshore production leases covering a total of 5.3 million gross acres in Turkey. On February 18, 2011, the Company’s wholly owned subsidiary TransAtlantic Worldwide, Ltd. acquired Direct Petroleum Morocco, Inc. and Anschutz Morocco Corporation and its wholly owned subsidiary TransAtlantic Petroleum Cyprus Limited. On June 7, 2011, TransAtlantic Worldwide acquired Thrace Basin Natural Gas (Turkiye) Corporation. Advisors’ Opinion:
- [By CRWE]
TransAtlantic Petroleum Ltd. (Amex:TAT) reported that the Turkish Competition Authority has approved the Company’s sale of its oilfield services business to Dalea Partners, LP (“Dalea”, an affiliate of N. Malone Mitchell, 3rd, the Company’s Chairman and Chief Executive Officer).
Top Sliver Companies To Own For 2015: CVR Partners LP(UAN)
CVR Partners, LP engages in the production of nitrogen fertilizers including ammonia and urea ammonium nitrate. The company was incorporated in 2007 and is based in Sugar Land, Texas. CVR Partners, LP operates as a subsidiary of CVR Energy, Inc.
- [By Susan J. Aluise]
CVI is structured into two Managed Limited Partnerships (MLPs): CVR Refining (CVRR) and the nitrogen fertilizer unit CVR Partners (UAN). CVR Energy owns 71% of CVR Refining and 53% of CVR Partners. This is an interesting play in the energy sector, given UAN’s lower cost of ammonia and urea ammonium nitrate and CVRR’s edge as an MLP refiner.
- [By Robert Rapier]
4. CVR Partners
CVR Partners (NYSE: UAN) is a fertilizer MLP that suffered from the same declining margins and weak fertilizer prices that hurt Rentech Nitrogen Partners. The partnership’s price declined 36 percent in 2013. The annualized yield based on the past four quarters of distributions is 11.7 percent, but that is expected to decline when the next distribution is announced.
5. Terra Nitrogen Company
- [By Alex Planes]
That’s not a good trend for nitrogen-using fertilizer makers. We’ve already seen some indication that steady profit growth may be ending, as fellow nitrogen fertilizer MLP CVR Partners (NYSE: UAN ) reported results virtually identical to last year’s, instead of enjoying strong growth as it has in the past. The one thing in these companies’ favor is the simple fact that farmers need fertilizer, now perhaps more than ever in light of persistent droughts that are making every alternative to watering more valuable. That can help maintain Terra’s profitability in the face of rising input prices, but for how long? Farmers can only bend so far before their finances break.
Top Sliver Companies To Own For 2015: Navios Maritime Partners LP (NMM)
Navios Maritime Partners L.P. (Navios Partners) is an international owner and operator of dry cargo vessels formed by Navios Holdings. Navios GP L.L.C. (the General Partner), a wholly owned subsidiary of Navios Maritime Holdings Inc. (Navios Holdings) acts as the general partner of Navios Partners and received a 2% general partner interest in Navios Partners. Navios Partners is engaged in the seaborne transportation services of a range of drybulk commodities, including iron ore, coal, grain and fertilizer, chartering its vessels under medium to long-term charters. On May 19, 2011, Navios Partners acquired from Navios Holdings the Navios Orbiter, a 76,602 deadweight Panamax vessel. On May 19, 2011, Navios Partners acquired from Navios Holdings the Navios Luz. In June 2012, the Company purchased the Navios Buena Ventura, a 2010 South-Korean-built Capesize vessel of 179,259 dwt from Navios Maritime Holdings Inc.
The Company is an international owner and operator of drybulk carriers formed by Navios Maritime Holdings Inc., a vertically integrated seaborne shipping company. Its vessels are chartered-out under medium to long-term time charters with an average remaining term of approximately four years to a group of counterparties, consisting of Cosco Bulk Carrier Co. Ltd., Mitsui O.S.K. Lines Ltd., Samsun Logix, STX Panocean, Sanko Steamship Co. Ltd., Daiichi Chuo Kisen Kaisha, Augustea Imprese Maritime, Rio Tinto, Constellation Energy Group and Mansel.
As of December 31, 2011, the Company’s fleet consisted of 11 Panamax vessels, six Capesize vessels and one Ultra-Handymax vessel. Its fleet of dry cargo vessels has an average age of approximately 5.6 years. Panamax vessels are flexible vessels capable of carrying a range of drybulk commodities, including iron ore, coal, grain and fertilizer. All of its vessels operate under medium to long-term time charters of three or more years at inception with counterparties. It als o operates vessels in the spot market until the vessels have! been fixed under appropriate medium to long-term charters.
The Company competes with China Ocean Shipping, China Shipping Group, Mitsui O.S.K. Lines, Kawasaki Kisen, Nippon Yusen Kaisha, Cargill, Pacific Basin Shipping, Bocimar, Zodiac Maritime, Louis Dreyfus/Cetragpa, Cobelfret and Torvald Klaveness.
- [By Nickey Friedman]
It seems like everybody these days universally agrees that the dry bulk shipping market will get better at least in the short term. Executives from DryShips (NASDAQ: DRYS ) , Navios Maritime Partners (NYSE: NMM ) , Diana Shipping (NYSE: DSX ) , and other carriers have voiced optimism about increased demand for 2014. Even if that optimism is realized, there is another very important factor to watch that could ruin the whole thing.
- [By Robert Rapier]
Some of our portfolio picks that are suitable for IRA accounts include Kinder Morgan (KMI), Williams (WMB), Targa Resources (TRGP) and Navios Maritime Partners (NMM).
