What is tax shield?
The distributions from LINN Energy are normally return of capital and tax-deferred through reduction of basis in your units. For example, if the allocated taxable income reflected in your Schedule K-1 is $200 but you received a $1,000 distribution, you will only be currently taxed on the $200 taxable income amount reported on the Schedule K-1. The remaining $800 distribution will be shielded. Therefore, you have a tax shield of 80 percent.
