Final Transcript	

	

Conference Call Transcript

WPC - W. P. Carey & Co. LLC Participating in The Coalition of Publicly Traded Partnerships Conference Call

Event Date/Time: Jan. 11. 2005 / 2:00PM ET
Event Duration: N/A

CORPORATE PARTICIPANTS
 Mary Lyman
 Coalition of Publicly Traded Partnerships - Executive Director
 Linda Carlisle
 White & Case LLP - Partner
 Jerry Jones
 PriceWaterhouseCoopers

CONFERENCE CALL PARTICIPANTS
 Bradley Pete
Analyst
 Adam Rosenthal
Analyst
 Sam Arnold
Analyst
 Paul Reicher
Analyst
 Stuart Stinson
Analyst
 Gideon Moore
Analyst
 Ronald Londe
 A.G. Edwards & Sons - Analyst
 David Foster
Analyst
 Brad Kinkolar
Analyst
 Malcolm Day
Analyst
 Paul Krug
Analyst
 David Berkowitz
Analyst
 Donnie Morten
Analyst
 Chris Gretchel
Analyst
 Robert Manly
Analyst
 Kim Allen
 Kinder Morgan, Inc. - VP-IR, Treasurer
 Steve Single
Analyst
 Gina Lacrosse
Analyst

PRESENTATION

Operator 

 Thank you for holding and welcome to your conference call today with your host Mary Lyman. At this time, your lines are in a listen-only mode. We will open it up for questions a little bit later, at which time I will give instructions for the Q&A. Ms. Lyman, I will be turning the call over to you and thank you for using Sprint.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Thank you. Good afternoon, everybody. Welcome to the Coalition of Publicly Traded Partnerships' very first webcast and conference call. We're hoping that this will be a successful event that we will repeat in the future.

I am Mary Lyman. I'm the Executive Director of the Coalition, and I have with me today Linda Carlisle of White & Case, who is a former treasury official and an expert in the tax questions that we're going to be addressing. I also have on the line Jerry Jones and Todd Reilly (ph) from PriceWaterhouseCoopers. They do the processing of K1 forms for the partnership and they will address any questions related to that.

As the operator indicated, I'm going to walk through the presentation first and then open it up for questions. I going to start with just a very basic information on what publicly traded partnerships are, who they are and how they work and we will continue from there.

Okay, what is a publicly traded partnership you may be wondering. The simple answer -- it is just a partnership which trades on the public exchanges or on the over-the-counter market. Instead of shares of stock, what you have is a partnership unit. The tax code has a slightly more detailed definition; it is any partnership which actually is traded or if the interests are readily tradable. Most people think of a publicly traded partnership in terms of the master limited partnerships or MLPs. However, there are also some entities, classes, publicly traded partnerships which are LLCs, limited liability companies, and these are LLCs which have chosen to be taxed as partnerships and which are traded. We've two of them in the Coalition, Copano Energy LLC and W.P. Carey & Company. W.P. Carey is a real estate partnership.

Because of a law passed in 1987, only certain kinds of partnerships can be publicly traded without being taxed as corporations. This is how they are defined in the tax code -- it is partnerships that earn 90 percent of their income from these sources -- interest, dividends, real estate rents, sale of real estate, commodities and natural resource activities. Basically, this means that, as you will see, of the 48 publicly traded partnerships that we are aware of that are trading right now, the lion's share are engaged in energy-related activities; 31 are currently engaged in transportation primarily through pipeline, processing, gathering, marketing, distribution, etc., of oil and gas products, crude oil, refined petroleum, natural gas, natural gas liquids, propane.

The other big area where you still have a lot of publicly traded partnerships is in real estate. However, those have become fewer in proportion to the energy partnerships, so we have five that are in actually owning real estate properties, three that are in real estate through investment in mortgage securities, we have three that own coal mines that are selling to the energy sector, and then there are some miscellaneous ones. You can see, on this pie chart, sort of how they break down graphically; you can see that the transportation and distribution processing, etc., of the oil and gas-based products is at this point by far the largest number of PTPs. The real estate ones are the next biggest chunk and then the rest fall out from there.

This is kind of a busy table and I'll won't belabor it but the point of it is that while the energy related ones are -- they are not only the biggest in numbers but they go far beyond their simple numbers in their contribution to PTP market capital assets and revenue. They are about 85 percent of market capital and assets and well over 95 percent of the revenue that came in last year. This is based on market capital as of the end of last year, December 31, and the assets and revenue as of the first three quarters -- since obviously we do not have the year-end figures in yet. This shows the same thing graphically. We have about, overall, about 53 billion in market capital for the publicly traded partnerships that we know about, about 55 billion in assets and about 50 billion in revenue earned during the first three quarters. Again, you can see that the energy, oil and gas product sector is overwhelmingly the largest on those.

Okay, why would an investor wants to invest in PTP? PTPs offer investors some of the best features of investing in stock and investing in a more traditional partnership. Like any partnership, PTPs pay no corporate tax. This leaves them more cash to distribute to investors. For most of the PTPs, they pay out cash distributions quarterly. As in any partnership, you, the investor, gets a pass-through of the tax benefit such as depreciation and can deduct that against his share of partnership income. Light corporate stock PTPs are units. Liquid by definition, PTPs units are publicly traded, unlike a more traditional partnership where you would have to put in 10 or $20,000 and stay in there for a number of years.

