Publicly Traded Partnerships (Portfolio 723)

Bloomberg Tax Portfolio No. 723 T.M., Publicly Traded Partnerships, analyzes in depth the U.S. federal income taxation of publicly traded partnerships and their partners.

As a general matter, partnerships are not subject to an income tax under U.S. federal income tax laws. Instead, partners are liable for income tax on their distributive shares of a partnership's items of income, gain, loss, deduction, and credit. Under §7704, however, partnerships that are “publicly traded” are classified as corporations for U.S. federal income tax purposes unless at least 90% of the partnership's gross income is from sources commonly considered to be passive or from certain types of businesses historically conducted in partnership form (“qualifying income”).

This Portfolio includes comprehensive discussions of the rules for determining whether a partnership is “publicly traded” and the rules for determining which types of income are treated as qualifying income. This Portfolio also examines the conventions that publicly traded partnerships frequently use to comply with the U.S. federal income tax rules generally applicable to partnerships and to ensure that their publicly traded units are fungible. In addition, this Portfolio explores the U.S. federal income tax consequences of owning interests in publicly traded partnerships for various types of investors, such as individuals, tax-exempt parties, and foreign persons. Finally, this Portfolio summarizes significant developments in the law affecting, and novel uses of, publicly traded partnerships.