What is a Master Limited Partnership? (MLP)
A master limited partnership is a limited partnership that is publicly traded on an exchange that combines the tax benefits of a limited partnership with the liquidity of publicly traded securities. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from its cash flow and the general partner is the party responsible for managing the MLP’s affairs and receives compensation that is linked to the performance of the venture. To qualify for the tax benefit, 90% of an MLP’s income must come from activities in real estate, commodities or natural resources such as mining, timber or energy production.
Are MLPs Similar to REITs and How do they Differ?