Question

When beck joined his uncle's oil exploration company in east texas, he was given several hundred shares of stock in the firm, and was officially made a partner. The firm's accountant explained that the company paid taxes the same way as regular partnerships, by passing the profits through to each partner. Beck could purchase more shares of the company on a public stock exchange, as long as someone was willing to sell his/her shares. This firm was likely a special form of ownership called a

Answer 1

Answer:

The correct answer

Explanation:

master limited partnership.

Explanation

A master limited partnership pays taxes like other partnerships, by passing the profits through to the individual owners, and thus accounting for those profits on each owner's federal tax return. Similar to a corporation, the master limited partnership's shares actually trade on a stock exchange.

Answer 2

Master Limited Partnership

Explanation:

1. A Master Limited Partnership (MLP) is a special partnership that incorporates the limited company (LP) tax advantages and common stock liquidity. At their core, MLPs are businesses that produce, transport and store oil and gas resources
2. To both the company and its investors (partners), the tax effects to MLPs vary considerably from those of corporations. There is no tax at the business level, like most limited partnerships. By turn, this reduces the cost of capital for an MLP as it does not face the issue of double dividend taxes. Companies willing to become MLPs are highly encouraged to do so because they offer a cost benefit over their incorporated peers.
3. As MLPs structure themselves as partnerships, they are able to avoid paying corporate taxes, passing the bulk of their free cash flows on to investors (partners) as tax-deferred distribution.. In an MLP, instead of paying a corporate income tax, the tax liability of the entity is passed on to its unitholders
4. An MLP is a publicly traded partnership and trades on national exchanges. Interests in MLPs are sold as MLP units that can be traded on the New York Stock Exchange,NASDAQ,  and, to a lesser extent, other exchanges.

To know more

What are the tax complications for investing in a master limited ...

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