The important point is about unrelated business taxable income (UBTI). There is no UBTI on a 1099 while the K1 must recognize this item. The tax is 50% of the amount of this income and requires the custodian must file the tax form and pay the tax out of the IRA. This must be paid by the IRA in the year the UBTI was received if a taxable amount. If owning a small amount of stock in an MLP it is unlikely that this amount will exceed the first $1000 of exclusion for this tax, but it is accumulative among all MLP's owned by an IRA, so it makes sense to use the LNCO vehicle in an IRA or an MLP fund that is not itself an MLP. Also, if there is a loss on the K1, it may be important to file the special tax form for the IRA since this loss will offset all or part of a future year UBTI. It is more trouble than it is worth for the average investor. Note I hold CODI in my IRA's and it is subject to this tax but it has never been a problem and the advantages of holding in my IRA offsets the possibility of UBTI which I believe is less likely in a business development company partnership.