Well this is interesting, I've never seen anything like this one before. Linn Energy (LINE) is going to introduce a new way to invest which will be called LinnCo (LNCO). From what I gather LNCO's only assets will be units of LINE, but will be set up as a corporation. So if you like LINE but don't want to fool around with K-1's this could make some sense. Seeing that LNCO will be a corporation it's going to have to pay corporate taxes (which can run up to 35%) but will pay regular dividends and issue a 1099. Intriguing!
This is not like KMI at all. LINE is technically not a MLP because there is no general partner or incentive distribution rights. It is set up as a LLC meaning it pays distributions, you file a K-1, it's a pass through entity, and you own units not shares. One of the main attractions to KMI is that you can invest in the general partner and reap the rewards of the MLP structure in a big way. This isn't possible with Linn. I'm not saying either is better, just different.
I haven't made up my mind if I'll buy LNCO shares or not, but if I do it's going in my ROTH. The main downside here is that the dividend will obviously be lower and you don't get the built in tax sheltering. For those who like Linn, LNCO will make tax time a little easier and will have a place in retirement accounts.
What do you all think? Am I understanding LinnCo correctly?
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