1.2.2.1. Publicly Traded Partnership (PTP)
A publicly traded partnership (PTP) is a limited partnership that is freely tradable on an established securities market (a national or regional exchange) or “readily tradable” on the secondary market or its equivalent (over the counter). To be readily tradable on a secondary market, the PTP’s securities must be regularly quoted by a market maker, and the holder must have a regular and ongoing opportunity to sell in the market. PTPs are not considered to be readily tradable on the secondary market, if they are not registered with the SEC and if they have fewer than 100 partners at any time during the taxable year.
A publicly traded partnership will be treated as a corporation for income tax purposes, unless 90% of its gross income is passive income: income derived from interest, dividends, rent from real property, and gains from property sales. Its business also must involve the buying and selling of real estate, mining, or depletable natural resources. Meeting these requirements will qualify the PTP for treatment as a “pass-through” entity.
A master limited partnership (MLP) is a PT