NRP 20-Year Tax Projection

200 units of Natural Resource Partners at $120/unit — IRS Partner’s Basis Worksheet methodology with full citations.

This tool provides projections based on assumptions. It does not constitute tax, legal, or investment advice. Consult a qualified CPA or financial advisor before making decisions based on this output.

Assumptions for this projection:

  • Position: 200 units at $120 per unit ($24,000 total)
  • Distribution: $0.75/quarter ($3/year), growing at 0.0%
  • Growth source: Mineral royalty MLP (coal, soda ash, aggregates) — NOT midstream. Distributions were suspended 2016-2020 during deleveraging. Special distributions ($0.12-$2.44/yr) cover unitholder tax liabilities. Regular distribution flat since mid-2022.
  • ROC: ~40% of distribution (estimated from historical K-1 data)
  • Federal tax bracket: 32% (Married Filing Jointly)
  • NIIT: 3.8% on investment income above $250,000 threshold
  • §199A QBI deduction: active (20% on qualified PTP income)
  • K-1 entities: 1
  • Operating states: ~10

These are default assumptions based on historical data. For your actual numbers → Enter your position in the Portfolio Simulator

Last computed: 2026-04-03 | Engine: 429 tests passing | v0.1.0

Your broker says

Cost Basis: $24,000

Gain if sold: $23,755

Tax owed: $4,466

The IRS says

Adjusted Basis: $19,200

Actual gain: $28,555

Actual tax: $6,216

⚠ BROKER UNDERSTATES YOUR TAX BY $1,750

Zero-Basis Year

Never*

20-Year Cash Collected

$12,000

20-Year Federal Tax

$2,120

Effective Tax Rate

17.7%

§751 Recapture (est.)

~$8,000

Estimated — actual determined by MLP sales schedule

§1014 Step-Up Savings

$6,216

Basis Erosion — NRP Over 20 Years

Blue line: base case (0.0% growth). Shaded area: sensitivity range.

NRP IRS Adjusted Basis Over 20 Years $0.00 $6,300 $12,600 $18,900 $25,200 1 5 10 15 20 IRS Basis ($) Year

Cumulative Cash vs. Tax — NRP

The growing gap between distributions received and taxes paid is the core value proposition of MLP holding.

NRP Cumulative Cash Collected vs Tax Paid Over 20 Years $0.00 $3,300 $6,600 $9,900 $13,200 1 5 10 15 20 Year $12,000 $2,120 Distributions Received Cumulative Tax Paid

NRP 20-Year Projection Table

Year Distribution K-1 Taxable §731 Gain Federal Tax Ending Basis Cum. Cash Eff. Rate
1 $600 $360 — $106 $23,760 $600 17.7%
2 $600 $360 — $106 $23,520 $1,200 17.7%
3 $600 $360 — $106 $23,280 $1,800 17.7%
4 $600 $360 — $106 $23,040 $2,400 17.7%
5 $600 $360 — $106 $22,800 $3,000 17.7%
6 $600 $360 — $106 $22,560 $3,600 17.7%
7 $600 $360 — $106 $22,320 $4,200 17.7%
8 $600 $360 — $106 $22,080 $4,800 17.7%
9 $600 $360 — $106 $21,840 $5,400 17.7%
10 $600 $360 — $106 $21,600 $6,000 17.7%
11 $600 $360 — $106 $21,360 $6,600 17.7%
12 $600 $360 — $106 $21,120 $7,200 17.7%
13 $600 $360 — $106 $20,880 $7,800 17.7%
14 $600 $360 — $106 $20,640 $8,400 17.7%
15 $600 $360 — $106 $20,400 $9,000 17.7%
16 $600 $360 — $106 $20,160 $9,600 17.7%
17 $600 $360 — $106 $19,920 $10,200 17.7%
18 $600 $360 — $106 $19,680 $10,800 17.7%
19 $600 $360 — $106 $19,440 $11,400 17.7%
20 $600 $360 — $106 $19,200 $12,000 17.7%

IRS Partner’s Basis Worksheet — Key Years

Partner’s Instructions for Schedule K-1 (Form 1065), Worksheet for Adjusting the Basis of a Partner’s Interest in the Partnership, Lines 1–14.

