Excersizing call options to purchase MLP's?
I purchased call options to purchase LINE (an MLP) for a premium of $5 apiece. The option strike price was $24. Suppose the unit price goes to $35, and I excercize the options to buy the units.
Will the MLP record my cost basis as $24 (the excercize strike price), or as $29 (the excersize strike price plus the option premium I paid), or as $35 (the share price at the time of excersize).
The answer makes a huge difference as it determines (1) when the cost basis recorded by the MLP goes to zero and the tax advantage on the distributions runs out, and (2) capital gains tax on the eventual sale of the MLP units.
Any advice would be appreciated.