Kinder Morgan offers a reality check on master limited partnerships

Don’t you hate it when that good thing that you hoped would last forever comes to an end?

Many retail investors in Kinder Morgan Energy Partners and El Paso Pipeline Partners are probably feeling that way now that they understand the tax implications of an acquisition by Houston-based Kinder Morgan Inc.

But the warning signs that these master limited partnerships were doomed have been growing for years as the cost of capital grew high and higher, and no tax bill can be put off forever.

That should be the lesson for those who bought MLP units, the term used to differentiate securities in a partnership from shares in a corporation.

The retail investors who are caught off guard, and who may now be forced to pay unexpected taxes or to change their estate planning strategies, should take this as another lesson that nothing lasts forever, and death and taxes will always be certain.
August 20, 2014
Houston Chronicle