What would you like to do?

What are the tax consequences of owning a master limited partnership?

already exists.

Would you like to merge this question into it?

already exists as an alternate of this question.

Would you like to make it the primary and merge this question into it?

exists and is an alternate of .

What are the tax consequences of owning a master limited partnership?
Assuming you mean owning a share in a master limited partnership (MLP)as an investor, he short answer is: you get tax-deferred income on a quarterly basis, and pay income tax on your share of partnership income, which is usually far smaller than the distribution. The long anwer: the important thing about an MLP, or any partnership, is pass-through taxation. That is, an MLP does not pay an entity level tax the way a corporation does. Rather, the partners--that is you and the other unitholders--are allocated their proportionate shares of all tax items, net them out, and pay the tax on the resulting taxable income. So, you will be allocated a share of the partnership's income, its depreciation deductions, etc. All this is on paper--you don't actually receive an amount equal to your share of income. You do, however, receive a quarterly distribution, which is like a dividend, except that it is treated differently for tax purposes. Because the partnership doesn't pay a tax, it can pay out more of its income to you in case than a corporation typically can. Instead of being taxed currently, the distribution is subtracted from your basis in your partnership units. When you sell your units, your taxable gain is the difference between your sales price and your adjusted basis, so the tax on the distributions is collected then. While the distributions lower your basis, your share of taxable income and other things increase it, and so it takes longer than you might think to get your basis to zero. If you ever do get to zero, the distributions would become taxable. For more information, visit the website of the MLPs' trade association, the National Association of Publicly Traded Partnerships (http://www.naptp.org)...the answer is being submitted by its executive director.
+ 33 others found this useful
Thanks for the feedback!
Do partnerships pay income taxes?

Do partnerships pay income taxes?

No but they do file a 1065 income tax return and report each partners share of the taxable income to them on a schedule 1065 K-1 and each partner then reports the partner shar

When a limited partnership is formed?

A limited partnership is formed upon the execution of an agreement between a limited partner (usually a financial contributor) and a general partner (responsible for the day-t
What is the rate of tax for partnership firm?

What is the rate of tax for partnership firm?

A partnership computes its income and files its return in the same manner as an individual. However, certain deductions are not allowed to the partnership. Go to the IRS.gov w
Does a partnership have limited or unlimited liability?

Does a partnership have limited or unlimited liability?

At the basest level (Written or unwritten, simply a handshake agreement, or even an implied partnership) you would be operating as a "General Partnership". General Partnership

What are Family Limited Partnerships used for?

Family Limited Partnerships are used to hand down wealth from generation to generation. You can learn more about Family Limited Partnerships online at the Wikipedia.

What are advantage of partnership to limited liability?

None. A partnership is nothing but a glorified sole proprietorship...it provides ZERO legal protection. If anyone sues you, they can take all of your assets. When it comes to

How do you get out of a limited partnership?

The best way to get out a limited partnership is to sell your  portion of the business. You can sell your portion of the business  to the other person or to someone else.

What are advantages of a limited partnership?

Liability Protection:   In general partnerships, each participant is personally responsible  for the actions of the company. This includes debts, liabilities  and the wr
In Uncategorized

What is meant by a limited partnership?

A limited partnership is a type of partnership where each limited partner has limited liability and they are only responsible for their own investment. So when the company los