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Kinder Morgan Energy Partners, L.P. Message Board

dar200 408 posts  |  Last Activity: 1 hour 0 minutes ago Member since: Nov 16, 1998
  • Reply to

    Damaged goods

    by dar200 5 hours ago
    dar200 dar200 1 hour 0 minutes ago Flag

    Is 13% before or after nsam takes 1.5%? I'll assume it is after.

    Start with 210 million shares earning 1.60 = 336 million annualized cad.

    Add about 63 million shares for Griffin @ 1.60 = 101 million

    Assume net net net on 45 million 17.50 per share = 787.5 million of new equity x 13% = 102 million of additional annualized cad.

    So, 336 + 102 + 101 = 539 new annualized cad. 210 + 63 + 45 = 318 new shares. Thus 539 / 318 = 1.695 new annualized cad, a whopping 5.94% increase.

    Almost 1.9 billion of new equity produces a 6% increase in cad assuming neutral for Griffin and 13% for this offering. That ain't gunna cause 100% per year total return like the last two years..

    Buy NRF for tax deferred yield, not stock price increase.
    Buy NSAM for stock price increase, not yield.

  • Reply to

    Damaged goods

    by dar200 5 hours ago

    No. DB (nrf's proxy) borrowed 30 million and sold them to the underwriters for 17.95 per share. The sale to the underwriters did not hit the short sale volume because it was not an open market sale. But it sure as hell was public. All the pros know this "forward sales contract" makes nrf the economic short.

  • Hey Hamo, this is what you get by selling 30 million of your shares short disclosing in the process you do not expect cad per share to increase in over a year.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM

    I defer on the estate tax issue as long as the kids have the power to fire you as manager.

    Over simplified, IRC section 453(g) prohibits installment sale treatment on the sale of depreciable property between related persons unless you can convince the IRS that income tax avoidance was not a principal purpose of the transaction. Thus, the problem can be overcome. This cross references to section 1239 to define related persons.

    I think you may have real problems with section 1239. Don't trust me on this. I'm just reciting my recollection of expert talk on what seems to be a very similar transaction about 10 years ago. I just looked at my notes of a meeting for the cites. Maybe the law has changed since that meeting. I remember the expert saying a sale directly to the kids was ok for capital gain, but a sale to an entity controlled by the kids would result in ordinary income. Seemed like a weird rule to me, so it stuck in my head. I suggest you make a call.

  • Reply to

    OT--where's roger?--OT

    by dar200 Aug 18, 2014 3:31 PM
    dar200 dar200 Sep 17, 2014 10:20 AM Flag

    Thought you were dead without an immediate retaliatory response. Please give someone an envelope to notify us when you die so we won't worry about you being thrown in jail for polluting the river.

    Speaking of dilution, Cananea is getting a huge flushing rain today. Hope those pregnant leach solution dams hold and the rivers get a good flush. Not disclosed yet is how much copper was in the spill.

    Don't forget the capital gain election on cutting timber.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 17, 2014 6:21 AM Flag

    Others mentioned LLC and LLP, not me. I now have no small business or real estate other than personal residence, so I don't need the cost of them.

    Two revocable trusts (no-brainers for privacy/probate/costs) pour into as many trusts as are necessary to result in no estate tax on first death, maximize exemption use with disclaimers , no genskip tax, dynasty trusts to the max allowed. Family trustees (kids and grandkids if appointed by kids) have charitable giving powers, testamentary limited powers of appointment (general if necessary to avoid genskip) with charities as ultimate remaindermen if and when there are no living beneficiaries. No beneficiary trustee has unilateral power to appoint to themselves and no beneficiary has an indefeasible, vested right to anything for divorce protection.

  • Reply to

    Irrational selling

    by illuminati.investments Sep 15, 2014 1:31 PM
    dar200 dar200 Sep 16, 2014 2:52 PM Flag

    OK. I know next to nothing about community property state law.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 16, 2014 9:22 AM Flag

    NO.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 16, 2014 9:18 AM Flag

    lunco: It's much too complicated for here and I am not a tax expert. I suggest you consult with an estate tax expert (not just an attorney, banker or cpa.....a specialist in estate tax) about the risks you are taking by retaining control of the LLC. You might be risking having the entire LLC included in your gross estate.

    Also, if you have been selling depreciable property to the LLC, you have an issue which can be overcome with installment sale qualification (section 453) and have a real problem with section 1239....ordinary income from sale of depreciable property to a related entity. I repeat, I am not expert in the area, but I have been involved with so many transactions I have learned from experts how much I don't know about the tax system. If your current tax advisor has not alerted you to these issues, I suggest a cpa specializing in tax.....not accounting...not auditing, not computer consulting...find one who does nothing but tax. They do exist, but not in small cpa firms.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 15, 2014 6:45 PM Flag

    The cumulative effect of annual gifts over a long enough period of time is never "inconsequential". It may be small relative to the total estate, but never inconsequential. Give away 1 million and save 450,000 of estate taxes pays a helluva lot of estate planning fees.

