The Motley Fool Discussion Boards

Previous Page

Fool Community Help Desk / Ask A Foolish Question


Subject:  Re: BPT Date:  1/24/2013  3:08 PM
Author:  pauleckler Number:  260425 of 278021

Prudhoe Bay (Alaska) is now an old oil field. Production is declining. The pipeline has had several leaks and may one day have to be removed--unless drilling in that part of Alaska gets allowed and proves successful.

BPT payout mostly depends on oil prices and production rates. Nice yield. Oil depletion allowance on Sch E when you do your income tax. Nice "dividend" (actually unit payments) are not qualified for the dividend income tax rate, but are partially reduced by expenses and depletion.

Tax booklet provided each year tells you exactly how to file taxes. Its easy but usually requires a few extra forms. They are in the tax preparation software TurboTax and TaxCut (H&R Block) even in their cheapest basic software. But tax booklet is often not available until end of Feb. Hence, if you expect a refund, it will be delayed waiting for the tax booklet.

Fine print has an escalator that gives general partner a bigger share of income over time to cover additional costs.

These have attractive yield, but understand no residual value when the trust expires. And various interruptions in production or pipeline leaks can cause changes in income.

This is a high risk investment. Its OK as part of a diversified portfolio. But do not hold it too long. Collect your nice dividends for a few years and sell before share price wipes out your gain.
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us