I'm just starting to learn about MLP's as an alternative to preferreds and even REIT commons. I've read a lot, but one issue that comes up is the question of state taxation. One article indicated that the taxpayers has to pay taxes to each state the partnership is involved. Is this true?Also, as a user of Turbo Tax for my personal Fed taxes, is this tax software capable of handling what is construed as a "complex" tax preparation issue?Thanks, Bill
Do taxpayers has to pay taxes to each state the partnership is involved?No. Not all states have state income taxes. And GAAP earning per state tend to be small - so most taxpayers will have income that falls beneath the threshold of a filing requirement.If you are scared of having a state tax filing requirement - then invest in MLPs with IRAs. If you are scared of UBTI taxes - then look up prior year UBTI stats. [Note: UBTI volunteers are still being sought at I.V.]Is Turbo Tax software capable of handling what is construed as a "complex" tax preparation issue?Depends on the edition - the least expensive one is not.Did you read the primers at www.naptp.org [web site for the National Association of Publicly Traded Partnerships?Also, if you are lost on MLPs, then you should be reading the MLP board at Investor Village. My efforts at creating an active board here has failed.And the article at seeking alpha was fairly simple stuff. but I have been a MLP investor since 2005 - so I have forgotten how little I knew when I was a newbie.MLPs are due diligence intensive - and there are ETNs, one ETF, several CEFs and mutual funds for those who can not handle the work load.
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