The more complicated aspect of being an investor in a PTP is taxation. Like any partnership, a PTP is not taxed at the entity level. The investor in a PTP is a limited partner and takes all of the partnership income and deduction items into account when he figures his taxes, so the partnership pays no tax on its income. The tax floats the -- all of the income items and loss items flow through to the investor and the income is allocated for tax purposes but does not (indiscernible) receive in cash; he only sees it on paper a share of the partnership income, capital gain, deductions, capital losses. Instead of receiving a 1099 as you would if you were a corporate shareholder, you receive a K-1, which reports on all of these items. Then you net the items and you pay the tax on your share of the partnership's net home. This, of course, is very different from investing in a corporation where the Corporation pays the tax on its income.

The quarterly tax distribution is not taxed; it is treated as a return of the investor's capital investment. What it does is reduces his basis in the PTP units so that when he sells them, he pays more capital gains but he is not taxed on it currently. This is what often gets confusing for investors -- the income that they actually pay tax on is not the distribution; it is their allocated share partnership income.

Okay, here is a very simplified example to show how this works. The investor buys 100 units at 50,000 -- at $50 per unit, so his basis in his partnership investment is now 5,000. For this tax year on the K-1, he gets -- he is allocated $2 per unit in income, $1.50 per unit in depreciation and he receives $3 per unit in cash distribution. So what he does is he nets out the $2 minus the 1.50 and so for each unit, he will owe -- he will have 50 cents of taxable income, so he pays tax on $50. The income that he pays tax on increases his basis by that amount, $50, because he has already paid tax on it so he will not have to pay tax again when he sells the unit. The $300 cash distribution he does not pay tax on now, however, that is subtracted from his basis, so his basis which started out at the $5000 he paid for the unit has been increased by the $50 of taxable income that he paid tax on and reduced by the $300 in distributions that he did not pay tax on and the net result is he starts the next tax year with an adjusted basis of 47.50 and that just continues on throughout the life of his ownership of the partnership.

There are some additional special issues that go along with investing in a publicly traded partnership that investors in corporate stock generally do not have to deal with. One is state taxation. Again, because of the flow-through nature where the tax payment actually is the responsibility of the individual partner and not of the entity, the individual may find that he owes state tax in the state in which the PTP is earning income. Generally, the PTPs will provide, along with their K-1, a breakdown of how much of their income is allocated to each state so that the partner can figure that out.

The other issue, and this comes into play in you are a pension fund or if you are an investor wanting to put units in your IRA or if you are any other sort of tax-exempt entity such as a university or a charity, anything like that, is the unrelated business income tax. The tax code does not want tax-exempt entities engaging in businesses that are not related to the purpose for which they are tax exempt -- education for an educational institute or whatever. So there is this rule that if you are earning income from an unrelated business, you are going to be taxed on it if you are a tax-exempt entity. That rule applies if you invest in a partnership, again because of the flow-through nature. If you're a partnership and a partner, you are considered to be earning that income and so if it is a tax-exempt pension fund, say, that is the investor, that pension fund is considered to be earning the partnership business income and it will have to pay tax on it. That has caused some difficulty. That is something that we hopefully may be able to address, at least partially, through future legislation but at the moment, that is an item that is out there.

The reason that we wanted to do this presentation is that we have made some favorable changes in the rules that govern mutual funds and which had -- and keeping mutual funds from investing in publicly traded partnerships in the past. Under the what are called the regulated investment company or RIC rules of the tax code, a mutual fund, in order to receive the special tax treatment that the tax code gives them, has to derive at least 90 percent of its income from specific sources. As that read before this year, that was dividend interest, payments on security loans, gains from the disposition of stock, foreign currency, etc. Any income that does not come from this list has to stay under 10 percent of your gross or you lose your special RIC status under the tax code, which none of them wants to happen.

The problem is none of those categories covers the income from a PTP. The PTP fell into that nonqualifying income bracket that could -- had to be under 10 percent or the mutual fund risks losing its special treatment. Obviously, no mutual fund wants to risk that, especially since the level of income they are receiving from a PTP really isn't that much under control. If you're looking at an asset tax, you can sort of control how many of your assets are invested in a PTP but you really -- once you're in the PTP, you cannot control how much income it is going to earn and pass-through to you as your allocation of partnership income. So this was proving to be a big deterrent for investment.

The Coalition was able, after several years of lobbying, to have a provision added to the tax code as part of a recently enacted American Jobs Creation Act and it adds the income from an interest in a PTP to that list of income sources that the 90 percent is drawn from, so we are now qualifying income for mutual funds. They can derive it -- much of their gross income from PTPs as they want and they will be fine.

Now, we are subject to limits similar to those that apply to investment in corporate stock. No more than 25 percent of the funds' assets may be invested in PTPs. There is a slight difference for corporations that you cannot be more than 25 percent invested into any one company. For PTPS, it's PTPs as a whole that cannot comprise more than 25 percent of your assets. The exact same rule is for corporations, the funding of no more than 10 percent of any one PTP.

The effective date for this provision is the fund's first tax year beginning after October 22, 2004, which was the date the President signed the Bill. If you are on a calendar year, obviously this was January 1st. If you have a fiscal year that is different from that, then your first fiscal year after October 22, so your calendar -- if your next fiscal year has not started yet, then you're still under the old law.

I know there are a lot of people who have asked us by e-mail and in phone calls how this is the basic role of the federal taxation of a PTP (ph) that we just discussed. We are working the case of a mutual fund. The mutual fund will be very much in the position of the individual investor that we discussed several slides ago. The fund will be the limited partner and the fund will receive a K-1 detailing its share of partnership income and deductions. The fund also will receive the quarterly cash distribution.

