I’ve noticed within the comments section of my recent articles on Legacy Reserves (NASDAQ:LGCY) and Memorial Production Partners (NASDAQ:MEMP) that many readers are concerned with the potential tax ramifications of all the “creative measures” upstream master limited partnerships (“MLPs”) are implementing to try to remain solvent through the downturn in commodity prices. Latham & Watkins, LLP, a law firm, published an article I often used as the source for the below material.
The foundation of these tax issues is that unlike corporations, partnerships cannot exclude cancellation of debt income (“CODI”) from their taxable income. This can result in tax liabilities to limited partners because unitholders receive their fair share of …
Read the full article at: http://seekingalpha.com/article/3956525-mlps-critical-often-overlooked-tax-implications-suspended-distributions-debt-restructuring