Investing in Partnerships - KMI Buyout of KMP and EPB
Laurie Frederiksen on
For any who want further reasons for not investing in partnerships, I ask you to talk to clubs that still thought it was fine to purchase shares in KMP and EPB. They are both being converted from partnerships in a reorganization action taken by their parent KMI.
The good news is that KMI is not a partnership so it is not an investment that will cause problems going forward.
The bad news is that the transition will be very rough for the clubs tax wise since it is treated as if the shares in KMP and EPB are sold. The WSJ has a great overview of the tax issues of this:
The bottom line is that there are big and complicated tax consequences the holders of these shares will be facing.
Handling them correctly is beyond the scope of the services we provide. And don't assume you are immune if you own these or any other partnerships in personal accounts. I'd highly recommend you read the information at the link above. These investments are not really as advantageous as they appear if you factor in the costs of handling their tax issues and only look at the percentage return you get from their "distributions".
Again, I remind everyone to check our "Before you Invest" page prior to purchasing so you don't get into investing in a partnership by mistake. We're also glad to look up a ticker if you are considering purchasing something and are not sure if it is a problem. We want to help you stay away from problems ahead of time.
Unfortunately, it doesn't help much to email us after the fact. At that point you are already mired in the tax mess and all we'll be able to do is to help you minimize your issues by recommending that you sell it as soon as possible.
Laurie Frederiksen Invest with your friends! www.bivio.com