Camp Tax Reform Proposal Would Reduce Scope of MLP Qualifying Activities

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Explore:  Income Taxes Tax Reform

On February 26, 2014, House Ways & Means Committee Chairman Dave Camp released a discussion draft of the “Tax Reform Act of 2014.” The draft bill proposes a host of significant revisions to the Internal Revenue Code, including changes to the MLP qualifying income rules of Section 7704. The proposal would eliminate income derived from

  • interest
  • dividends
  • real property rent and gains
  • fertilizer
  • timber and
  • transportation or storage of alternative fuels, such as alcohol and biodiesel

from the definition of qualifying income, effective for tax years beginning after December 31, 2016. The Joint Committee on Taxation projects that these revisions would raise $4.3 billion through 2023.

Although tax reform legislation is unlikely to be enacted this Congress, this bill is important because it shows the Ways & Means Committee intends to move legislation forward. It will be the starting point for future revisions and anyone who seeks to amend it needs to start building their substantive case and political support now.

The text of the bill can be found here. The relevant provision (Section 3620) appears on page 660.

IRS Circular 230 Disclaimer: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

Topics:  Income Taxes, Tax Reform

Published In: Energy & Utilities Updates, Environmental Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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