A Master Limited Partnership (MLP) is a publicly traded partnership (PTP) that combines the pass-through tax status of a partnership with the liquidity and trading convenience of a public stock. Under IRC §7704, “Certain publicly traded partnerships treated as corporations”, a partnership can maintain public listing without entity-level taxation only if it derives at least 90% of its gross income from qualifying sources. These sources are contractually defined to include the exploration, development, production, processing, refining, transportation, or marketing of natural resources, minerals, or timber. Consequently, the MLP universe is highly concentrated in midstream energy infrastructure assets (e.g., interstate pipelines, storage terminals, and processing facilities).
Direct investment in MLPs (e.g., Enterprise Products Partners L.P. (EPD), Energy Transfer LP (ET), Cheniere Energy Partners, L.P. (CQP), AllianceBernstein Hldg. LP (AB), MPLX LP (MPLX)) provides exposure to infrastructure cash flows, but introduces complex tax filing requirements and severe structural hazards for tax-exempt retirement wrappers.
Verify historical yields and asset sizes using tools like Yahoo Finance MLP Listings and Sure Dividend MLP Database.