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Author: gadawg403 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75793  
Subject: Master limited partnership Date: 5/12/2010 10:52 AM
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Can one invest in a Master Limited Partnership in a Roth IRA account? The MLP I am looking at is Oneok Partners (OKS).

Thanks,

gadawg403
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Author: Stas3000 CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67087 of 75793
Subject: Re: Master limited partnership Date: 5/12/2010 11:37 AM
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Yes, absolutely.

You can also invest in corporations such as Kinder Morgan (KMR) and Enbridge (EEQ). In simple terms, KMR is a corporation version of KMP, which is perhaps the largest MLP in the US. KMR's tax treatment is different than KMP's but what's "under the hood" is basically the same.

You'll need to take note of Unrelated Business Tax Income for MLPs (not corporations). I'm not a tax professional, so will not give the best advice, but in short, income you receive from MLP's in Roth IRA may be subject to tax -- yes, even inside IRA! Threshold is $1000, i.e. up to $1000 income is not taxed. Read more here:
http://www.fool.com/taxes/2000/taxes000908.htm

A few links as to KMR vs KMP:
http://boards.fool.com/Message.asp?mid=22604354&sort=who...
http://boards.fool.com/Message.asp?mid=22520984

Hope this will help.

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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 67089 of 75793
Subject: Re: Master limited partnership Date: 5/12/2010 12:31 PM
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You can own master limited partnership shares in a retirement account.

The standard advice of the tax professionals here is not to do it, because of the possibility of having to pay tax on Unrelated Business Income.

I own shares ON Oneok, not in a retirement account. For 2009 UBI was a negative number. I own it in a taxable account. If I owned it in my IRA, I wouldn't have to mess with the K-1's at all, as long as UBI doesn't go over $1000.

Not clear to me is if there are several LMPs in an IRA, does the negative UBI in one cancel another that might have gone over that $1000 mark?

Best wishes, Chris

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