Column 6 "State Income Tax" of the 2023 State Schedule for EPD MLP K-1 has a number in each row corresponding to each state in which the MLP does business. For most of the states, the number is "$0" or just a few dollars, and I was wondering what this means. I found the following explanation in the Tax packet:
“In some states, the Partnership is subject to and pays state taxes levied on an entity level basis as opposed to a partner level basis. In such states, taxes payable by the Partnership are treated as state income taxes for federal income tax purposes. The amounts reported in Column 6 represent your share of state taxes treated as state income taxes for federal tax purposes. You may need this information to complete your state income tax return for those states where a deduction is allowed since the state tax expense is not included in Column 1 (Ordinary Business Income or Loss and other income or loss.”
I think what this is saying is that the Partnership (as a whole/entity) already paid state income taxes in these states because these states assess the income tax against the Partnership as a whole, so the unit holders/limited partners do not pay the state income tax individually themselves. (Presumably, so the states make sure to get all the income tax which is owed and do not have to process returns from all the limited partners for small amounts.) The amounts in Column 6 represent my share of the income tax already paid by the Partnership in each state, and is told to me so I can deduct it against my federal income tax if I itemize my deductions. I am not an account or tax specialist, but this is my conclusion.
