Read article recommending buying VNR but comes with problems in filing fed tax. Mentioned Schedule K. Are the dividends reported on schedule D or are they reported as return on investment or in some other way.??? Before I take a position I would appreciate any help from current owners.
MLPs do not pay dividends. They pay Distributions, which are not taxable. But there are other things to report as shown on the yearly K-1. You do pay tax on your share of interest earned, but most things are deductible. It is a bit complicated but TurboTax software makes it easy so you can still prepare your own tax return each year.
Back to those distributions: You keep track of them until you want to sell your position. THEN you deduct the total of all distributions you received from your purchace price. That is when you will have a reportable capital gain to report and pay tax on.
amazingly i read two articles people selling MLPs who dont understand them and worry fiscal cliff means dividend take rates going up. makes 0 sense. these are not qualified dividends. they are distributions and when you sell you pay ordinary income tax rates already. silly but opportunity