Originally Posted by jimnjana
I would not reinvest distiributions, when/if you sell its easier to calculate gain/loss, and with the tax software today it is really not a big deal.
Partial sales can be tricky. Professional tax software usually handles it well, but apparently Turbo-Tax has to be tweaked heavily to get it right. During tax season there must have been 150-200 posts on an MLP board that I frequent, asking a very well informed CPA who hangs out there for advice.
With MLPs, I just don't sell. I buy very carefully, and unless I made a boner or things changed radically I will hold until death. I also don't have 1/2 million small postitions; it just isn't worth it. I think about 5 is optimal but I have fewer.
IMO it is very important to get intelligent and conservative management. These things will be going to the equity and debt markets frequently, as they pay out pretty much their entire cash flow. You wnt the LP and the GP if there is a traded one to be very conservatively financed.
For reasons related to this, I also will not buy units in the limited partner. I buy units in the GP, or better yet when the GP is a well financed C corp in the same business I buy the C-Corp if it is reasonably priced. I do have one E&P MLP that I have owned for years, and they have never had a debt or equity offering. I traveled to Dallas to meet with mangement years ago when I got into it, and I have been very pleased with the way they run their business.
Be certain that you understand IDRs before you invest.