Now, theoretically, as the limited partner, the fund would be liable for tax on its net income -- its share of net income from the PTP. However, as long as the fund continues to meet another one of the fund rules, mutual fund rules, which is that 90 percent of its income gets taxed through to investors as dividends, it is going to continue to be free from a fund level of tax and it will not be taxed on it share of partnership income. As with any other investor, it will not be taxed -- have to worry about tax on its share of distribution but the distributions will lower its base in its partnership units.

So the fund shareholders -- they are not really going to notice much difference. They will continue to get a dividend, as they have before, and now it will be -- some of that will come from PTP income but for them, it would just be treated as a regular dividend. We talked a couple of slides ago about the problem for tax-exempt investors. This is a way that they can at least get some investment in PTPs without having to worry about unrelated business income tax. For them as well, the PTP income becomes just another dividend that they -- or part of just another dividend that they receive from the mutual funds. It is not subject to unrelated business income tax because dividends are one of the kinds of incomes that are not subject to EBITDA.

That is pretty much the story. This slide is just a list of all of our members. Besides the members who are publicly traded partnerships, we have several other members who support our efforts, accounting firms, PriceWaterhouseCoopers and Ernst & Young, several of the investment firms that work with publicly traded partnerships and Cain Anderson and Taurus Capital, which are a different kind of fund, closed-end funds which have found a way to invest in MLPs without some of these restrictions that we just talked about.

This is how you can contact us. Our Web site is www.PTPcoalition.org. On that, you will find a list of all of our members as well as a list of all of the PTPs that are currently trading. On the link to the list of coalition members, you will also find a link to a list of investor relations contacts at all of the coalition members, so if you want to call up somebody and talk to them in more detail about their particular company, you can find them on that list. You will also find contact information for me on the Web site and you can also call or e-mail me and I can furnish you the list or answer any questions.

At this point, I'm going to -- this ends the presentation and I'm going to open it up for questions.

QUESTION AND ANSWER

Operator 

 (OPERATOR INSTRUCTIONS).

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I don't know if you heard the operator instructions. To ask a question press star-1 on a touchtone phone.

Operator 

 Jerry O'Halloran (ph).

 Bradley Pete Analyst 

 This is Bradley Pete (ph) in the same office. Thank you for the presentation. It is very interesting. We use MLPs for a lot of our clients as a regular investors hedge fund and also for good income stream. When we see the information about mutual funds being able to purchase shares, we were curious to see what your perspectives is on expected volatility in share price because some of these MLPs do not have a huge float in any one day but mutual funds do not just buy 1 or 200 or even 1000 shares of any stock at a given time; they buy large quantities. If they're buying, that could push the price up and if they're selling, that could push it down. I wondered what the industry association feels about that and how to mitigate that volatility?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I have to be honest. That is a question we have not addressed. If any of the Coalition members who are on the line has a response to that, you are welcome to contribute but I have to admit that, we have not addressed that question and I do not believe that is anything we have noticed so far.

Linda, do you have any thoughts on that?

 Linda Carlisle  - White & Case LLP - Partner 

 The legislation itself puts a 25 percent cap on any one mutual -- any one RIC investment at PTPs. Nonetheless, the volatility that you are describing is the great benefit that the PTPs companies are believing or do believe emanates from this legislation. It is an increased capital flow primarily to the energy sector in the United States. We do not view the volatility, at least at this point, as detrimental. Rather, it will increase the flow of all of these smaller, less liquid PTPs, as you mentioned.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Was that it, Mr. O'Halloran?

 Bradley Pete Analyst 

 It's Mr. Pete (ph). Both of us are here. We were just afraid that it would increase volatility and make it less stable for the income oriented investor.

 Linda Carlisle  - White & Case LLP - Partner 

 That is certainly something we hope is not the case. PTPs are clearly designed for the income-oriented investor.

 Bradley Pete Analyst 

 Correct, thank you.

Operator 

 Adam Rosenthal (ph).

 Adam Rosenthal Analyst 

 Hi. I thought there was an issue with mutual funds that have 401(k) and other retirement or pension plan participants in the mutual fund and whether or not that mutual fund could actually take advantage of the new tax legislation?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 The great news is that mutual fund can take advantage of the new legislation. Yes, the mutual fund in that situation serves as a converter. It converts for the 401(k) or other pension plans what would otherwise be ubits (ph) into qualified dividend income which is not subject to ubit (ph).

 Adam Rosenthal Analyst 

 So it does not matter how many qualified plan participants are in the mutual fund? It just makes no difference at all? They can follow the new legislation?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Well, the mutual fund -- remember, there are limitations, as Mary described, with respect to how much of an investment the mutual fund can have in publicly traded partnerships.

 Adam Rosenthal Analyst 

 Right, but it's not -- but the qualified plan does not preclude them from doing that?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 No. No, sir.

 Adam Rosenthal Analyst 

 Okay, that is not what we were led to believe in some other research that we had seen, so thank you for the clarification.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Certainly. That was an issue that was raised during the course of the legislation and was clarified.

 Adam Rosenthal Analyst 

 Okay, great. Thank you.

Operator 

 Sam Arnold (ph).

 Sam Arnold Analyst 

 Hi. A quick question for you about general partnerships and how they are taxed on the general partner level and -- is there any way that mutual funds could take a position in the general partner under the new tax laws?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 No. The general partner is not traded usually.

 Linda Carlisle  - White & Case LLP - Partner 

 Well, unless it is a corporation.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Well, if it is a corporation and often the general partner is, but this only refers to investments in publicly traded partnerships as defined in section 7704 of the Internal Revenue Code, so it would generally apply to a general partner.

