Taxation of Master Limited Partnerships
Read the full article at: http://www.thediv-net.com/2009/01/taxation-of-master-limited-partnerships.html
Submitted by Dividend Growth... on Sun, 2009-01-04 17:29.
(via www.thediv-net.com)
MLPs are not like regular corporations and do not get taxed on income. Instead they tend to return most of their income (typically 85 to 90%) to investors or partners through quarterly distributions. This shifts the tax responsibility to the partners, who are taxed at their ordinary income rates. Since ordinary income rates of investors are typically lower than the income tax rates of corporations, this proves to be advantageous to the MLPs and hence their investors.
