As we covered in Weeks 2 and 3, the passive loss limitation rules impose real li

Question

As we covered in Weeks 2 and 3, the passive loss limitation rules impose real limitations on the ability of owners of certain types of ventures to take losses from those ventures and use them to reduce other income. That hardly means, however, that people don’t try. One such area often involves various oil and gas ventures. Often operated as publicly traded partnerships, sophisticated investors often purchase limited partnership interests in these ventures. They are, however, subject to a particularly restrictive set of passive loss limitation rules.

Locate at least three such oil and gas publicly traded partnerships on the web that are marketed to new investors. Describe the benefits that the promoters of each of these partnerships claim will result from the investments and describe the disclaimers, if any, that they provide detailing what limitations may be placed on the losses.

NOTE: You must either (1) submit complete citations to these online resources so that your instructor may find these studies online or (2) submit complete copies of these online resources with your submission.

Explanation / Answer

There are many such partnership in the market and some of them are:

American midstream partners

Atlas resource partners

Boardwalk Pipeline Partners, LP

The promoters benefits here are :

1)Actually if you are limited partner just you invest money and not participate in operation activities but still you receive the share of the profits as per your partnership interest

2)If you general partner you will participate in operation activities and gain share of the profits

3)since it is like corporation and the partnership has to pay corporate taxes and if any tax liability is there it will pass to investors which will impact there returns

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