 Linda Carlisle  - White & Case LLP - Partner 

 It is true that some PTPs or MLPs do have corporate (indiscernible) partners that are publicly traded but this does not really change anything for them; you always had access to them.

 Sam Arnold Analyst 

 Right, okay, but there's nothing precluding that other than they have to be a 7704?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 That's right.

 Sam Arnold Analyst 

 Okay, thank you.

Operator 

 Paul Reicher (ph).

 Paul Reicher Analyst 

 Does this legislation apply to 401(k)s and the IRAs the same as it does to mutual funds?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 No. The problem with 401(k)s and IRAs is the ubit (ph) problem and that is because they're a tax exempt trust, any income that is allocated to them by the Partnership is considered to be unrelated business income and subject to tax. We have not changed that for -- in terms of direct investment in a PTP by a 401(k) or an IRA. What this provision does do is allow a 401(k) or an IRA to invest in a mutual fund holding that holds PTPs is part of their portfolio and receive a dividend from the mutual fund that will not be taxed as ubit. As Linda termed it, we do have a converter if they invest through a mutual fund but we have not resolved the problem of 401(k)s and IRAs with a direct investment.

 Linda Carlisle  - White & Case LLP - Partner 

 Not yet.

 Paul Reicher Analyst 

 It is my understanding that, presently, there is a limitation of this kind of income in a 401(k) or an IRA to 10 percent of the aggregate, I guess, asset value of the funds. I guess what I was thinking was that perhaps this would change it to 25 percent.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Not yet.

 Paul Reicher Analyst 

 Not yet?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Not yet.

 Paul Reicher Analyst 

 Okay, thanks a lot.

Operator 

 Stuart Stinson (ph).

 Stuart Stinson Analyst 

 It's Stuart Stinson (ph). How about a metric like a dividend rate for all of the partnerships as a composite by which one could compare the efficiency that the partnership structure can pay out cash compared to something like the 500 or some of the large-scale metric (indiscernible) payout rate, dividend rate?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I believe that some of the investment bankers that we work with have done that sort of thing and actually, if any of the investment bankers are on the call and would like to answer that, you are welcome, otherwise I can -- I'm trying to think -- why don't you e-mail me and I can send you a list of contacts.

 Stuart Stinson Analyst 

 Thank you.

Operator 

 Gideon Moore (ph).

 Gideon Moore Analyst 

 When the PTP income is converted by the mutual fund and through the dividend, how will that portion of the PTPs income be classified for tax purposes?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Dividend income. To the ultimate RICs shareholder, it is dividend income.

 Gideon Moore Analyst 

 Thank you.

Operator 

 Ronald Londe.

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 It is Ron Londe at A.G. Edwards. I do have a couple of questions. Number one, is there a penalty for going over the 25 percent limit for a mutual fund to invest in MLPs?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, you can lose your status as a mutual fund, I mean, a big penalty, which means you are taxed as a corporation under the Internal Revenue Code.

 Linda Carlisle  - White & Case LLP - Partner 

 The difference between that and n the penalty on income now is you can control pretty well how much of your assets are invested in a particular investment.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Right, but you have to be very careful.

 Linda Carlisle  - White & Case LLP - Partner 

 Yes, you have to be vigilant bit it's not the same as income where the PTP has a good year that you never anticipated and all of a sudden you're over the limit.

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 Also, will the slideshow be on the PTP Web site?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I can certainly post it there and you can also access it by going to the same Web site that you went to for this webcast and click on recorded events and there is a replay there.

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 Okay, I was trying to print it and I can't get it to print.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I will post it on the Web site.

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 Okay. The other question I had was with regard to the mutual funds filing for state tax purposes. Are there any problems (indiscernible) intricacies about concerning doing that?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Jerry, would you like to address that?

 Jerry Jones  - PriceWaterhouseCoopers 

 Yes. I guess that, first of all, the partnership provides to all partners the amount of income attributable to each state in which the partnership has operations, so the partner has the state information. Then from that point, it would flow through the RIC taxation scheme for any state in which the partnership has operations.

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 Okay, so each individual mutual fund would have to file with each state for each MLP that they own?

 Jerry Jones  - PriceWaterhouseCoopers 

 Ron, I would not say that they would necessarily have to file but they certainly would have to consider that taxable income to check their filing requirements in each of those states. I presume that would be a state-by-state issue whether or not there was truly a filing requirement there.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I am assuming that most states have a similar regime where as long as the income is flowed through as dividends to their investors, they're not actually going to have to pay tax on it.

 Jerry Jones  - PriceWaterhouseCoopers 

 Mary, I really don't know the answer to that in all of these states. (indiscernible) most states do follow the federal law but it is literally a situation where you have to look at the each state specific rule and it is very hard to generalize.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Right, right. We do know that most states piggyback on the federal law and one problem we are aware of is that not all states automatically update their law whenever the federal law changes, so there may be states that have not picked up this particular change in federal law yet.

 Linda Carlisle  - White & Case LLP - Partner 

 There are not many.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 But not many of them that don't piggyback; that aren't current. Linda was just saying most of them are in fact current.

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 Also Mary, just as maybe a comment on the question about MLP volatility given the size of the mutual fund industry trying to move into these units. I think that it is obvious that the MLPs are going to become more volatile and it will also depend on the size of each MLP obviously, but I think we will also have a tendency for some of the MLPs to do some private placement of equity, which they have done in the past with the closed-in (ph) funds but also extending into maybe the mutual fund area too and doing private deals with those when they need to raise equity, which might take away from some of the volatility of trying to move in and out.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 So what you're saying is that rather than the funds just suddenly deciding to go out on the market and buy up a bunch of units that what is likely to happen is that when the partnerships are looking to raise additional equity, they will go to the funds and that is how the funds will get involved?

