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My understanding of my Stonemore MLP distributions is that it reduces basis...i.e. not reported until the position is closed.

That's an incomplete answer. Generally, the cash distributions do just that, but if you've recovered all of your basis, any additional cash distribution is taxable gain when received. The bigger problem is that you've ignored the part where you have to report and pay tax on all of the various items reported on the K-1 you receive each year - and use them to adjust your basis as well.

Ira
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