Any Way to Treat Foreign Partnership as MLP?

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated) 

Yahoo!   Google   Windows Live   del.icio.us   digg   Netscape

Subject Author Date Any Way to Treat Foreign Partnership as MLP? W 07-31-2009
Posted by W on July 31, 2009, 8:35 am Please log in for more thread options I am looking at an investment in a foreign gas pipeline. The company distributes money much as a master limited partnership (MLP) gas pipeline in the US does. Is there any way to treat such a foreign investment like an MLP for tax purposes? Specifically I want to be able to pay tax based on actual earnings, and the surplus over that paid in each distribution I want to take as a reduction of cost basis on the investment. I realize there is the PFIC rule with the QEF election that allows you to do something very similar, but the problem with the PFIC rules is they require the foreign company to make "passive" income. A gas pipeline has active income from its assets. Not applying PFIC rules to foreign corporations that make "active" income seems pretty strange to me since I thought the intent of PFIC rules was to penalize companies for domiciling in low tax environments. If you invested in a company whose income was not "passive" in a low tax environment, wouldn't you get the benefit of their low-tax retained earnings compounding each year? Maybe there is an analog to the PFIC rules for foreign companies that make active income? -- W -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted IRS Form 3520, Section 679 IRC - what is a "foreign trust"? Not a foreign partnership, right? July 25, 2007, 6:22 pm Re: Form 1065 foreign partnership January 25, 2009, 10:54 am Foreign Earned Income Exclusion & Foreign Tax Credit May 21, 2008, 9:29 am Foreign Income Exclusion vs. Foreign Tax Credit March 25, 2007, 12:07 pm Foreign Tax Credit & Foreign Income Exclusion June 3, 2008, 9:35 am Partnership K-1 January 4, 2007, 8:54 pm new partnership April 12, 2007, 12:25 am LLC (Partnership) Tax Questions November 7, 2006, 8:19 am individual 401(k) in partnership February 6, 2007, 9:58 pm Reporting of partnership February 27, 2007, 4:14 pm