 Ronald Londe  - A.G. Edwards & Sons - Analyst 

 That is potentially a possibility, yes.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Okay, thanks, Ron.

Operator 

 David Foster (ph).

 David Foster Analyst 

 Yes. Does the stockholder have the same limited liability that they had with a traditional stock where they can only you lose their initial investment or in the case of a major environmental disaster, as a partnership, could they be liable for that disaster?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 You're talking about would the RICs have -- the investor in the partnership -- I just want to be clear, David.

 David Foster Analyst 

 As an investor, a holder of the stock.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, you're limited. As a limited partner, you're limited to your capital investment.

 David Foster Analyst 

 Okay, that is exactly what I wanted to know. Thank you.

Operator 

 Brad Kinkolar (ph).

 Brad Kinkolar Analyst 

 You have mentioned that the dividend will be treated as any other regular dividend going forward. However, in the past, the distributions made by PTPs have been classified as a nonqualifying dividend plus typically a return of capital. I am of the understanding that that will now be a qualifying dividend plus a return of capital. Is that what you mean when you say that is going to be treated as a regular dividend?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Well, no. What we mean is that when you own a PTP through an investment in a mutual fund -- if you invest directly, you are right. It is not a dividend; it is a return of capital. That is true for the individual who goes out and buys units in a PTP and it is also true for the mutual fund itself. However, if a mutual fund invests in a PTP, for the unit holder -- for the shareholders in that mutual fund -- or if the individual invests in the PTP indirectly by buying a mutual fund that is invested in the PTP, at the individual's level, it becomes a dividend.

 Brad Kinkolar Analyst 

 Including the return of capital portion?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, all the fund shareholder sees is a dividend. All of the tax consequences of being a partnership investor occur at the fund level.

 Brad Kinkolar Analyst 

 Okay, so previously, the return of capital portion did not contribute to the dividend paid to the shareholders of the fund? Now it will is what you're saying?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Let's go (indiscernible) for a second because what is happening, though, even though you had a return of capital, you had tax paid on the net income of the partnership. Here, there will only be, assuming the investor in the RIC is a taxable entity, you will only have tax paid on the dividend. Okay?

 Brad Kinkolar Analyst 

 Thank you.

Operator 

 Malcolm Day (ph).

 Malcolm Day Analyst 

 I was wondering if you could go into the state tax into a little more detail in terms of what the mutual fund is going to have to do? Let's say the mutual fund purchases a single MLP. At the end of the year, they are going to get a K-1. It is going to list the states in which they received income. Then the MLP is going to be required to address each individual state whether or not it has a filing obligation in those states and it is not going to pass that income or information or tax liability or anything like that through to the shareholders of the regulated investment company. Is that what I understood from your earlier discussion?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, that is correct. Our belief is that most state laws will follow the federal law and as long as the mutual fund distributes out 90 percent of its income as dividends to it shareholders, it won't have a state tax liability just they way it will not have a federal tax liability. But it depends on the laws of each state but it may have to actually file in the state in which the PTP has operations just to show that it has received so much income and has passed it on through.

 Malcolm Day Analyst 

 Right, it will be acquired I guess somewhat obviously to file as a corporation in that state, which may have different implications than individuals who would be filing as persons in those states?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Right, right.

 Malcolm Day Analyst 

 The other question -- you mentioned, in one of your earlier slides, that the limitation I believe you stated was 25 percent in PTPs at time of purchase and 10 percent in a single PTP. I just wanted to ask you does that mean that so long as the mutual fund does not own more than 10 percent of the total units of a PTP that they could own, in theory, like 24 percent of their mutual fund in a single PTP? I know that is extreme but I'm just trying to understand what the numbers specifically mean.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, they can not have more than 25 percent of the funds assets invested in PTPs collectively and then it can not own any more than 10 percent and Linda, is that by capital value of any one PTP?

 Linda Carlisle  - White & Case LLP - Partner 

 Yes, any one issuer.

 Malcolm Day Analyst 

 I guess the question I'm trying to ask is they could earn more than 10 percent of the funds' assets in a single PTP. (indiscernible) 10 percent -- (Multiple Speakers) -- 10 percent of the PTP not the fund?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Right, yes. More than 10 percent of the funds' assets could be in a single PTP as long as they did not own more than 10 percent of the PTP.

 Linda Carlisle  - White & Case LLP - Partner 

 (indiscernible) by 25, so you're exactly right.

 Malcolm Day Analyst 

 Have you received a lot of inquiries from fund complexes about how they would handle the accounting, the back office? Maybe this is a question for the gentleman from PriceWaterhouse as well in terms of how they might handle it. Have you seen much interest?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Wave not heard a lot from individual funds. We have heard from the ICI, the Investment Company Institute, which is the mutual funds trade association, that their members have expressed interest and have been in particular concerned about the state tax implications.

 Malcolm Day Analyst 

 I realize this might be beyond your expertise but would that typically the ICI put out some kind of guidelines (sic) that mutual fund would look at, or would mutual funds kind of -- (Multiple Speakers)?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 (Multiple Speakers) yes.

 Malcolm Day Analyst 

 Thank you very much for having the call. It has been very helpful.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Thank you for joining us.

Operator 

 Paul Krug (ph).

