KMR - Dividends and Splits

See important Tax Basis Disclosure below.

Disclosure of §6045B, Actions Affecting Basis of Specified Securities

Under IRC §305(a), stock dividends of Kinder Morgan Management, LLC (KMR) are not taxable upon receipt to the stockholder. However, the stock dividend does affect the basis of each individual share held by the stockholder. Under IRC §307(a), the basis of such new stock and of the stock to which it is distributed (referred to as old stock), respectively, shall, in the shareholder's hands, be determined by allocating between the old stock and new stock the adjusted basis of the old stock.

Example 1: A owned 100 units of (KMR) on July 1, 2010 with a basis of $65/share, or $6,500 total. A received an additional 1.8336 shares (100 x 0.018336) of KMR shares on August 13, 2010, giving A a total of 101.8336 shares. A's basis in the old stock of $6,500 would be allocated between A's old stock of 100 shares and new stock of 1.8336. A's basis in the old stock ($6,500) is allocated between the old stock and the new stock. Thus, A's basis in the old stock is $6,383 ($6,500 / 101.8336 x 100) and A's basis in the new stock is $117 ($6,500 / 101.8336 x 1.8336). Therefore, A has 101.8336 shares with a basis of $63.83/share or $6,500 in total.

Subsequent distributions are treated in the same manner.

Example 2: Assuming A in Example 1 still has the units described above on November 12, 2010. A received an additional 1.8171 shares (101.8336 x 0.017844) of KMR shares on November 12, giving A a total of 103.6507 shares. A's basis in the old stock of $6,500 would be allocated between A's old stock of 101.8336 shares and new stock of 1.8171. Thus, A's basis in the old stock is $6,386 ($6,500 / 103.6507 x 101.8336) and A's basis in the new stock is $114 ($6,500 / 103.6507 x 1.8171). Therefore, A has 103.6507 shares with a basis of $62.71/share or $6,500 in total.

Kinder Morgan recommends you contact your tax advisor with specific tax questions. If you have any questions concerning your stock distribution, you may contact Kinder Morgan Investor Relations at 713-369-9490, or via email km_ir@kindermorgan.com. You may also submit your questions in writing to Kinder Morgan, Inc., Investor Relations, 1001 Louisiana Street, Suite 1000, Houston, TX 77002.