Taxation complexities of owning units in an MLP increase as the percentage ownership increases. Each investor is responsible for paying the income taxes of the partnership, which is based on the pro rata share of ownership. Under certain circumstances, unit holders are responsible for income taxes in the individual states where the MLP has operations. So, a natural gas pipeline that passes through five states could result in income taxes being owed in each state. Also, taxes may be due even if the MLP investment is held in a tax qualified retirement account, such as a 401(k).
Now mlp's profits are taxed at 15%. But the divie is taxed at what ever tax bracket you fall under. So this coud be good or bad. All in all you can;t right off a loss in a mlp as you can in a regular stock. The over all profit plus divie on tax reduces what everyone calls total return on your mlp. The mlp hype plus all the k1's can be a hassel and also cost you more in accountant fees when your accountant does your taxes because of the work involved.