Recent US Tax Developments Affecting Publicly Traded Partnerships

March 12, 2015

Partnerships targeted to widespread investors are a popular investment vehicle and a significant source of funding for oil and gas projects. However, their use is affected by the publicly traded partnership (“PTP”) tax rules. If the PTP rules apply, a partnership may be treated as a corporation for U.S. tax purposes and its earnings could potentially be subject to a double layer of tax: tax at the corporate level and then, when distributions are made, at the investor level. Also, tax losses and credits cannot flow through an entity treated as a corporation.

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