I am a new investor to KMP and I keep reading that they don't give a dividend but they give a distribution. What I don't understand is how do you recieve the dist. do they credit your trading account so u can purchase more shares....can someone give me some insite on this..
Rather than a dividend, you get a return of captial. Thus, the longer you own the stock, the lower your basis becomes. This allows you to put off recording of gains/income until you sell the stock. You do get a K-1 as it is an LP.
Right but if you sell or are forced to sell for any reason after holding it many years doesn't that mean you will have a "balloon" tax payment effectively due from all the accumulated income/distributions. That could be a huge tax bill depending even if you get to reduce your basis on the sale.
Perhaps I misunderstood you,but from your posting you just wanted to know how you get your money.It comes the same way as stock dividends cash.As the other poster said dividends are defered which means if you get $3000 distribution,copared to dividends say on an electric company you almost pay no tax on the distribution until you sell,but if you are not familar with partner ships you get a form that is more difficult to comprehend ,but turbo tax or a cpa will make it simple