Oppenheimer Steelpath MLP expenses From the below linked article:
"Unlike traditional corporations, MLPs operate as limited partnerships and pay no tax at the company level, allowing investors to avoid the double tax on dividends.
But depending on how the mutual fund is investing in MLPs, some new tax issues could nullify many of the advantages of owning the partnerships directly.
“Most MLP funds flunk the mutual fund test by having more than 2
5% of the portfolio invested in MLPs,” said Robert Gordon, president of Twenty-First Securities Corp.
Therein lies the rub.
As soon as a mutual fund portfolio goes beyond a 2
5% allocation to direct MLP investments, the fund loses its status as a registered investment company and converts, for tax purposes, into a corporation. The tax rate climbs to 3
5%. That can be a painful surprise for investors."
This page requires a free registration to InvestmentNews.com.
http://www.investmentnews.com/article/20140508/FREE/140509899?template=printartMy take,as a non accountant or tax attorney:
As a mutual fund that holds more than 2
5% in M L Ps receives distributions from the M L P's it holds,it must account for deferred taxes owed on a daily basis as to the net effect on Daily N A V.This amount ends up in the "other expenses" column.It is a future tax liability and not an expense of the fund's operations or management fee.