Year 1 — IRS Partner’s Basis Worksheet

Line 1: Beginning Basis $24,000 IRC §705(a) — $24,000
Line 2: Capital Contributions $0.00 IRC §722 — $0
Line 3: Increased Liabilities $0.00 IRC §752(a) — $0 (no liability increase)
Line 4: Income and Gain Items $360 IRC §705(a)(1) — $1.80/unit × 200 units = $360
Line 7: Subtotal $24,360 IRC §705(a) — $24,000 + $0 + $0 + $360 = $24,360
Line 8: Distributions $600 IRC §731 — $3/unit × 200 units = $600
Line 9: Decreased Liabilities $0.00 IRC §752(b) — $0 (no liability decrease)
Line 10: Basis Before Losses $23,760 IRC §731(a)(1) — $24,360 - $600 - $0 = $23,760
Line 11: Loss and Deduction Items $0.00 IRC §704(d) — $0
Line 14: Ending Basis $23,760 IRC §705(a) — $23,760 - $0 = $23,760

Year 5 — IRS Partner’s Basis Worksheet

Line 1: Beginning Basis $23,040 IRC §705(a) — $23,040
Line 2: Capital Contributions $0.00 IRC §722 — $0
Line 3: Increased Liabilities $0.00 IRC §752(a) — $0 (no liability increase)
Line 4: Income and Gain Items $360 IRC §705(a)(1) — $1.80/unit × 200 units = $360
Line 7: Subtotal $23,400 IRC §705(a) — $23,040 + $0 + $0 + $360 = $23,400
Line 8: Distributions $600 IRC §731 — $3/unit × 200 units = $600
Line 9: Decreased Liabilities $0.00 IRC §752(b) — $0 (no liability decrease)
Line 10: Basis Before Losses $22,800 IRC §731(a)(1) — $23,400 - $600 - $0 = $22,800
Line 11: Loss and Deduction Items $0.00 IRC §704(d) — $0
Line 14: Ending Basis $22,800 IRC §705(a) — $22,800 - $0 = $22,800

Year 10 — IRS Partner’s Basis Worksheet

Line 1: Beginning Basis $21,840 IRC §705(a) — $21,840
Line 2: Capital Contributions $0.00 IRC §722 — $0
Line 3: Increased Liabilities $0.00 IRC §752(a) — $0 (no liability increase)
Line 4: Income and Gain Items $360 IRC §705(a)(1) — $1.80/unit × 200 units = $360
Line 7: Subtotal $22,200 IRC §705(a) — $21,840 + $0 + $0 + $360 = $22,200
Line 8: Distributions $600 IRC §731 — $3/unit × 200 units = $600
Line 9: Decreased Liabilities $0.00 IRC §752(b) — $0 (no liability decrease)
Line 10: Basis Before Losses $21,600 IRC §731(a)(1) — $22,200 - $600 - $0 = $21,600
Line 11: Loss and Deduction Items $0.00 IRC §704(d) — $0
Line 14: Ending Basis $21,600 IRC §705(a) — $21,600 - $0 = $21,600

Year 15 — IRS Partner’s Basis Worksheet

Line 1: Beginning Basis $20,640 IRC §705(a) — $20,640
Line 2: Capital Contributions $0.00 IRC §722 — $0
Line 3: Increased Liabilities $0.00 IRC §752(a) — $0 (no liability increase)
Line 4: Income and Gain Items $360 IRC §705(a)(1) — $1.80/unit × 200 units = $360
Line 7: Subtotal $21,000 IRC §705(a) — $20,640 + $0 + $0 + $360 = $21,000
Line 8: Distributions $600 IRC §731 — $3/unit × 200 units = $600
Line 9: Decreased Liabilities $0.00 IRC §752(b) — $0 (no liability decrease)
Line 10: Basis Before Losses $20,400 IRC §731(a)(1) — $21,000 - $600 - $0 = $20,400
Line 11: Loss and Deduction Items $0.00 IRC §704(d) — $0
Line 14: Ending Basis $20,400 IRC §705(a) — $20,400 - $0 = $20,400

