Sale of Master Limited Partnerships (MLPs)

logoLast year, the master limited partnership Kinder Morgan Energy Partners (KMP) was purchased by the corporation Kinder Morgan, Inc. (KMI). There are tax consequences to this sale.

The proceeds from this sale could have been paid out in three ways: common stock in KMI, cash, or a combination of the two. Regardless of how you received the compensation for your KMP units, the tax implications are the same.

In order to determine the taxability of the sale, you will need to know your basis in the units you owned. Your financial advisor will be able to run a report showing all units purchased. Be sure you include any distributions from KMP that you reinvested.

There will be three components of gain or loss from the sale of KMP units: capital gain, ordinary gain, and ordinary loss. All of these hinge on your basis in the units and how you reported income or loss from KMP on your tax return for each year you owned any units.


 

We would be happy to discuss any question you have on the taxability of the KMP sale or anything else. Place call the office at (314) 993-4285 at any time or email us at office@hkaglobal.com.

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