Sep 7, 2023Liked by Six Bravo

Hi - I've been enjoying your writeups. A question re: the royalty companies. If the royalty is a Net Overriding Royalty where the trust only receives a portion of the profits, doesn't that negate the benefits of being asset light? Meaning any inflated costs in withdrawing the commodity from the ground are passed through to the trust because the operator will have smaller net profits and therefore will pay less to the trust. (as compared to TPL that takes their royalty off the top). Interested in your thoughts. Thanks, Eric

Expand full comment

what is current opinion about it? Is there any special tax treatment for non US investors, as in case of partnerships, where one has to pay 10 percent tax on the whole sale proceeds amount (not on the potential profit)?

Withholding on Publicly Traded Partnerships (“PTPs”) Effective Jan 2023


As a result of U.S. Internal Revenue Regulations taking effect 1 January 2023, new withholding charges will be applied to sales proceeds from certain Publicly Traded Partnerships ("PTPs”) held by investors who are not U.S. taxpayers. The IRS withholding charges are substantial, therefore, Interactive Brokers has taken steps to limit access to these products for investors who might be unaware of the risks of investing in these PTP products.

Instructions on How to Access PTP Products are available below in this document.

What you need to know:

Amount of Withholding: 10% of sale or distribution proceeds. This means 10% of the amount of funds that would settle resulting from any transaction or distribution, not just 10% on any calculated profit.

Expand full comment