 Paul Krug Analyst 

 I do have similar concerns about the state tax issues. I guess in general I'm wondering if the PTP coalition can be of any help or a resource for state tax issues for mutual funds?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 We would like to be. We actually do have active efforts at state taxation not yet on this specific issue but we have been active in lobbying state legislators on other matters that have affected us. So, we actually would be happy to work with the funds or work with investors on particular states where it seems that there really is some attention needed.

 Paul Krug Analyst 

 Yes, I guess what would be most helpful, if there is some type of summary that can be put together or of a survey of a state, whether in fact there is a filing requirement for the mutual fund and even if there is, maybe if there is some type of abbreviated -- you know, what needs to be filed, but that type of survey would be very helpful.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, we could put that together.

 Paul Krug Analyst 

 Okay, because I'm in the funds industry and the prospect of picking up who knows how many state filing requirements is definitely a concern.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Sure. That is a good idea. We will look into doing that.

 Paul Krug Analyst 

 Another question I had was I think you mentioned that the companies on your Web site -- did you say that is a complete list of the PTPs or to the best of your knowledge?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 To the best of our knowledge, as anyone who has tried to find out much about PTPs has probably discovered, there doesn't seem to be any central list of the entities out there that are considered publicly traded partnerships either under the tax code or by a more simple definition. Our risk is as -- we think it's a pretty good one. It's all the ones we know about and the investment bankers and the coalition are very good about letting us know when new ones come out, but I cannot absolutely guarantee that there are not a few small ones out there that we have missed.

 Paul Krug Analyst 

 Are all of these PTPs on the calendar -- (technical difficulty) -- calendar tax year?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 They are predominantly on a calendar tax year. The one exception -- most of the propane ones seem to be on a fiscal year that ends about late summer probably because of the cycles of their own business but the great majority are on a calendar year.

 Paul Krug Analyst 

 Okay, and my last question in regards to that is, in the mutual fund industry and -- (technical difficulty) -- as well, there is kind of like a an accelerated timetable for reporting 1099 (indiscernible) information. I'm wondering if the PTPs are going to have any -- how timely is their reporting?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Well, they do the best they can and I let Jerry address this too. Their issue with the PTPs is that a lot of their units are held in Street names so brokers own them or investment houses own them and all they know is that, say, Smith Barney owns 1000 units and they don't know who the actual beneficial owner is. The brokers are required to report ever year by January 30 a list of all of their actual owners who have held the unit at any time during the previous year. Jerry Jones and his crew take that information and process it for the partnerships and turn it into K-1s. But because of that January 31 due date to get the information that the partnership needs from the brokers, there is some lag time built in. My observation is that they have been getting better and better about getting the reporting out faster and also a lot of them are now posting K-1 information on their Web sites, which also speeds things up a little -- but Jerry?

 Jerry Jones  - PriceWaterhouseCoopers 

 The actual time is nearly all of these K-1s are mailed between February 15 and February 28 and the K-1s are mailed to the individual investors, along with the state information, at that time.

 Paul Krug Analyst 

 Okay. I will just comment -- (technical difficulty) -- somebody already made the same comment. I'm trying to print. If you can put these slides out on the Web, that would be helpful.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I would be happy to.

Operator 

 Mark Schmerling (ph). I'm not getting any response. I'll go to the next question. Go ahead, Mr. Manly (ph).

Unidentified Speaker 

 I'm asking from the point of view of an individual investor. I am gathering if you can confirm that all of the concerns that are raised about state tax reporting requirements would equally fall on an individual investor. I'm assuming that. Would that be correct?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 That is true. The one advantage you have as an individual investor is that you are more likely, because your share of the partnership income in the state is going to be very small, it is pretty likely that you will fall under the (indiscernible) would actually have to pay tax to the state.

Unidentified Speaker 

 Yes, thank you. A concern that I had, there was one of your members that reorganized about 18 months ago had a longer history prior to that but reorganized and purchased a number of other distribution partnerships and has really been going great guns in terms of the value that the marketplace is on it in the last 18 months, so that leads to a two-part question. Number one, on a reorganization -- and this has happened to me one time before, about ten years ago also -- are there tax consequences for the limited partner?

 Linda Carlisle  - White & Case LLP - Partner 

 There can be a technical termination of the partnership in the reorganization constitutes a change in interest of 50 percent or more within a twelve-month period of the partnership interest. I'm not quite sure what other kind of reorganization, Mr. Manly, you are referring to.

Unidentified Speaker 

 I think that is close enough. The one I experienced before must not have included a greater than 50 percent interest and so my old interest became my new interest and I guess that gets reported on the K-1 to me. This new one, which I did not own before it was created in any case, I was just wondering how it might come up. I did not pay close enough attention to realize when the new law will take effect and mutual funds who are obviously showing a lot of interest in this area now are going to start to enter it, but I'm wondering about the run-up of one of these new partnerships that I referred to. Is there any indication on the part of the Coalition that mutual funds are beginning to buy these investment vehicles?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 We have not had any reports from our members that (inaudible).

Unidentified Speaker 

 That would indicate it.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes. However, that does not mean that it is not happening because there has not been -- haven't been any members calling up and saying, oh, by, you know, our units are so popular. But we're not really sort of equipped to follow that on a day-to-day basis, so I can't really say for sure what is happening but we are encouraged by the amount of interest in this call.

Unidentified Speaker 

 Finally, one spurious question -- I have some responsibility to keep tabs on a family trust that is a vehicle administered by a bank that reports on a 1041. I don't know so I'm asking. Is there reason why a trust could not include some of these kinds of shares in their assets?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Shares meaning publicly traded partnership shares?

Unidentified Speaker 

 Correct.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 I do not see why not.

