Monday Mailbag: How Do Incentive Distribution Rights Work?
Today we give a detailed example of how to calculate IDRs.
General Partners, Part 3: When Crude Gets Bad, Does Being In the High Splits Make It Worse?
In last quarter’s installment, we examined how an MLP in the high splits would pay increasing portions of its cash flow to the general partner (GP). Given this “GP tax,” some investors may choose to...
General Partners, Part 2: Why Cash Flows and Distributions Don’t Grow in Lockstep
MLPs may not pay taxes directly to the government, but MLPs with IDRs pay out increasing portions of incremental cash flows to their GPs according to a system very similar to US tax brackets.