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Many Master Limited Partnerships generate Unrelated Business Taxable Income. This is shown on the K-1 you get every year. If you get more than $1000 of this in a year, it is taxable even though the MLP be held in an IRA.

In an IRA, you don't pay capital gains buying or selling. You pay tax at your marginal rate when you withdraw the money.

I do hold several MLPs. Most, even though the partnership itself is profitable, have UBTI small or negative. So it actually wouldn't matter, and would save the trouble of wrestling with the K-1s every year. However, the partnership itself is by its nature tax-advantaged, so in that sense it wouldn't make sense to hold it in an account that also is not taxable.

Best wishes, Chris
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