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Boardwalk Pipeline Partners, LP Message Board

  • philippians4and13 philippians4and13 Aug 10, 2012 8:38 AM Flag

    BWP tax disadvantages and an alternative with a nice chart yesterday

    BWP investors: You may wish to consider KMR. Not only does the size of the Kinder Morgan family of equities make KMR likely able to refinance more easily when needed than BWP, you also have favorable tax treatment of dividends.

    On favorable tax treatment: KMR pays its dividends in stock. Thus, one incurs no tax until and unless one sells the new stock one gets as the dividend. This is already a great benefit for KMR. If the Bush tax cuts expire, it will be even more impressive of a KMR advantage. It is true a master limited partnership like BWP often distributes by return of capital rather than dividends. But return of capital hurts you when you go to sell the master limited partnership, since your tax basis is reduced. One preserves the full tax basis of the purchase price of KMR, since the distributions by KMR are stock divdends rather than return of capital.

    You might note KMR being up 55% in a sideways market yesterday, on volume that was more than double KMR's normal volume. Also, note it was steady to up in the last hour of trading yesterday, a nice daily chart characteristic (contrast SPY yesterday, for instance).

    If you profit on KMR, please consider donating some to an effective charity. Best wishes!

 
BWP
18.87-0.36(-1.87%)Sep 22 4:02 PMEDT

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