I receive a dividend from Sunoco and comes through as a Partnership Distribution, how do I handle this?

[TomYoung · Accepted solution]

Sunoco is a Master Limited Partnership, not a corporation, and accordingly does not issue "dividends."  Distributions from partnerships most commonly are treated by a recipient as a reduction of their basis in their partnership units.  Sunoco makes this clear in their registration statements:

"Distributions by a partnership to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him is in excess of the partner’s adjusted basis in his partnership interest."

Partnerships pay no taxes.  Instead they act as "pass through" entities and pass through their income and expenses to their partners so that individual partners can incorporate this information in their own income tax returns.  This information comes to you on a Schedule K-1.  Sunoco has not yet prepared their own Form 1065 and the related Schedule K-1's and you are not in a position to finalize your own income tax return until you receive your Schedule K-1.  Apparently Sunoco tries to mail out their Schedule K-1's in mid-March.

You might want to read through Sunoco's FAQ's here:

http://www.sunocolp.com/investor-relations/investor-resources/faqs/default.aspx

Tom Young