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Simple English definitions for legal terms
master limited partnership
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A quick definition of master limited partnership:
A master limited partnership is a type of business where some people invest money and others run the business. The people who invest money are called limited partners and they can only lose the amount of money they put in. The people who run the business are called general partners and they are responsible for the debts of the business. Sometimes, the interests or shares of a master limited partnership are publicly traded, which means people can buy and sell them like stocks.A more thorough explanation:
A master limited partnership is a type of partnership where the interests or shares are publicly traded. It is a limited partnership that allows investors to buy and sell shares in the partnership on a public exchange. This type of partnership is commonly used in the energy and natural resources industries.
For example, a company that owns oil and gas pipelines may form a master limited partnership to raise capital by selling shares to the public. Investors can buy and sell these shares on a stock exchange, just like they would with stocks in a corporation.
Master limited partnerships offer tax advantages to investors, as they are not subject to corporate income tax. Instead, the partnership's income is passed through to the individual investors, who pay taxes on their share of the income.