KMI Acquisition of KMP, KMR and EPB
Frequently Asked Questions (FAQs)

Q: When did the transaction close?
A: The transaction closed on November 26, 2014.

Q: Will Kinder Morgan representatives be able to help further with my tax-related questions?
A: If you have tax related questions, please contact a tax advisor familiar with the way MLP’s are taxed. Kinder Morgan’s investor relations department is not staffed by tax personnel and will not be able to provide tax advice.

Q: What is the expected U.S. federal income tax consequences resulting from the transactions, how will the transaction affect my taxes?
A: – KMR: the exchange of KMR for the transaction consideration is not expected to be taxable.
– KMP or EPB: the exchange of KMP and EPB units for the transaction consideration is considered a deemed sale of your partnership units.
- A U.S. holder of KMP or EPB will generally recognize capital gain or loss on the receipt of KMI common stock and cash in exchange for KMP or EPB units. However, a portion of this gain or loss will be taxed as ordinary income or loss. Passive losses that were not deductible by a U.S. holder in prior taxable periods may be available to offset a portion of the gain recognized by such U.S. holder.

Q: What tax documents will I receive after the close of the transactions? When should I expect to receive a K-1?
A: The transaction closed November 26, 2014.
-KMP and EPB unitholders - will receive a final Schedule K-1 and supporting materials (expected to be delivered in mid to late February 2015). You can expect to receive a Schedule K-1, a Transaction Schedule, a Sales Worksheet, and a State Tax Schedule as part of that package.
-KMR shareholders - will not receive any tax documents as a result of the KMR transaction, except in connection with cash received in lieu of a fractional share of KMI common stock which would generate a 1099 from your broker.

Q: How do I calculate the taxes on the cash portion of the transaction?
A: The result of the transaction is a deemed sale of your KMP or EPB units on 11/26/2014. Your taxable gain is based on the total consideration received (both cash & stock). The sum of the cash received and stock value received ($41.535 times KMI shares received) equals the deemed “sale price” of your partnership units.

Q: What will my basis be in my new shares of KMI?
A: -KMP and EPB – A U.S. holder’s tax basis in any shares of KMI common stock received in the KMP transaction or the EPB transaction will equal to $41.535.
-KMR – A U.S. holder will have basis in the shares of KMI common stock equal to the tax basis of the KMR shares surrendered by that holder. In other words, carry over basis from your KMR shares.

Q: Will Kinder Morgan file form 8937 for the KMP or EPB transaction?
A: Form 8937 is filed by a corporation that takes an organizational action that affects the basis of that security. Since KMP and EPB are partnerships and not corporations, they will not be filing form 8937. However, KMP and EPB unitholders who received KMI shares in this transaction will have a basis of $41.535 per KMI share.

Q: Why are my KMP or EPB units or KMR shares no longer trading?
A: If you held KMP, EPB or KMR, your units or shares were converted into the transaction election you received. Kinder Morgan purchased KMP, KMR, and EPB. If you were a holder of KMP, KMR, or EPB, you are now a holder of Kinder Morgan Inc. (KMI) which is a publicly traded C-Corp similar to Exxon or Apple and generates a 1099 from your broker not a K-1.

Q: What consideration did I receive for my KMP units, KMR shares or EPB units?
A: Holders of KMP, KMR, or EPB would have received the following consideration for each unit or share owned at the effective time of the transactions:
- KMP – A KMP unitholder was able to elect one of the three following consideration options:

  1. All-stock – 2.2264 KMI shares and $9.5414 in cash per each KMP unit (this election had a pro ration adjustment)
  2. All-cash - $91.72 in cash per each KMP unit without interest
  3. Mixed Consideration - 2.1931 KMI shares and $10.77 in cash per each KMP unit

-KMR – 2.4849 shares of KMI common stock per each KMR share
-EPB – An EPB unitholder was able to elect one of the three following consideration options:

  1. All-stock –1.0527 KMI shares and $0.6802 in cash per each EPB unit (this election had a pro ration adjustment)
  2. All-cash - $39.53 in cash per each EPB unit without interest
  3. Mixed Consideration - 0.9451 KMI shares and $4.65 in cash per each EPB unit

Q: Will KMI continue being a corporation that generates an IRS Form 1099?
A: Yes, the surviving entity will be Kinder Morgan, Inc. (KMI), a Delaware corporation, which is classified as a corporation for U.S. federal income tax purposes. KMI shareholders will receive an annual IRS Form 1099-DIV pertaining to their dividend income (or IRS Form 1042-S if the KMI shareholder is a non-U.S. person).

Q: Can I access the Registration Statement, Proxy Statement / Prospectus and other documents filed with the SEC by KMI online?
A: These materials, as filed with the SEC, are available online at www.sec.gov and on Kinder Morgan's website at www.kindermorgan.com (click on “Investors”, “KMI” and then “SEC Filings” if you know which SEC document for which you are specifically looking). Alternatively, you can look on the left-hand side of this webpage for Proxy Statements / Prospectus and other transaction-related documents.

Q: Will I receive dividends after the transaction?
A: Yes, KMI has paid in the past, and intends to continue to pay, quarterly cash dividends to its stockholders. In fact, management has stated it intends to target a KMI dividend of $2.00 per share for 2015 and expects to grow that dividend by 10% each year from 2015 to 2020. The amount and timing of past dividends paid is not a guarantee of any future dividends, the amount, the payment, timing and amount of which will be determined by KMI’s board of directors and depend on KMI’s cash requirements, its financial condition, contractual restrictions, legal and regulatory considerations and other factors.

Q: What type of dividend does KMI pay?
A: KMI is classified as a corporation for U.S. federal income tax purposes. A distribution of cash by KMI to a stockholder who is a U.S. holder will generally be included in such U.S. holder’s income as ordinary dividend income to the extent of KMI’s current and accumulated ‘‘earnings and profits’’ as determined under U.S. federal income tax principles. A portion of the cash distributed to KMI shareholders by KMI after the transaction may exceed KMI’s current and accumulated earnings and profits. Distributions of cash in excess of KMI’s current and accumulated earnings and profits will be treated first as a non-taxable return of capital reducing a U.S. holder’s adjusted tax basis in such U.S. holder’s shares of KMI common stock and, to the extent the distribution exceeds such stockholder’s adjusted tax basis, as capital gain from the sale or exchange of such shares of KMI common stock.

Final Results of the Merger Consideration:

KMI
KMP
EPB
KMR

KM Consideration Calculator