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  • Providing Cost-Effective Tax Services for MLPs

    Mutual Fund Solutions
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    Business Challenge

    In 2007, a client investing in open-end and closed-end Master Limited Partnerships, or MLPs, approached our Fund Administration department in search of a more efficient and cost-effective solution to tax preparation services for their funds investing in MLPs.

    MLPs are generally considered publicly traded partnerships (PTPs) that are sold on a primary or secondary market or exchange, much like a typical corporate stock. They can be classified as partnerships or corporations for U.S. tax purposes. Likewise, funds that invest in MLPs, depending on the concentration of MLPs an adviser wishes to have in a fund, can be classified as regulated investment companies (RICs), partnerships, or C corporations for U.S. financial reporting and tax purposes, each having its own distinct regulations to follow.

    U.S. Bancorp Fund Services has provided a full suite of services for funds investing in MLPs since 2004 and understands the nuances of various MLP fund structures. Prior to soliciting the help of the Tax team at U.S. Bancorp Fund Services, our client enlisted the support of an audit firm for all tax and audit services, which proved to be troublesome and expensive.

    Our Solution

    Over the last 10 years, U.S. Bancorp Fund Services developed an automated, solution-oriented approach to provide full fund accounting, financial reporting, and tax preparation services for funds that invest in MLPs. As the fund administrator, this allows U.S. Bancorp Fund Services to complete all fund-level federal and state tax preparation and analysis prior to sending to the fund’s auditor for approval and submittal. Our dedicated team of MLP fund administrators provides clients with full state apportionment analysis and automated K-1 income allocations for full and partial sales.

    We also continue to network closely with the tax departments at audit firms that work on MLP funds in order to standardize the processes and procedures followed in complying with current MLP tax regulations. We pride ourselves on our ability to provide clients with the peace of mind knowing that their funds are being serviced diligently, accurately, and according to all applicable regulations. Our comprehensive services are offered within mutual fund, hedge fund, and C corporation structures.

    The Result

    Through our strong relationships with outside audit firms, U.S. Bancorp Fund Services is continually working to establish procedures compliant with IRS regulations, seeking to reduce the tax preparation work the audit firms previously completed, while providing possible efficiencies and cost savings for funds. U.S. Bancorp Fund Services offers our clients consultative support and tax preparation services for multiple fund structures that invest in MLPs, and acts as a sounding board for general client inquiries, which enables us to share our industry knowledge and experience with our clients.

    Today, we provide customized tax preparation services for 31 clients with funds investing in MLPs structured as open-end and closed-end C corps, RICs, and partnerships. We are committed to being a leading full service administrator for MLP fund structures as well as funds that may hold a nominal amount of MLP investments. We provide opportunities for our Tax team and our clients to discuss industry issues with fellow MLP professionals, and make certain to be on the forefront of all trends and regulatory changes that may impact our clients and their funds.

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