To: Elroy who wrote (78444 ) 11/3/2025 4:32:42 PM From: E_K_S Read Replies (1) | Respond to Re: UAN basis at/below Zero If your MLP UAN cost basis goes to zero in a taxable account, the tax treatment of distributions changes. While your cost basis is above zero, distributions received are generally treated as a tax-deferred return of capital, which reduces your cost basis and does not create immediate taxable income. However, once your cost basis reaches zero, any additional distributions you receive are taxed as capital gains in the year they are received When your MLP cost basis goes to zero and capital gains tax is due on further distributions, the broker is generally responsible for issuing a Form 1099-B reporting the capital gain transaction for the year in which the taxable event occurs. The MLP itself typically issues a Schedule K-1 annually to report your share of income, deductions, and distributions, but the capital gain triggered by the basis reaching zero and subsequent taxable distributions is reported by the broker through Form 1099-B. I guess I will just be waiting for my 1099-B Looks like they will be treated as long term capital gains too w/ a cap at 20%. Much better than if I sell and have the depreciation recapture taxed as ordinary income. The capital gain distributions you receive once your MLP cost basis hits zero are generally treated as long-term capital gains. This is because these distributions are essentially classified as return of capital (ROC) that has fully reduced your basis, and future distributions become taxable gains typically taxed at long-term capital gains rates regardless of how long you have held the units.