- [By Bryan Murphy]
If you’re reading this, then odds are you already know shipping stocks like Diana Shipping Inc. (NYSE:DSX), Safe Bulkers, Inc. (NYSE:SB), and Navios Maritime Partners L.P. (NYSE:NMM) are all up big-time today, and up nicely for the week, for that matter. SB is up 11% for the day, NMM is up 6% for the week, while DSX is higher by 8% for the session, snapping a surprisingly-long weak streak.
- [By Robert Rapier]
The index includes everything from behemoths like Enterprise Product Partners (NYSE: EPD) and Kinder Morgan Energy Partners (NYSE: KMP) down to a pair with market capitalizations under $1 billion in Martin Midstream Partners (NASDAQ: MMLP) and Navios Maritime Partners (NYSE: NMM). The total market cap of the index is $328 billion, and its one-, three- and five-year total returns are 20 percent, 48 percent and 194 percent. The index yield is 6 percent.
Top Sliver Companies To Own For 2015: ICG Group Inc (ICGE)
ICG Group, Inc. (ICG), formerly Internet Capital Group, Inc., acquires and builds Internet software and services companies. ICG operates in two business segments: the core reporting segment and the venture reporting segment. The Company’s core reporting segment includes those companies in which its management provides strategic direction and management assistance. Its venture reporting segment includes companies to which it generally devote less capital than it does to its core companies and, therefore, in which it holds relatively smaller ownership stakes than it does in the core companies. As of December 31, 2011, its equity core companies consisted of Channel Intelligence, Inc., Freeborders, Inc. and WhiteFence, Inc. As of December 31, 2011, its venture companies consisted of Acquirgy, Inc., GoIndustry-DoveBid plc and SeaPass Solutions Inc. In April 2012, it acquired MSDSonline Inc. In December 2012, the Company aquired 85% of interest in Procurian Inc. In February 20 13, Google Inc acquired Channel Intelligence, Inc. one of the consolidated companies of ICG.
The Company is focused on the software and services markets, particularly on companies in the cloud-based software and services sector. Once the Company acquires an interest in a company, it works to assume an active role in the development and growth of the Company, providing both strategic guidance and operational support. The Company provides strategic guidance to its companies relating to, among other things, market positioning, business model and product development, strategic capital expenditures, mergers and acquisitions and exit opportunities. In addition, it provides operational support to help its companies manage day-to-day business and operational issues and implement the practices in the areas of finance, sales and marketing, business development, human resources and legal services.
GovDelivery Holdings, Inc.
GovDelivery Holdings, I nc. (GovDelivery) is a provider of government-to-citizen com! munication solutions. GovDelivery’s digital subscription management software-as-a-service (SaaS) platform enables government organizations to provide citizens with access to relevant information by delivering new information through e-mail, mobile text alerts, really simple syndication (RSS) and social media channels from United States and United Kingdom government entities at the national, state and local levels.
Investor Force Holdings, Inc.
Investor Force Holdings, Inc. (InvestorForce) is a financial software company specializing in the development of online applications for the financial services industry. InvestorForce provides pension consultants and other financial intermediaries with a Web-based enterprise platform that integrates data management with robust analytic and reporting capabilities in support of their institutional and other clients. InvestorForce’s applications provide investment consultants with the ability to conduct ana lysis and research into client, manager and market movement and to produce timely, automated client reports.
Procurian Inc. (Procurian) is a specialist in procurement solutions, which partners with transformational business to drive sustainable changes to their cost structures on an accelerated basis. Procurian integrates superior market intelligence with its customers’ businesses to optimize spending and deliver savings.
Channel Intelligence, Inc.
Channel Intelligence, Inc. (Channel Intelligence) is a technology and marketing services company that helps retailers, manufacturers and other advertisers make their products and services easier for consumers to find and buy online and in local retail stores. Through its technologies and product database, Channel Intelligence offers online marketing services, such as display advertising, manufacturer-based content and where-to-buy, paid search, shopping engine management, social marketing, Web storefronts, order manage! ment and ! robust performance analytics. With its range of services, Channel Intelligence helps its customers support their consumers through all phases of the sales funnel, from lead generation to consideration to purchase and delivery.
WhiteFence, Inc. (WhiteFence) is a Web services provider used by household consumers to compare and purchase essential home services, such as electricity, natural gas, telephone and cable/satellite television. WhiteFence reaches customers directly through company-owned Websites and through its network of exclusive channel partners that integrate the Web services applications into their own business processes and Websites.
Acquirgy, Inc. (Acquirgy) specializes in direct response marketing services and technology, which provides customers with a range of direct marketing products and services. Acquirgy helps market its products and services on the Internet and through other media channels, such as television, radio, and print advertising.
GoIndustry-DoveBid plc (GoIndustry)
GoIndustry-DoveBid plc (GoIndustry) is an in auction sales and valuations of used industrial machinery and equipment. GoIndustry combines traditional asset sales experience with e-commerce technology and advanced direct marketing to service the needs of multi-national corporations, insolvency practitioners, dealers and asset-based lenders worldwide.
SeaPass Solutions Inc.
SeaPass Solutions Inc. (SeaPass) develops and markets processing solutions that enables insurance carriers, agents and brokers to transmit and receive data in real time by leveraging existing systems to interact automatically. The Company’s technology allows information to be accessed in real time, which increases efficiency across all lines of the insurance business.
- [By Luke Jacobi]
ICG Group (NASDAQ: ICGE) rose 9.74 percent to $15.39 after the company announced the sale of Procurian to Accenture plc (NYSE: ACN) for $375 million in cash.
- [By Jake L’Ecuyer]
ICG Group (NASDAQ: ICGE) was also up, gaining 9.77 percent to $15.39 after the company announced the sale of Procurian to Accenture plc (NYSE: ACN) for $375 million in cash.