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Kinder Morgan Energy Partners, L.P. Message Board

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  • dodah_2 dodah_2 Nov 15, 2012 12:04 PM Flag

    Dividend taxes

    Panic ahead of the tax sh8tstorm even if there are no facts to support it. There's probably a lot more money being lost through panic selling, and paying on deferred income and capital gains than what Obama might concoct (if at all).

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    • One of Cramers bits of wisdom is "panic is not an investment strategy". It's hard to keep your head in a big selloff but time is usually on your side if you sit tight.

    • dans782 Nov 15, 2012 3:14 PM Flag

      Yes, suppose your original cost basis was 40/share. You have owned for 10 years and depleted the basis. Everything going foward is ordinary income. Sell now then reestablish a new basis

      • 2 Replies to dans782
      • "Everything going foward is ordinary income. "
        That's incorrect for a start. Dsitributions in excess of basis are taxed as LTCG.

        And if you owned for 10 years, you'd pay a very significant portion of your proceeds in deferred taxes. So when you rebuy to establish your basis, you'd do so with far less funds, meaning you'd have less units and lower income going forward.

        That idea is a really bad one where your basis is low.

      • "Everything going foward is ordinary income."

        This is not correct. As I understand it, distributions going forward after your basis reaches zero is treated as return of capital, and is taxed at the capital gains rate. Howsoever, were you to sell your entire holding after the basis is zero, then all your deferred distributions are subject to taxation at your ordinary rate, and you also have capital gain between your purchase price and your selling point. Moreover, not all of your ordinary distributions will be taxed as some of it is still sheltered by accumulated, but unused, depreciation. The last point may have to be clarified by a practicing accountant.

    • This entire country has just gone nuts. We will never see our country as it was, once you ave lost it it is gone never to be seen again. We are going down the same road as a lot of smaller countries have gone down and it always results in disaster. I look for roits in the streets to be the next step, sorry to say.

    • i'm more worried about what the republicans will concoct. at least obama is the devil we know because since 2008 he's had the same plan, go back to clinton rates for those making above $200/$250 k. First Romney and now Boehner want to completely overhaul the code and that's where the mlps are at risk of losing their tax status.

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