Enterprise Products Partners LP (EPD)

[pete807]

No worries Pick, good question.

They are not dividends technically, so they are called distributions, which are considered return of capital invested by us as "limited partners"

EPD is one of the largest MLPs (Master Limited Partnerships). MLP's issue K-1 details each year to all owners of the stock, to be used for your accounting. Also shares are not called shares technically, they are units.

Quarterly distributions from the MLP are not unlike quarterly stock dividends. But they are treated as a return of capital (ROC), as opposed to dividend income. So, the unitholder does not pay income tax on the returns. Most of the earnings are tax-deferred until the unitholder sells their portion. Then, the earnings receive the lower capital gains tax rate rather than at the higher personal income rate. This categorization offers significant additional tax benefits.

Additionally if you hold and never sell the original units, when your heirs inherit them they receive a current "stepped up" basis for the stock at the price of that day of inheritance. This is a key advantage for estate transfers. The capital appreciation you would have paid tax on, even at the reduced capital gains rate if you sold during your ownership, will then reset to 0 for your heirs. Read more:

https://www.investopedia.com/terms/m/mlp.asp