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Trump's Tax Plan: More Questions than Answers for MLPs

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Part 2
Trump's Tax Plan: More Questions than Answers for MLPs PART 2 OF 2

Proposed Tax Plan: MLPs Should Benefit from Expensing Provision

Expensing of capital investments

President Trump’s new tax framework proposes allowing businesses to immediately write off or expense the cost of new investments in depreciable assets. The proposal is applicable to investments in assets other than structures. It will be applicable for “at least five years.” The proposal intends to enhance this more—likely beyond five years, especially for small businesses.

Proposed Tax Plan: MLPs Should Benefit from Expensing Provision

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MLPs’ capital investments

MLPs regularly spend a lot of capital on depreciable assets. If the assets can be written off immediately for tax purposes, instead of allocating costs over the asset’s useful life, it will provide immediate tax relief to the MLP or the partners, who ultimately pay the taxes.

Enterprise Products Partners (EPD), Energy Transfer Partners (ETP), Williams Partners (WPZ), and MPLX (MPLX) are some of the MLPs with huge capital spending plans. To learn more, read US Midstream Companies with the Largest Capital Spending Plans.

MLPs should benefit if the expensing proposal gets passed.

In this series, we discussed the broad implications of the proposed tax plan on MLPs. Investors need to wait for more details.

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