mtks for your infmtn on how the tax is handled for eep. i have been wanting to buy eep for a long time but the tax consequence always inhibited me until your xplanation. i do have a question and hope you will answer it: if, as you say, the tax is deferred until the cost basis is zero or the year when sold, will the distributions be taxed as ordinary income?
You receive a K-1 each year from the partnership with instructions to visit their website during the tax season, and they step you through how to report the income. Footnote was correct that you are taxed the pro-rata share of income from the trust but in most years it has been a deduction rather than income due to depreciation. This should be the case in the near future because of the massive infrastructure investments EEP has made in recent years. If you keep the stock and the basis is 0, you report the distribution income as a capital gains distribution which I understand is treated as long term capital gains at a maximum of 15% federal tax. I'm not a CPA so take my information as just an opinion.