Loading ...Interesting chart pattern in CNX
So we know that coal is dead… natural gas is going to zero etc etc. Look at what CNX has been doing as other coal miners and energy plays are going bankrupt.massive basing pattern and look at the volume on the break of the neckline on the inverse head and shoulders…. absolutely enormous. Maybe the pattern has already played out, but I’m betting on this a different way and I have highlighted it already in CNXC. It is the coal MLP that CNX spun out last year. It has a 20 percent interest in CNX’s Pennsylvania thermal coal mines and has a distribution yield of 30 percent. Something that CNXC does that gold miners do not anymore is hedge. CNXC will most likely meet their distributions for the next 2-3 years because they have substantial hedges in place in the 50-55$ range per ton of thermal coal and their cash costs are in the 30s. Einhorn owns 50 percent.
Cash, wow a 30% dividend stream would be awesome in an IRA if it pays out.
Do you know if there are any restrictions against holding MLPs in IRAs?
There are no restrictions but you may end up paying taxes even in an IRA if the unrelated business income from the MLP exceeds 1000$. I wouldn’t buy an MLP in an IRA for this reason.
These things can be a bit complex… in a regular taxable account the entire distribution won’t be taxable unless the MLP has earnings that exceed the distribution which may not happen as distributable cash flow tends to be higher than earnings due to depreciation. This part of the distribution is a return of capital and isn’t taxed, but it reduces on’e cost basis on the partnership unit. Bottom line is to buy it in a taxable account if possible… although you may end up having to pay income tax in Pennsylvania bc that is where the MLP operates. One really has to invest in these in decent size to make it worth the extra tax headache.
Also if your tax basis becomes less than zero due to large returns of capital, you will have to pay tax on the following returns of capital even if they aren’t classified as income.