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Is BIP a true master limited partnership? The reason I ask is the difference in tax treatment. With an MLP held in a tax-deferred account like an IRA, taxes may have to be paid on some of that income. Morningstar explains:

"With most investments held inside an IRA or 401(k), account owners don't have to pay taxes on any income or capital gains paid out from year to year. Instead, they won't owe any tax on their accounts until they begin taking distributions during retirement. By contrast, the IRS considers cash distributions from MLPs held inside a tax-deferred account as unrelated business taxable income, and any UBTI distribution that exceeds $1,500 (across all the IRA accounts that you hold) is taxable at the account level.

So to sum up: Holding an MLP in a tax-deferred account is a bad idea on a couple of levels. First, you'll pay income tax on distributions that exceed $1,500, and you'll also pay tax when you begin taking withdrawals from your account during retirement. Second, you won't be availing yourself of MLPs' benefits when held within a taxable account."

Thanks in advance.

Ken
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