A Master Limited Partnership is a special type of limited partnership. Also called MLP’s, these are limited partnerships that are usually larger than standard partnerships and are publicly traded according to securities laws. MLP status is restricted by U.S. federal laws. They usually only issue MLP status to businesses that involve the use or manipulation of natural resources. However, master limited partnerships can also include certain types of real estate partnerships.
- Avoiding corporate tax rates
- Reduced liability for limited partners (although parties also have restricted rights)
- Benefits associated with liquid securities that can be traded publically
Also, MLP’s tend to save costs on funding due to the nature of the business operations as well as the favorable tax implications.
One legal issue to consider with MLP’s is that the tax implications, although beneficial, can also be very complex. Distributions from an MLP to members are subject to complex legal and tax determinations, which can sometimes require legal assistance.
Lastly, because MLP’s tend to be larger organizations, partners tend to have somewhat limited interests in the securities. Even general partners have somewhat smaller interests in comparison with other types of business forms. Disputes over securities issues can sometimes arise in an MLP setting, which may require a lawsuit to resolve.
Master limited partnerships are highly specific business structures. You may need to hire a businsess lawyer if you need help with a master limited partnership or with any other types of business matters. Your attorney can provide you with legal advice and can also help you file a lawsuit if you need to have a dispute resolved.