Tax Benefits

• An MLP general partner makes the day-to-day operating decisions and receives a management fee for their work. Sometimes a general partner is also paid an incentive fee to increase profits for the limited partners. The MLP produces more income than corporations because the MLP pays no corporate income tax. The tax liability falls to the partners individually, because all cash flow is distributed to the partners. Taxes on MLP income are also deferred because most of the income distribution may be considered a return on capital investment.
  
  

Real Estate Securities

• A real estate securities master limited partnership allows the real estate investor to enjoy high yields on investment, while avoiding corporate taxes and personal liability for the property. MLPs in real estate securities may be landlords or developers who build new or purchase and renovate existing property. The property may be rental housing or commercial investments. The limited partners provide the cash investment to purchase the property and receive a distribution of income from the MLP from rents.
  
  

Amusement Parks

• Cedar Fair Entertainment Company (cedarfair.com) is a non-energy master limited partnership that began trading units publicly in 1987. The company was permitted to remain on the securities exchange as a non-energy MLP because it was formed and trading prior to enactment of the the Revenue Act of 1987, which requires 90 percent of MLP revenue from energy, real estate or commodities industries. Cedar Fair owns 11 amusement parks and six water parks located in the United States and Canada.
  
  

Hedge Funds

• Investors in a hedge fund may enjoy the tax benefits of a master limited partnership provided the fund meets the requirements of the 26 U.S.C. sec 7704(c). To qualify as an MLP, 90 percent of more of hedge fund income must be "qualifying income," such as income from rent or sale of real estate, energy-related or capital gains from commodities. The total number of investors in the hedge fund must be limited to 100 and investor withdrawals are limited to income on investment and are not liquid.