Unidentified Speaker 

 I did not think so either. Thank you very much. The conference call has been very interesting and I will hang on the line. I'm sure I will learn as much from other people's questions.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Thanks for joining us.

Unidentified Speaker 

 It's my pleasure.

Operator 

 David Berkowitz (ph).

 David Berkowitz Analyst 

 I would just like to ask you, I mean, now that the income is allowed for mutual funds, is the reporting regime to report to the federal government in place? If not, is there an estimated timeline on that?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 What reporting, Mr. Berkowitz:

 David Berkowitz Analyst 

 How they report the income that they receive? Will it just be reported in the same manner that the other 90 percent, the qualified income has always been reported or -- (Multiple Speakers)?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes, yes it will.

 David Berkowitz Analyst 

 So there's no additional reporting requirements?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 None whatsoever.

 David Berkowitz Analyst 

 Great, thank you.

Operator 

 Adam Rosenthal.

 Adam Rosenthal Analyst 

 Hi, a follow-up question -- you mentioned that you speak to investment bankers on a pretty regular basis regarding the pipeline for new companies seeking to form partnerships. Can you give us some color around where that stands? It would seem that, given the structure and the benefits of the structure, that there would be lots of new partnerships coming public in the next 12 to 18 months.

 Linda Carlisle  - White & Case LLP - Partner 

 That is not necessarily true because as you just heard, a publicly traded partnership is a very complicated entity and so it is not going to work for everybody but we do hope that this change in the law, which will make mutual fund capital more accessible, will encourage some additional formation of publicly traded partnerships. As to how many are in the pipeline, I really do not know. I will say that the investment bankers don't let me know anything before the general public knows it, so I should hastily make that qualification. So anything that you do not know, I don't know either. They just kind of give me a heads up that there is something there and (indiscernible) you can find out about it.

 Adam Rosenthal Analyst 

 Great, thank you.

Operator 

 Gideon Moore.

 Gideon Moore Analyst 

 At the risk of sounding obtuse, could you clarify that the dividend that the mutual fund pays out to its shareholders, the dividend is a qualified dividend and will receive the 15 percent tax?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 The dividend is a qualified dividend. It will receive the 15 percent tax.

 Gideon Moore Analyst 

 Thank you.

Operator 

 Donnie Morten (ph).

 Donnie Morten Analyst 

 When was this legislation expected to affect limited liability companies that currently provide ownership interest in limited partners to institutional investors?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 If the limited liability company is publicly traded and is chosen to be taxed as a partnership, then they will benefit from these rules the same way other publicly traded partnerships will. I am not sure if that was what you were getting at.

 Donnie Morten Analyst 

 I was thinking, for instance, Kinder Morgan management -- (Multiple Speakers) -- they provide institutional investment into Morgan Partners.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Like the eye (ph) units, yes. Yes, those should still go along. I think the need for them will still be there. For instance, they not only address the issue that we had with the mutual fund shareholders but also the ubit (ph) issue that affects the pension fund in the 401(k)s and the IRAs. So I am not an expert on the market but my guess is that those will continue to be something that will go on as before.

 Donnie Morten Analyst 

 Thank you.

Operator 

 (technical difficulty) -- your line is open.

Unidentified Speaker 

 I have a two-part question here. The first has to do with the -- do I have it right that if you are an exempt entity and you own a mutual fund, say, for the sake of argument here, was 25 percent MLPs and 75 percent cash, that you would essentially owe no tax on what the MLP made?

 Linda Carlisle  - White & Case LLP - Partner 

 You would owe tax on the dividend that the mutual fund paid you but you would not be directly taxed on what the MLP made.

Unidentified Speaker 

 But if you were an exempt entity anyway -- (Multiple Speakers).

 Linda Carlisle  - White & Case LLP - Partner 

 (Multiple Speakers) -- that's right. If you are an exempt under the NUA (ph) then that is right; you will receive a dividend which will be tax-exempt to you.

Unidentified Speaker 

 So this is a way to sort of circumvent the tax system completely to eliminate the taxation of the income out of these partnerships completely if you owned it that way?

 Linda Carlisle  - White & Case LLP - Partner 

 Right it is a way to have that kind of investment without the tax consequences.

Unidentified Speaker 

 It seems almost too good to be true, because you could almost imagine mutual funds that were set up just to do that.

 Linda Carlisle  - White & Case LLP - Partner 

 Right. That is the reason there are the limitations in the rules dealing with the amount that can be invested in a PTP for that exact reason.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes. We had some discussions with the Treasury Department about that in and they realize what a good deal it was too, so as Linda said, that is why there are some limits on the extent to which you can do that.

Unidentified Speaker 

 You could buy a mutual fund with borrowed money at 3 to 1 leverage and you have the same effect as if it were a complete -- if the mutual fund were completely full of PTPs. Then the second part of the question is that, if you had a mutual fund that had these PTPs and it was trading them and owning them, could you go through like -- would there still be capital gains distributions to the holders, to a taxable holder, and dividends? How do you calculate the dividend part as opposed to a capital gain distribution?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 It would be exactly the same. If I'm trading in the units, you're telling me that it is a capital gain from the sale or exchange of the units and so it would be a capital gain distribution from the RICs just as if it were buying and selling shares of IBM stock.

Unidentified Speaker 

 How does the RIC calculate its basis in the units of the MLPs that it is trading?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 It has an acquisition basis and then to the extent that there is any income allocable before the trade date to the RIC, it would increase basis.

Unidentified Speaker 

 The distributions would decrease basis?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 The distributions would decrease basis.