  • Reply to

    Irrational selling

    by illuminati.investments Sep 15, 2014 1:31 PM
    dar200 dar200 Sep 15, 2014 6:38 PM Flag

    Sorry to rain on your parade, BUT, it looks like you are describing a qualified joint interest. In such a case only half the property gets a step up in basis with the first death.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 15, 2014 4:15 PM Flag

    Been giving the kids the annual gift tax exclusion limit (from 40,000 from 2 donors to 2 donees to 56,000 today) for years and years except 2008. Never underestimate the power of the annual exclusion over many years. Flip gains pay for it resulting in no decrease in the taxable estate.

    Am considering a defective grantor trust (where I pay income taxes) for the kids or an irrevocable trust which is not defective since both kids are under the Obama surtax thresholds, at least for now. In either case, I don't have much low gain assets to give. Am considering more margin debt to give cash. Hard to pick which is best because all depend on future events and tax rates and all are irrevocable. Gotta be well thought out because once done, it's done forever.

    If the above does not answer your question, it's because the answer is none of your business.

  • Reply to

    Irrational selling

    by illuminati.investments Sep 15, 2014 1:31 PM
    dar200 dar200 Sep 15, 2014 4:14 PM Flag

    Splendid for yield. Hamo has told the world he does not expect the price to go up much if at all in the next 6 months. Growing aggregate cad is not a problem. Griffin will do this in a big way. Growing cad PER SHARE is the challenge. Excluding what is done with the current offering, we are looking at 40 cents per quarter through 2015. Consequently, I don't see much price appreciation without Hamo doing something to lower the yield, like the next spinoff.

    For tax deferred yield, buy NRF.
    For price appreciation, buy NSAM. It may take until after spoonfeeding in Nov., but it will come.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 15, 2014 2:50 PM Flag

    At the cost of federal and Rhode Island estate taxes.

    For those without death tax exposure, having appreciated property included in the gross estate (whether or not owned) is a no-brainer. For those with only a state death tax to worry about, it's a calculation of the state death tax cost vs the income tax savings. For those facing both federal and state death taxes, gifts of appreciated property are likely to result in less overall tax to the family than dying with the property.

    Those with lesser wealth don't have to worry about death taxes but they do have to worry about a nursing home taking all their assets before Medicaid steps in. Here, the gift of appreciated property can preserve assets for the kids provided the lookback period (currently 5 years) is met. The cost is carryover basis resulting in income taxes.
    But most families I have talked to about this would rather pay a 25 to 30% income tax than a 100% nursing home tax.

  • NRF....4.431 at 8/29 settlement vs 4.849 at 8/15....down 418K.

    NSAM....1.756 at 8/29 vs 1.685 at 8/15......up 71K.

    Of course nrf above does not include DB borrowing 30 million for the offering. That will show in next report.

  • Reply to

    OT--HCN offering--OT

    by dar200 Sep 12, 2014 9:24 AM
    dar200 dar200 Sep 13, 2014 11:49 AM Flag

    Did not buy any because I bought SUI and NRF.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 13, 2014 11:42 AM Flag

    That's what happens with growing equity reits. The depreciation from new properties offsets increasing rents and declining depreciation on the older properties. The tax deferral becomes permanent as long as sufficient growth continues.

  • Reply to

    Still Misunderstood?

    by martmartymartin Sep 12, 2014 12:00 PM
    dar200 dar200 Sep 13, 2014 11:38 AM Flag

    Good for you. To get the most mileage out of small dollars, take the spouse/friend out to dinner and tell them Sun Communities is paying for it. They love it so much maybe you get lucky after dinner.

  • Raised 507.0 thru 9/11 vs 444.4 thru 8/14 in sup 9. Thus, 62.6 million in 28 days, an average of 2.236 per day.

    Not as good as the 3.76 million per day raised in the 20 days starting with 7/26 thru 8/14, but better than the 1.925 per day for 28 days between 6/27 and 7/25.

    Last report from Income 2 was thru 8/11, so it's harder to estimate the quarter. Nevertheless, it looks to me like 250 for the quarter, continuing a 50 million per quarter increase. If so, by quarter, 150 +200+250 = 600 thru 9/30.
    Raise 300 in 4Q = 900 for year without the rxr startup vs 800 still in nsam budget in Aug slides.

    2 billion RXR registration should be declared effective shortly so they can begin selling in 4Q. Won't be lotsa dollars in 4Q. Important thing is to be out of the start gate before 2015.

  • Reply to

    Load up over 9%

    by dar200 Sep 11, 2014 10:25 AM
    dar200 dar200 Sep 12, 2014 3:13 PM Flag

    For years I have been a yield investor. Still am, BUT current dividends are now so much more than what we spend AND I am losing the battle to keep my AGI below the Obama extra taxes threshold, I don't mind having some low yield growth stock in the portfolio. If I were to switch some NSAM to NRF, it would be in the IRAs because the gains in the taxable account are too big.

KMP
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