Reorganization could be costly for long-time Kinder Morgan Partners' owners

|About: Kinder Morgan Energy Partne... (KMP)|By:, SA News Editor

For owners of Kinder Morgan Partners (NYSE:KMP) worried about the coming tax bill as their units become absorbed into Kinder Morgan (NYSE:KMI), the harsh reality is that the longer they have benefited from reaping years of KMP's excellent returns, the worse they'll fare when tax time rolls around.

Ethan Bellamy, an MLP analyst with Robert W. Baird, estimates investors who acquired units during 1992-2000 could owe $24.04-$25.22 per unit, investors who acquired units during 2001-10 could owe $10.78-$23.72, and investors who got their units during 2011-13 could owe from $4.62-$7.13.

What's more, there's very little unitholders can do about it; while "death is the best tax planning for MLPs," the coming reorganization counts as a taxable sale, with KMP investors slated to receive $10.77 in cash and 2.1931 shares of the new firm for each unit they currently hold.