How are MLPs different from a corporation?
A corporation is a legal entity, separate from its shareholders and employees. The entity has liability for all obligations of the corporation. The shareholders contribute capital, but have no liability to creditors, taxing authorities, or other parties that may have a claim against the corporation. The corporation is also treated as a separate entity for tax purposes and must pay taxes on its income. If there is any income left after corporate taxes, capital investment and other uses, it may be passed on to the shareholders in the form of dividends. Shareholders then pay taxes on the dividends they receive. Since the dividends passed on to shareholders have been taxed once at the corporate level and once at the shareholder level, it is said that corporate income is “double taxed.” A MLP is not considered a separate entity, but rather is an aggregation of all of the partners. However, as with shareholders in a corporation, limited partners have no liability to creditors or other partie
