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Strategies & Market Trends : Value Investing
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To: research1234 who wrote (66605)2/21/2021 1:32:11 PM
From: Paul Senior  Read Replies (2) of 78817
 
Not sure about ordinary income rates at time of sale for MLPs.

If the MLP distribution is a return of capital (as with pipeline company mlps sometimes for example), then those cumulative distributions are used to reduce cost basis. So if the MLP is sold, the difference between that adjusted cost basis and the sales price is the capital gain (assuming there's a gain). And that capital gain could be long-term or short term. Depending on which it is, the appropriate tax rate would apply. That is, the tax rate wouldn't be at ordinary rates (for long-term sale). I believe this to be correct, but I'm not entirely sure.

As regards UAN, I don't know if the distributions or a portion of them would be considered return of capital.
If they are not considered a return of capital, I don't know how the taxes play out. While it might be important to know, for me, my UAN position will be small, and I won't worry about taxes that may have to be paid at a future time.
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