What are the tax requirements for holding and profiting from an MLP stock?

Asked 4 years ago

I got Master Limited Partnership this year, and it pays good dividends, but I did not know about its tax requirement. Can you expand on it a little bit? How does the tax filing work? What is the best way to calculate the tax on dividend-paying stocks?

Master limited partnership (mlp)Tax payments Dividend investing Tax requirements

Andrew Moran

Monday, July 12, 2021

The primary benefit of holding master limited partnerships (MLPs) over other regular company stocks is that investors are not hit with a double tax on dividends. MLP cash distributions are not penalized at all when shareholders receive their payments. 
That said, the tax obligations do increase the longer your shares are held and then sold. Plus, the tax work is considered to be complicated.