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Substitute "IBM" for "MLP".

The dividends paid by IBM and corporations are paid out of after tax earnings. Hence, they are taxed twice when paid into a taxable account.

Publicly traded partnerships pass on their earnings to unit holder untaxed. The IRS specifically recognizes this and requires that they be treated as UBTI in an IRA. That means they too are taxed.

The fact that MLPs do not pay taxes is one of the reasons they can pay high yields compared to other investments. In a taxable account the unit payments are not qualified dividends and hence do not get the special dividend tax rate. But you can deduct expenses and items like oil depletion reducing the tax burden (or shifting the burden to capital gains rates when you sell).
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