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Strategies & Market Trends : Value Investing
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To: bruwin who wrote (66595)2/20/2021 8:20:09 PM
From: E_K_S  Read Replies (1) of 78817
 
Now all you need to do is see if the projected revenues (less direct expenses) are achievable w/ the projected UAN fertilizer prices. I do not know what the two facilities process at normal operating capacity, what if any constraints they have on production, if they have pre-orders and/or operate at capacity and/or store/deliver product as required (ie contracted sales)

There are a lot of variables and there are always the chance of some breakdowns and/or weather that could cause some disruptions in their production. I believe their facilities are located in Coffeyville, Kansas, and East Dubuque, Illinois.

Their conference call was pretty optimistic on UAN prices but it may not be until Q2 before those higher revenues would kick in.

Here is a table of all their distributions made by quarter since 2011; 2017 & 2018 had $0.00 distributions (8 quarters of $0.00 distributions)

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Remember if'/when you sell units it's always the FIFO shares that are sold first. At that time you create a taxable event equal to the amount of depreciation recapture (FIFO cost less accumulated depreciation minus sales price ) which is your long term capital gain (higher if FIFO shares were held 1 year + 1 day). The dividend income 'distribution' is tax deferred so as long never sell your units, you incur little to no current year tax liability (unless your cost basis reaches zero).

Therefore the big tax event occurs when you SELL shares since that triggers the deprecation recapture calculation.

Your K1 report will show what your cost basis is on all your accumulated shares, if some/all shares were sold the amount of the depreciation recapture is listed and this is the information needed by TT (Turbo Tax) to calculate your individual tax obligation.

It becomes complicated if you made several Buys over the years (along w/ the 10-1 reverse split), that all shares are correctly adjusted w/ the correct cost basis. Every quarterly distribution requires that the cost basis be reduced accordingly (by the amount of the depreciation). This is similar to how depreciation recapture works w/ income property when you sell/dispose of the rental property.

Welcome to MLP accounting and the dreaded K1 reports. Buying is easy it's the selling that triggers the 'tax' event.

EKS
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