Lance ---
I never want to turn this thread into a stock pickers platform... but your question is the difference of how a stock is handled -- tax wise and therefore fits this thread because it is an important aspect.
KMI -- OWNS KMP (actually I think MANAGING PARTNER) is the correct description. As such KMI gets its "income" via an agreement with KMP. It is therefore a "stock" - with normal capital gains and dividend treatment.
KMP -- Is an MLP (Master Limited Partnership) -- and as such spins off it's income/profit back to the "partners". The "distributions" (not dividends) are treated as a RETURN OF CAPITAL. So this is a special tax treatment. And therefore are TAX ADVANTAGED.
I've said it here before - that there's no reason to own tax advantaged stocks or investments inside an IRA or ROTH etc.
Most "Limited Partnerships" are not very liquid. For instance - I own apartment complexes that are set up as partnerships. The Managing Partner is the operator - the "investors" have little control of how things are run or when the buildings might be sold and so on. I would have a hard time getting my money out of this type of investment. The MP might sell in next week - or maybe 20 years from now. Even as the largest investor - I would have little say so. I'm in for the ride.
An MLP traded on the stock market is LIQUID - since they're publicly traded and you can get in and out. But the tax advantage remains the same.
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