I did not intend my post to be condescending. I wished only to point out that your comment made no sense to me. I do understand that these tax rules are different and I don't pretend to understand them completely. Am trying. The next post does a good job of clarirying this point about accumulated losses. To me best way to make a point is to be direct to avoid confusion about what point is one making. I am sure you are a fine person or you wouldn't be here investing hard earned money. Investing and saving today is a challenge.
Please reread your comments; I believe you are applying normal income/tax rules; The K-1's are not normal in any sense:
1.The money received from SPH is a distribution not dividend income; And therefore a completely different set of IRS rules apply to reporting, record keeping, taxing:
2.The K1 will in most cases will show a loss in Box1 which is passive & does NOT go on individual 1040s as per SPH's instruction booklet included with the K1; This amount is included in the accompanying capital account figures on the K1:
3.Sage533 is right about the IRA "trap"; Although normally anything in an IRA is OK, when a MLP exceeds certain amounts in an IRA it can trigger devastating results:
I hope you find all of your answers; Please try not to be so condesending in your replies. :) These K1's are very complicated at first; Even now I dont understand why they are even worth having-other than they simply move your taxes from now until later; Thes distributions do get taxed on sales; I'll try to visit that post you found.
SPH is not "well suited" only because most of the gain is already tax sheltered. That does not mean it is a bad investment. I have SPH in my regular account and some in an IRA. No problem in either tax reporting on the 1040 (turbo tax was easy) and no problem with growth in the IRA. For those who do not understand, see your tax advisor; do not give bad advice here.
I went to the kpp and sph web sites and they have a menu item and instructions on how to download the data. Once downloaded it can be imported into TT. I have done this for several years without problem.
The majority of the money that you receive for the first 5 years of ownership is return of principle and is not taxable. Therefore it is not as well suited for IRA's as other investments.
SPH doesnt pay a dividend; Its a distribution; It does not issue a 1099 DIV IRS form; Instead it issues a K-1 Form; Fairly easy to do taxes if you read the paperwork accompanying the K-1:
Basicaly you'll report a partial amount of your total distribution which will be designated 'interest income' or 'dividends' on the K-1; Will prolly also show losses; These do go on your tax form and are carried into the future; Unless SPH showed a big income vs loss for the year; Or you sell your stock which is actually a "unit".
SPH of any MLP held in large amount in IRA's can be a big problem.