The MLP Parity Act has a glitch for the solar industry: it does not include income from solar leases in the definition of “qualifying income.” Section 7704(c)(2) of the Internal Revenue Code requires an MLP, to avoid characterization as a corporation (and a second layer of tax), to have 90 percent of its gross income be “qualifying income.” This apparent inadvertent omission is important to the solar industry, because a large percentage of residential solar is financed using a lease to the homeowner. Thus, if the MLP Parity Act is enacted in its current form, residential solar projects using a lease to the homeowner would not be good candidates for inclusion in an MLP.
The MLP Parity Act has bipartisan and bicameral support and appears to be supported by the White House. See here.
1 Ari Natter, Senate Bill on Master Limited Partnerships to Cover $1.3 Billion Over 10 Years, Daily Tax Report G-6 (Nov. 19, 2013).