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Lynn Energy LLC – $LINE $LNCO

Today’s Stock Pick of the day is Lynn Energy, LLC (LINE) Lynn Energy is a master limited partnership (MLP). If you are not familiar with MLP, fear not. The main difference between an MLP and a normal company is that you are paying for units of the partnership rather than shares of a company. A limited partnership means that you have no involvement in day-to-day operations, a silent partner, if you will. MLPs are similar to REITs in that they are required to pay out most of their income to unit holders, they are generally very high yield, and they invest in mostly energy assets. This is what gives them such a large appeal.

What this means for you is that The general basis is that it is not beneficial to own LINE in a retirement account, one that already has tax advantages.  MLPs do not pay corporate taxes. These taxes are considered to “pass-through” to the investors,  meaning liabilities and expenses are passed to you so you’re investment is not double taxed. Also, MLP investors may write off partnership expenses (depreciation, etc.)against income on their tax returns.The distributions that you receive from an MLP are considered a return of capital. This means that you will pay no taxes until the you sell the MLP, aka tax deferred.

If you want to invest in Lynn Energy in a retirement account I recommend going with LNCO, which is set up strictly to hold LINE units, and follows traditional tax procedure.

With LINE pullback, and now steady rise. I believe that they are a good investment moving forward. They also currently yield 9.67%, which is a fairly high yield in general. You will also see an appreciation in price over the coming months. They are also looking to merge with Berry Petroleum (BRY). This could end up being very lucrative.

Lynn Energy LLC

Disclaimer: I currently do not hold the above mentioned investment. I may look to add to a position in the above mentioned investment, within the next 30 days. I am not looking to take a short position in the above mentioned investment within the next 30 days.