For those unfamiliar, here's a brief summary of my understanding of these:
They are traded on public markets, but structured as partnerships rather than corporations. This means they don't pay income taxes, their owners do via K-1's which are reported on their tax returns. Many of them are energy (mostly gas) companies like Kinder Morgan Energy Partners, LP.
I'm in the hate 'em camp, and here's why:
-The tax reporting sucks, and I'm a CPA so I have to deal with it a lot.
-Most of them have a crazy amount of data on the K-1's including domestic production credits and depletion.
-Some are split into 3 companies but reported on 1 K-1.
-Because they are partnerships, when they pay dividends they reduce your cost basis, but the brokerage houses don't track it properly.
-Therefore, when you sell, the gains reported on the brokerage statements are not correct but most people don't realize this, including some CPAs.
-So the solution is put them in an IRA to avoid the tax filing hassles. Well very few of my clients do this for some reason. I'm stuck with 5 new K-1's to report on their tax return, then they complain when our fees go up 10%.
-I know some investment advisors that push these on clients, which typically means high expenses and more fees for the advisors.
I realize that was a bit complainypants, but it's how I feel and I don't see the benefits.
So can someone convince me otherwise? What are the benefits that I don't see? Who's in the Like 'em, camp and why?