A new position!

KMI WAS an MLP recently change to a C Corp in the last year or 2.

KMI was NEVER an MLP.

b&w

No?

https://ftalphaville.ft.com/2015/02/02/2108272/kmi-the-forme…

Rob

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Apparently you have to register to get that link. Her’e another one on KMI.

http://marketrealist.com/2015/04/kinder-morgan-consolidation…

Rob

If I can get $50K or $100K or more in income and defer the taxability of that income (currently about 33%) into the future or maybe forever while leaving the income for me to spend or reinvest FOR MY BENEFIT I wouldn’t worry too much about paying an accountant to do my return.

While I don’t disagree with your premise, there are many alternatives that offer comparable returns without the complexity of requiring a professional tax accountant to complete your taxes (presuming you’re not involved in running a business).

For me, managing an investment portfolio includes managing its tax implications. If my investing style pushed me into needing a tax accountant, I’d question whether I really understand the return implications of my underlying investments.

As Saul pointed out, partnerships involving K-1s are best contained in an IRA. With few exceptions, K-1’s have caused me too many headaches and refilings due either to incorrect guidance or K-1 revisions… and nearly all K-1’s required filing extensions as their delivery seldom occurred before filing deadlines.

Clearly your experience is different. Mine though is cautionary for those who might wander into this unknowingly of its unique character outside of an IRA (or similar) account. I don’t know this particular entity, nor where it falls on the complexity spectrum. Just a “heads up” for the developing investor.

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Rob,

The link you posted goes to a log in page, here’s a different one:

https://www.wallstreetdaily.com/2015/12/31/mlps-kinder-morga…

An excerpt:

Even though KMI is no longer an MLP, it’s still considered a bellwether and is the poster child for the MLP sector.

I guess that means it was an MLP at some time in the past.

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Hi Rob:

Go back to your link that you posted and look at the pre-merger and post-merger organization charts They both refer to Kinder Morgan INC
Kinder Morgan Inc was always a C-Corp and is currently a C Corp and I stand by what I said KINDER MORGAN INC was never an MLP. The subsidiaries they rolled up into KMI were mostly MLPs.

KMI issues a 1099 and not a K-1 and their income is taxable–Big difference.

b&w

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As Saul pointed out, partnerships involving K-1s are best contained in an IRA.

I’m sorry—But MLPs do not belong in an IRA–MLPs are a tax shelter and many tax advantages are lost by placing an MLP in an IRA.

The next issue is does an investor want to buy tax shelters to invest in to make money or not–That’s a different issue.

In 13 years of owning MLPs I NEVER HAD TO FILE FOR AN EXTENSION. My accountant does my tax return. My car dealer repairs my car-My barber gives me a haircut. My hip surgeon replaced my hip. My eye surgeon did my cataract surgery. My plow guy, plows my driveway when it snows- He cuts my grass in the summer.
I support a lot of people including my accountant.

b&w

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Even though KMI is no longer an MLP, it’s still considered a bellwether and is the poster child for the MLP sector.

I guess that means it was an MLP at some time in the past.

No-It means they are wrong. KMI was never an MLP–Here is a link to the KMI IPO prospectus

https://www.sec.gov/Archives/edgar/data/1506307/000119312512…

b&w

Not exactly correct. KMI was formed from the following companies:

Prior to November 26, 2014, the Kinder Morgan group publicly traded companies included Kinder Morgan, Inc. (NYSE: KMI), Kinder Morgan Energy Partners, L.P. (NYSE: KMP), Kinder Morgan Management, LLC (NYSE: KMR) and El Paso Pipeline Partners, L.P. (NYSE: EPB); a merger transaction combined all under Kinder Morgan, Inc.

Anyone buying into a Kinder operation needs to carefully read the prospectus and look at the history of his prior companies - there are a lot of moving parts.

b&w:

In view of your considerable investment success over the years and your readiness to provide advice on MLPs and tax-deferred investments may I ask which ones of your present 8 stocks are MLPs and which ones are tax-deferred.

I understand that some stocks which are not MLPs (and do not require filing of K-1 forms) may have distributions/dividends part of which is ROC and therefore tax-deferred. Perhaps, HASI is one such.

I am now trying to move my investments, which are at present all over the place, towards a portfolio similar to yours if not exactly a copy.

Cheers.
alpha
(PS. I am asking the question here on Saul’s Board as it seems to be topical.)

Last effort on my part with KMI

Not exactly correct. KMI was formed from the following companies:

NO- That’s not true. I owned KMI years ago. It was a corporation and somewhere in 2010-11 or12 Richard Kinder the Founder and head guru took KMI private. (The subsidiaries remained public.) He kept it private for about 2 years and then loaded KMI with a few Billions of dollars of debt and took it public again–Still a corporation then Richard Kinder rolled up all the subsidiaries into KMI.

But that’s history—We should be talking about what is current today and THAT is SAUL’S new investment in a vastly different type of security that requires different thinking. It can be extremely rewarding if you get up to speed. In 2004 I knew nothing about MLP’s I found someone on the message board that sounded like he understood what was the MLP business was and I listened and I learned and I invested and today my portfolio has increased 16 Times and I live completely off the market for the past 13 1/2 years.

Most of the comments today since Saul announced his purchase have been all kinds of personal prejudices as to why you don’t like MLPs. You certainly are allowed to have your prejudices, but don’t poison the water for others that could be interested.

Respectfully submitted
b&w

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“You certainly are allowed to have your prejudices, but don’t poison the water for others that could be interested.”

