A master limited partnership (MLP) is a publicly traded business structure that offers the unique tax characteristics of a partnership, combined with the liquidity of a publicly traded security. MLPs are most commonly found in the energy sector, particularly in industries related to oil and gas pipelines, natural resources, and energy infrastructure.

You can buy and sell MLPs with Robinhood similar to how you purchase a stock or ETF. However, depending on your unique situation and residency, there may be certain tax withholding requirements.

Master limited partnerships generally don’t pay corporate taxes. Instead, they pass all of their income, capital gains, deductions, and losses through to their owners (anyone who buys shares in an MLP). US resident owners will receive a Schedule K-1 form.

Nonresident aliens (NRAs) are subject to increased US withholding tax on US-sourced income derived from MLP investments, which will be reported on a Form 1042-S.

These withholding rates are specific to NRA customers only and are applied to ensure compliance with US tax regulations. An NRA is an individual who is not a US citizen and doesn’t meet the criteria of the Green card or Substantial presence tests to qualify as a US resident for tax purposes.

The MLP tax withholding applies to NRAs as follows:

• MLP income distributions are subject to a 37% tax withholding rate
• Certain MLP distributions may incur an additional 10% withholding tax
• MLP sale proceeds are subject to a 10% withholding rate

If you hold or sell MLP securities, we recommend reviewing your portfolio and consulting with a tax advisor to understand how this may impact your taxes.

Robinhood doesn't provide tax advice. For specific questions, consult a tax professional.

Reference No. 4037145