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Brookfield Infrastructure Partners L.P. Message Board

  • rlp2451 rlp2451 Mar 30, 2013 11:02 AM Flag

    BIP Distributions All Taxable?

    Got my K-1 today.

    I didn't notice this last year, but:

    Lines 5 and 6a equal the amount of distributions. Both add to my tax burden.
    There are no offsets.

    Is this correct?

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    • I guess I'm not alone. Lines 5 and 6a equal MORE than my distributions. I think it's because I sold everything in BIP(bought back at a lower price). I know I have to pay tax on the capital gains, but I also think past distributions now become taxed. I just turned everything over to a tax guy. Did you sell any of your BIP in past year? If not, then I'm thinking maybe this stock belongs in an IRA. Tom

      • 2 Replies to kempstom
      • The website is more clear, and suggests that it is suitable for an IRA. None of the distributions are ROC.

        Which is OK, just that the distribution isn't tax deferred, and you have the hassle of dealing with a K-1.

      • Unless you have held for a rather short time, selleing and re-purchasing at a lower price will generally be counterproductive because those past distributions are now taxed at ordinary income rates. So after you take into account the tax you will now have to pay you may well have increased your cost basis (ie. now have a smaller position, or if the same size position have had to pay extra money (in the form of tax) to maintain the same size position). Which means that your net yield on cost may be less than before.

        I don't know the specifics of the BIP K-1 since I have only played options on it, never owned units. However the only slight compensation for the high lines 5 and 6 amount would be that they raise your cost basis and so may partially offset that tax you have to pay on sale (assuming the K-1s for earlier years had the same pattern).

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