William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘New York Stock Exchange’

May A Proposed Expansion Of Master Limited Partnerships’ (MLPs) Tax Benefits For “Renewable” Energy Lead To America’s Energy Independence?

Posted by William Byrnes on October 8, 2013

As of June 2013, Master Limited Partnerships (“MLPs”) have reached a market capital of $400 billion, with over 100 MLPs traded on major exchanges.[1]  Generally established as LLCs with advantageous partnership flow through tax treatment, MLPs present attractive return vehicles to attract long term capital to the energy extraction, energy transportation (“midstream”), and most recent, energy distribution (“downstream”), markets.  However, MLPs may result in unfavorable tax treatment for investors as well.

The Mertens Federal Income Taxation August 2013 Highlight by William Byrnes, Robert Bloink and Theron West examines the tax issues for MLP investors pre- and post- the 1986 Code, imposed MLP investment restrictions, and gradual relaxation thereof.  The Highlight  concludes with an analysis of the April 2013 legislative bi-partisan proposal, the Master Limited Partnership Parity Act, to extend MLP tax treatment to renewable (“green”) energy, and why this proposal is contentious.

Given the continuing Congressional gridlock over deficit reduction and heightened sensitivity of energy industry tax breaks in light of this, even with bipartisan support, renewable energy lobbyists will probably not realize passage this year.   According to J.P. Morgan, “MLP distribution yields have generated 6-7%, and over the past twenty years, capital growth has totaled approximately 8% annually.[2]  Regardless of whether MLPs eventually are expanded to encourage renewable energy investments, for the time being they present an alternative asset class that has the potential to produce high-yield returns, and therefore high investor interest.[3]

See Mertens Highlights at > WestLaw <

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SEC Approves FINRA Suitability and Know-Your-Customer Rules

Posted by William Byrnes on February 26, 2011

The SEC recently approved FINRA proposed rules—FINRA Rules 2090 and 2011—that amend and consolidate know-your-customer and suitability obligations for broker-dealers and their authorized representatives.  The new rules are based on, and replace in-part, similar NYSE and NASD rules. According to FINRA, the amended know-your-customer and suitability rules are intended to protect investors by “promoting fair dealing with customers and ethical sales practices.”

The new rules are effective as of October 7, 2011.  For previous coverage of the suitability standard and the debate over the proposed fiduciary standard in Advisor’s Journal, see What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10-40) and Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97).

Under the know-your-customer rule, firms are required to use reasonable diligence respecting the opening and maintenance of every account and to know essential facts about every customer. “Essential facts” are facts required to …. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).


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