Well I’m fascinated. Will look into it further.

On a side not, I bought a car from my landscaper, who also plows snow, and his wife cuts hair and her brother is an eye surgeon who’s married to a hip surgeon. So I’m covered there as well. ;).

Lighten up everyone, it’s Friday!!!

Chris

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Hi Alpha:

I own 3 MLPs-ETE EVA and MPLX
I own 2 REITs-HASI and NRZ
I own 1 BDC-ARCC
and 2 CEF’s (Closed End Funds) GAB and UTF

HASI announced the 2016 dividend tax treatment at 100% tax deferred

https://finance.yahoo.com/news/hannon-armstrong-sustainable-…

In 2014 it was 90% deferred- In 2015 it was about 75% deferred- Now in 2016 100% deferred and they just increased their distribution to $0.33 per quarter and it was just paid in Early Jan

All MLP Distributions are TAX Deferred and should be held in taxable accounts. Their might be some income on some K 1’s that is reportable some years but usually it is a minor amount
ARCC-NRZ is taxable so I keep it in an IRA

GAB I believe was about 26% tax deferred I keep most of the GAB and all of the UTF in IRA’s

Download a MLP Primer from Google and read every page and every word on it to get the full benefit of the investment if you seriously are interested. Otherwise you will be wasting your time because there is a lot of negative feedback out there. You can take advantage of the negative feedback because every person that is discouraged from investing in MLPs is one less competitor buying and gives you the opportunity to buy cheaper

Best regards
b&w

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b&w:

You just said (as you have done before), “In 2004 I knew nothing about MLP’s I found someone on the message board that sounded like he understood what was the MLP business was and I listened and I learned and I invested and today my portfolio has increased 16 Times and I live completely off the market for the past 13 1/2 years.”

According to your portfolio as you detailed at Post #24405 on this BOARD you have now effectively only 6 stocks as UTF is only 1.00% and NRZ 0.2% of the portfolio. I am trying to find out how much of your total dividend/distribution income is tax-deferred as I asked in my earlier post. Unless you have omitted to mention some important information, the deferred income seems to be only a small part of your portfolio income.

If the purpose of your messages is not just to talk about the history of your success (which is very laudable) but to help others to achieve similar results, then please let us know how you defer tax on a large part of your income. Knowing Buffet also does the same (as you mention time and again) does not help investors like me who do not have enough background knowledge.

Hope you do not take it as an adverse comment or out of place.

Many thanks in anticipation.
alpha

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It is an MLP(Master Limited Partnership) and issues a K-1 which IMHO is a POSITIVE and not a Negative.

In my very amateur understanding it eliminates the double taxation of the company paying taxes on its profit and you paying taxes on what’s left that they distribute…

Saul

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I have to ask. If someone were to in 13 years grow their portfolio 16 times, is that not the equivalent of taking 100,000 and turning it into 1.6 million? Wouldn’t that be about 60% plus a year?

If you did that with MLPs then please teach me, I’m all ears.

Chris

If someone were to in 13 years grow their portfolio 16 times, is that not the equivalent of taking 100,000 and turning it into 1.6 million? Wouldn’t that be about 60% plus a year?

Chris, If you were growing 60% per year you’d be above 16 times in just six years! In 13 years you’d be up over 250 TIMES. (Pull out your calculator and try it. It will only take a minute or two).

Saul

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Alpha:

This might help
about 1/3 of my portfolio is in IRA’s and 2/3 is in taxable accounts All income in IRA’s is tax deferred

All MLPs are in Taxable accounts and are tax deferred (About 62% of assets) Their might be some reportable income on an MLP K-1.
Some Some HASI (100%) deferred-Some GAB (About 26% deferred in 2015) and some ARCC (unknown deferred) are in taxable accounts.

I would guess that 90% to 95% of all income is in some way tax deferred.

The big problem I have is my biggest taxable event is the RMD’s I have to take out of my IRA’s due to age each year. And it keeps growing. This year I had to withdraw 29% more than last year. I was able to increase my income 24.9% in 2016 over 2015

If the purpose of your messages is not just to talk about the history of your success (which is very laudable) but to help others to achieve similar results, then please let us know how you defer tax on a large part of your income. Knowing Buffet also does the same (as you mention time and again) does not help investors like me who do not have enough background knowledge.

I think you will find as you dig deeper into the numbers that there really is no magic. Basically wherever possible a taxable dividend paying stock belongs in an IRA, and A tax deferred income security (MLP’s) belong in taxable accounts. As i said before, Excess income is dripped into additional shares/units to cover inflation and increasing taxes

b&w

Hi Saul:

In my very amateur understanding it eliminates the double taxation of the company paying taxes on its profit and you paying taxes on what’s left that they distribute…

Not true. MLP distributions are considered ROC and aren’t even listed on the 1099. The distributions are deferred until you sell—And if you don’t sell they stay deferred. Thats why I don’t sell. I’m better off riding an appreciated MLP down and keep receiving the distributions and dripping them into additional units for more tax deferred income Don’t believe me–Call your broker and speak to a knowledgeable person in the tax department and ask how are MLP distributions handled and reported.

b&w

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Chris:

One of the posts i wrote this evening I posted a link to read an MLP Primer to learn about what MLPs are. I am sure you didn’t read it because it was 67 pages long. What did you hope to accomplish by trying to figure out what I made? If I was you and I was seriously interested I would have downloaded the PRIMER and started to read. You appear to be playing games and I happen to be serious. I make a living by investing in the market, so I am very serious.

b&w