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Kinder Morgan: Triple Threat



June 22, 2011 – Comments (0) | RELATED TICKERS: KMP.DL , KMI , KMR.DL

Kinder Morganis a large and successful company. With their three different partnerships, it give you a few different choices when it comes to investing in their company. Dividend Growth Investorbreaks down the Kinder Morgan partnerships and explains the three ways you can invest.


 "The first is by purchasing the limited partner units traded on the NYSE as Kinder Morgan Energy Partners under the ticker KMP. These are limited partnership units, which generate K-1 tax forms to unitholders. Most of the distributions which investors receive on a quarterly basis represent a return of capital, which means that it is not taxable unless investors decide to sell their units or unless their cost basis drops below $0. This return of capital reduces the cost basis of investors. The lower cost basis would trigger capital gains when units are sold. When the tax basis drops below $0, any distributions are taxed as ordinary income.


 The second is by purchasing the LLC units traded on the NYSE as Kinder Morgan Management under the tickerKMR. KMR is a limited partner in and manages and controls the business and affairs of KMP. KMR has no properties and its success is dependent upon its operation and management of KMP and KMP’s resulting performance. The only asset that KMR owns is KMP shares. Investors in KMR do not receive cash distributions, but receive shares proportional to the ownership interest they have in the stock. The cash distributions for KMP and KMR are equal, the only difference is that KMR distributions are paid in the form of additional shares."


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