Year 20 — IRS Partner’s Basis Worksheet

Line 1: Beginning Basis $19,440 IRC §705(a) — $19,440
Line 2: Capital Contributions $0.00 IRC §722 — $0
Line 3: Increased Liabilities $0.00 IRC §752(a) — $0 (no liability increase)
Line 4: Income and Gain Items $360 IRC §705(a)(1) — $1.80/unit × 200 units = $360
Line 7: Subtotal $19,800 IRC §705(a) — $19,440 + $0 + $0 + $360 = $19,800
Line 8: Distributions $600 IRC §731 — $3/unit × 200 units = $600
Line 9: Decreased Liabilities $0.00 IRC §752(b) — $0 (no liability decrease)
Line 10: Basis Before Losses $19,200 IRC §731(a)(1) — $19,800 - $600 - $0 = $19,200
Line 11: Loss and Deduction Items $0.00 IRC §704(d) — $0
Line 14: Ending Basis $19,200 IRC §705(a) — $19,200 - $0 = $19,200

Sensitivity Analysis

Scenario Growth Year 10 Basis Year 20 Basis Zero-Basis Year 20-Year Tax Eff. Rate
Conservative 0.0% $21,600 $19,200 Never $2,120 17.7%
Base Case 0.0% $21,600 $19,200 Never $2,120 17.7%
Aggressive 2.0% $21,371 $18,168 Never $2,572 17.6%

Sell vs. Inherit in Year 20

If Sold in Year 20

Market Value: $47,755

Adjusted Basis: $19,200

Total Gain: $28,555

§751 Ordinary (est.): ~$8,000

Remaining LTCG: $20,555

Tax on Sale: $6,216

If Inherited in Year 20

Market Value: $47,755

Heir’s Stepped-Up Basis: $47,755

§751 recapture: eliminated

§731 gains: eliminated

Heir’s Tax If Sold: $0

Tax saved by holding until death: $6,216 — IRC §1014(a)

Frequently Asked Questions

What is my NRP basis after 10 years?

After 10 years of holding 200 NRP units, your IRS-adjusted basis drops from $24,000 to $21,600. This is calculated using the IRS Partner’s Basis Worksheet (IRC §705(a)), Lines 1–14, applying 0.0% annual distribution growth and ~40% return of capital.

When does NRP basis reach zero?

At base-case assumptions (0.0% growth), NRP basis does not reach zero within the 20-year projection horizon.

How much tax if I sell NRP after 20 years?

If you sell 200 NRP units after 20 years at an estimated market value of $47,755, total tax on sale is $6,216. This includes ~$8,000 in §751 ordinary income recapture (taxed at up to 37%) and $20,555 in long-term capital gains.

Should I sell NRP or hold until death?

Selling in Year 20 triggers $6,216 in taxes. If inherited instead, your heirs receive a §1014 stepped-up basis of $47,755, eliminating all deferred taxes and §751 recapture. The tax difference is $6,216.

What is NRP’s distribution yield after tax?

The nominal distribution yield is 2.5%. Due to the high return-of-capital percentage (~40%), most of the distribution is tax-deferred. The 20-year effective tax rate on cash received is 17.7%, making the after-tax yield approximately 2.1%.

Should I hold NRP in an IRA?

Holding MLPs in an IRA triggers Unrelated Business Taxable Income (UBTI) under IRC §512. If UBTI exceeds $1,000 in a tax year, the IRA must file Form 990-T and pay tax at trust rates. For NRP with 200 units generating ~$360 in annual taxable income, this threshold may or may not be reached depending on the year. Most MLP investors prefer taxable accounts to preserve the §1014 step-up benefit.

What happens to NRP when I die?

Under IRC §1014(a), your heirs receive a stepped-up basis equal to the fair market value at date of death. For this projection, that means a basis of $47,755 instead of the eroded basis of $19,200. All accumulated §751 recapture (~$8,000) is eliminated. Tax saved: $6,216.

How complicated is NRP’s K-1?

NRP issues 1 K-1 form per year. The K-1 includes state allocation schedules for ~10 states, which may require additional state tax filings depending on your home state’s de minimis thresholds.

Related Tools & Guides

Methodology

Computed using the IRS Partner’s Basis Worksheet, Lines 1–14, from the Partner’s Instructions for Schedule K-1 (Form 1065). Every calculated value maps to a specific IRC section, K-1 box, and tax return form line.

Projection engine: 429 test cases passing, last verified 2026-04-03. Engine version 0.1.0.

Built by Lucas Andersen. Proprietary energy trader and direct MLP holder.

Partner’s Instructions for Schedule K-1 (Form 1065) — IRS Publication 541 (Partnerships)