I try to avoid all stocks that are MLP or REIT because of the additional tax reporting. But I don’t know how to identify if a company is a MLP or REIT by reading their description. I use Yahoo Finance. For example, EMES is Emerge Energy Services LP. Their description is below. Does LP stand for “Limited Partner”? Does this mean it’s an MLP?

Emerge Energy Services LP acquires, owns, operates, and develops a portfolio of energy service assets in the United States. The company operates in two segments, Sand and Fuel. The Sand segment is involved in the production and sale of various grades of industrial sand primarily used in the extraction of oil and natural gas, as well as in the production of building products and foundry materials. The Fuel segment operates two terminals and two transmix processing facilities located in the Dallas-Fort Worth, Texas area and Birmingham, Alabama. This segment also engages in the sale of wholesale petroleum products; provision of third-party terminaling services; blending of renewable fuels; and provision of reclamation services, such as tank cleaning services, as well as other complementary products and services. Emerge Energy Services GP, LLC operates as a general partner of the company. Emerge Energy Services LP was founded in 2012 and is based in Southlake, Texas.

Please let me know if there is a way of typing in a stock ticker and having somewhere say it’s a MLP or REIT.

Thank you.


I try to avoid all stocks that are MLP or REIT because of the additional tax reporting.

Hi Ken,

First, I am not sure that REITs involve additional tax reporting. I know that they are trusts, which would suggest that they might pose reporting issues, but I am an owner of O, CTRE, HCN and STAG and have never had to do any extra reporting at all for them.

Note that REITs do, however, raise substantive tax issues (not, to my knowledge, reporting issues), because their distributions tend to be ordinary income (instead of tax-qualified dividends), subject to a higher tax rate. So many people choose to own REITs in tax-qualified accounts, which is fine. (There are, to my knowledge, no UBTI issues raised by REITs, which is good for holding them in IRA’s, pension plans, 401(k) plans, etc.)

Extra reporting issues are usually the result of getting a K-1, which will happen if the company is a partnership or an LLC that does not elect to be taxed as a corporation. This is where the MLP problems arise, but note that any publicly traded partnership raises these issues, not just MLPs.

The quick test to see if a company will involve these K-1 reporting problems is to look at its full name. In my experience, if there is a K-1 issue, the name will always include the words “Partners,” “LP,” or “LLC” – or some obvious variant of those words.

Note that royalty trusts also create some extra reporting issues, so you may want to stay away from them. They are pretty rare, and usually have the word “Trust” in their names along with an oil or gas business description – and unlike REITs (which are also trusts), they pay royalties, which can be a bit of a reporting burden.

Finally, note that foreign partnerships can raise significant extra reporting issues. For example, one of my favorite companies is BIP, which is a partnership (check out the full name). Not only does it raise the usual partnership reporting issues – it also raises all kinds of weird issues because of its dealings overseas.

Last comment – if you own the US ADR of a foreign company’s stock, and you get a dividend, be wary of the withholding tax – often the foreign country will withhold a tax from your dividend. You will have to (ii) hold the stock in a taxable account (not an IRA, etc.), (ii) do the paperwork to get a US foreign tax credit for paying that tax, and (iii) recognize that your US foreign tax credit will be limited to the LESSER of (a) the foreign tax you paid and (b) 15% of the dividend. My memory is (faintly) that some countries (maybe Switzerland, some south American countries, etc.?) have withholding tax rates in excess of the 15% amount, although I cannot remember for sure and am way too lazy to check.