Master limited partnership
To obtain the tax benefits of a pass through, MLPs must generate at least 90% or more of their income from qualifying sources such as from production, processing, storage, and transportation of depletable natural resources and minerals.The "MLP" and "PTP" terms are commonly used interchangeably, but MLPs are technically a type of limited partnership that conducts its operations through subsidiaries and are not always publicly traded.Section 7704 of the Revenue Act of 1987 limited which businesses could be MLPs, delineating that an MLP must earn at least 90% of its gross income from qualifying sources, which were strictly defined as the transportation, processing, storage, and production of natural resources and minerals.[2] To encourage tax-exempt investors, some MLPs set up C corporation holding companies of limited partner which can issue common equity.However, many other assets can be operated in an MLP including processing plants, natural resource storage facilities, rail terminals, marine transportation vessels, and refineries, among others.