High Yield Dividend Trap: Why MLPs and "Schedule K-1" Ruin Your Taxes

Описание: You bought a pipeline stock for the 8% yield. But come tax season, you didn't get a 1099—you got a Schedule K-1. Now you face a "Tax Bomb" upon sale and a hidden tax (UBTI) if you hold it in an IRA.

As The Finance Observer, I’ve performed a forensic review of the Master Limited Partnership (MLP) tax structure. In this video, we dissect why MLPs delay your tax filing until March (or April), the difference between "Return of Capital" (Tax Deferred) vs. "Recapture" (Ordinary Income), and why Box 20 Code V on your K-1 is a red flag for your IRA.

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FORENSIC BREAKDOWN:

0:00 The "Late Form" Trap: Why Schedule K-1s arrive in March

1:40 The Structure: Partner vs. Shareholder (Pass-Through Entity)

2:40 The "Tax Bomb": Return of Capital lowers your basis to $0

3:50 The Recapture Trap: Paying Ordinary Income tax on sale (not Capital Gains)

4:20 IRA Warning: Unrelated Business Taxable Income (UBTI) explained

5:00 The Silent Tax: Why your broker files Form 990-T and takes money from your IRA

6:00 The "Silo Rule": Why MLP losses cannot offset other gains

DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. K-1 tax reporting is complex; always consult a qualified tax professional.