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What is negative with EPD? Something to do with the fund?
- EPD the stock is a limited partnership with energy holdings and it is positive for the year.
- Since your question refers to “fund”, most likely you mean EPDIX, the mutual fund, which invests in European dividend paying stocks …
The second is up about 8% this year, but fell about 1% Friday. Since the fund owns dividend paying stocks a 1% drop for one day is entirely normal. Unlike income paying bonds, or mixed allocation funds, dividend paying stocks are normally riskier and more volatile.
@ron - Members are here to help you if you need some direction. It all depends on your age, purpose in investing and your willingness / ability to accept potential losses over shorter periods in pursuit of potentially greater longer term gains.
@ron. Someone else explained it to me this way: I'm in ET, a similar midstream MLP. The K-1 is required, but don't ask me why. Too complicated for me. Anyhow, I'll just let my tax guy deal with it. My tax returns are very simple, otherwise. ...
.....So, the other fellow responded to my questions, offering this response. I'm paraphrasing from memory: in the case of such a LP (Limited Partnership,) when dividends are paid, it is a return of your own capital. And it is un-taxed. If you ever receive enough dividends to make-up for your own cost, then those dividends would be taxable. But will you ever get there? Since the profit is untaxed as long as you own it, he plans simply never to sell it. Let the heirs worry about the rest..... That's far from a thorough answer, but he told me enough so that I was able to make an informed decision. And you might check out ET, too, along with EPD.
@Crash: we have personal experience as heirs of a portfolio containing several Limited Master Partnerships, positions bought and held by a DIY investor before the advent of electronic brokerage record keeping. The estate (read the lawyers) had to establish a basis at time of death for everything being passed on. It took several years to sort things out, at considerable expense to the heirs. The ironic aspect of this mess was the original investor’s intent to save on income taxes. That the outcome resulted in handing over his hard-earned dough to lawyers and accountants instead of the IRS would surely have disturbed his final rest.
ISTM that should have been very simple - it's the market value (not book value) of each asset at time of death (or six months later if using an alternate valuation date). In the case of MLPs which are traded like stocks, I imagine the valuation would be the average of the opening and closing market prices on the valuation date. Though I haven't checked to confirm the same algorithm is required for MLPs as for stocks.
This is the beauty of basis step up (or down) - it wipes the record clean. Depreciation adjustments that would matter if the owner sold the property while alive no longer come into play.
For example, I was the (co) executor of an estate containing a depreciated rental property. Valuing real estate is more difficult than valuing securities. You can't just look at the last trade. We went to a realtor who did a lot of sales in the development and asked for a written estimate of what the property would sell for. Six months later we had him provide an updated estimate. No complaints from the IRS.
Something else must have been going on with these MLPs. Perhaps they were jointly owned? Then (except in community property states) the step up in basis would only apply to the fraction owned by the deceased. Or perhaps they are thinly traded (still not very complicated)? Do you know why the lawyers made such a fuss over the MLPs?
Edit: a key word here is "master". That means it is public, listed. Without that, it would be more difficult to value, just as real estate is more difficult to value.
@msf: my memory might be faulty, but I recall that the problem was that the investor kept his own records, not his brokerage. I also understood that pass-through dividends issued by the MLP, which, are not taxed, require an adjustment of the basis as though they were a return of capital. In any event, I have always avoided such investments.
Comments
- Since your question refers to “fund”, most likely you mean EPDIX, the mutual fund, which invests in European dividend paying stocks …
The second is up about 8% this year, but fell about 1% Friday. Since the fund owns dividend paying stocks a 1% drop for one day is entirely normal. Unlike income paying bonds, or mixed allocation funds, dividend paying stocks are normally riskier and more volatile.
@ron - Members are here to help you if you need some direction. It all depends on your age, purpose in investing and your willingness / ability to accept potential losses over shorter periods in pursuit of potentially greater longer term gains.
https://www.enterpriseproducts.com/k1-tax-information
There are MLP ETFs that issue 1099, see
https://ybbpersonalfinance.proboards.com/post/113/thread
https://www.enterpriseproducts.com/k1-tax-information
I'm in ET, a similar midstream MLP. The K-1 is required, but don't ask me why. Too complicated for me. Anyhow, I'll just let my tax guy deal with it. My tax returns are very simple, otherwise. ...
.....So, the other fellow responded to my questions, offering this response. I'm paraphrasing from memory: in the case of such a LP (Limited Partnership,) when dividends are paid, it is a return of your own capital. And it is un-taxed. If you ever receive enough dividends to make-up for your own cost, then those dividends would be taxable. But will you ever get there? Since the profit is untaxed as long as you own it, he plans simply never to sell it. Let the heirs worry about the rest..... That's far from a thorough answer, but he told me enough so that I was able to make an informed decision. And you might check out ET, too, along with EPD.
ISTM that should have been very simple - it's the market value (not book value) of each asset at time of death (or six months later if using an alternate valuation date). In the case of MLPs which are traded like stocks, I imagine the valuation would be the average of the opening and closing market prices on the valuation date. Though I haven't checked to confirm the same algorithm is required for MLPs as for stocks.
This is the beauty of basis step up (or down) - it wipes the record clean. Depreciation adjustments that would matter if the owner sold the property while alive no longer come into play.
For example, I was the (co) executor of an estate containing a depreciated rental property. Valuing real estate is more difficult than valuing securities. You can't just look at the last trade. We went to a realtor who did a lot of sales in the development and asked for a written estimate of what the property would sell for. Six months later we had him provide an updated estimate. No complaints from the IRS.
Something else must have been going on with these MLPs. Perhaps they were jointly owned? Then (except in community property states) the step up in basis would only apply to the fraction owned by the deceased. Or perhaps they are thinly traded (still not very complicated)? Do you know why the lawyers made such a fuss over the MLPs?
Edit: a key word here is "master". That means it is public, listed. Without that, it would be more difficult to value, just as real estate is more difficult to value.