If a partnership sends you back your money, no wonder you dont have to pay tax on it. You arent earning anything. You only have to "recapture" or recognize earnings and therefore taxes once all your money has been returned to you.
I thought you'd find this writer very interesting. He certainly opened my eyes.
First - To my knowledge and that of several large acctg firms there has never been any tax paid on sale within an IRA for MLPs. If you go in for an audit on a sale outside an IRA (I have twice) you will get an agent and a specialist who are trying to read the applicable tax code. Then if you are up to snuff you read thenm another section that contradicts the first part. The IRS deals with very few cases regarding MLPs. The laws are confusing and the UBTI issue is in conflict with several other sections in the tax code. My suggestion is to simply move on.
As to the letter I obtained, it was agreed that it applied only to me and my specific case. It could not be used as a precedent for case law.
The only problem is the author is incorrect. When you sell a MLP inside an IRA according to the IRS ruling I have you are not subject to UBTI on the sale. This has been much debated at Investor Village. If you have a question ask the IRS for a written opinion.