Unidentified Speaker 

 I see. Then were does the dividend income come from then? If it never receives dividends from the MLP, which it does not, and really the only gains are from trading, are they not?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 In the situation you are (indiscernible) yes but the trading gains or losses aren't taking into account the incremental distribution or rather the income of the PTP. I may not have gotten the cash but my unit value is increased by the amount that the PTP has just earned.

Unidentified Speaker 

 Yes, so I mean, but the unit trades in the market and so you get a basis. You have your original basis and then you add in the income and you subtract from the basis the distributions and you a new basis and then you compare that to your sale price and that is your gain or loss. Is that right? So that would be the capital gain or loss allocable to the holder of the RIC, right?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Correct.

Unidentified Speaker 

 So when does the holder of the RIC get dividend from a RIC holding an MLP? How does it ever -- I mean, to contrast the corporation, if a corporation pays a dividend into the RIC, then I get a dividend as a holder of the RIC but if the MLPs are never paying dividends, which they don't, how do I ever get a dividend as a holder of a RIC?

 Linda Carlisle  - White & Case LLP - Partner 

 The MLP will be making distributions. As one of the participants mentioned a few moments ago, that is the reason people do like these investments, because there is a fairly stable rate of return, so there will be a distribution. I'm not using the term 'dividend' because these critters are not corporations; they do not make payments classified or out of there earnings in process, which is what a dividend would be. Rather, they make distributions which may or may not be the same as their after-tax or pretax profits, which is the point Mary made in her example.

So the long and the short of this is the mutual fund will be receiving cash from the PTPs generally and that cash will be accumulated or merged with the cash the mutual fund receives from other investments and then the mutual fund will make a dividend payment to its investors.

Unidentified Speaker 

 Yes but a portion is capital, is it not?

 Linda Carlisle  - White & Case LLP - Partner 

 In the situation that you were (indiscernible) a second ago, if the mutual fund is trading capital assets so that it has gain or loss on the sale or exchange of a capital asset, just as with other capital assets, that portion of the mutual fund's income or cash from the sale will go out as a capital dividend.

Unidentified Speaker 

 Not to belabor, I will try once more and then we will move on. Let's say the RIC doesn't trade and just receives distribution from the MLP and then pays those out to the holders of the RIC, that that would be -- if I were an individual and did that, I would essentially have -- my tax would be deferred and it would be related to whatever I sold; it would be an adjustment to basis but you are saying that now it gets a taxed as a dividend?

 Linda Carlisle  - White & Case LLP - Partner 

 I'm sorry if I'm confusing you. If you were an individual and you hold a unit in a PTP, you will not be taxed per se on the cash distribution from the PTP.

Unidentified Speaker 

 That's right but in the case of a RIC?

 Linda Carlisle  - White & Case LLP - Partner 

 Rather, rather, rather -- let me just finish. Rather you will be taxed on your proportionate share of the taxable income of the PTP regardless of whether you get it or not. So you will pay current tax on the amount -- the net amount of PTP income. That may or may not be the same as any cash distributions from the PTP. The same applies to a mutual fund. The mutual fund will receive cash distributions from the PTP or may and it will be allocated -- it will receive a K-1 and it will be allocated taxable income or loss of the PTP. But if the mutual fund makes distribution of 90 percent of its income to its shareholders, it is not subject to its own corporate level tax, so that income is not taxed to the mutual fund.

Unidentified Speaker 

 Okay, thank you.

Operator 

 Chris Gretchel (ph).

 Chris Gretchel Analyst 

 This is just a follow-up question to another one that was on qualified dividends. I was just wondering if you could clarify how it is classified as a qualified dividend? Because I guess I was under the impression that, in order to be qualified ineligible for the reduced rate, that income or that payout had to at some point been subject to a corporate level tax. If it is flowing through from a non-taxable partnership to a non-taxable RIC to the shareholder, wouldn't it be a nonqualified dividend?

 Linda Carlisle  - White & Case LLP - Partner 

 There is nothing in the code that requires a qualified dividend to be out of (indiscernible) income that has been subject to corporate level tax.

 Chris Gretchel Analyst 

 Okay, then I guess I was mistaken. Thank you.

Operator 

 Robert Manly.

 Robert Manly Analyst 

 What I'm hearing is that what I think I'm understanding is that if the PTP he distributes to a RIC and then the RIC pays out part of that distribution, that then becomes a taxable dividend to the individual holder of the RIC?

 Linda Carlisle  - White & Case LLP - Partner 

 That is right.

 Robert Manly Analyst 

 Thank you.

Operator 

 Cindy Mills (ph).

 Kim Allen  - Kinder Morgan, Inc. - VP-IR, Treasurer 

 Mary, it's Kim Allen at Kinder Morgan. Listen, I thought it might be easy if you guys would just walk through what happens when the mutual fund basically is going to get a $3 in dividend, say, or in distribution just like I'm going to get $3 in distribution. If I'm an individual person and I own this directly, let's say that it had 90 percent deferral. $2.70 is going to go and be a return of capital and then 30 cents is going to be ordinary income which I'm going to pay tax on. If, on the other hand, I own this indirectly through a mutual fund or an RIC, basically I'm going to get $3 in qualified dividend coming through on my 1099. Is that correct? So in effect, there is going to be a tax timing difference that the mutual fund will absorb.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 That's correct.

 Kim Allen  - Kinder Morgan, Inc. - VP-IR, Treasurer 

 Okay, so in the case that the -- somebody asked a question about what happens if the mutual fund sells the shares. The mutual fund is going to deal with the K-1s and the reduction in basis and the tax that has to be paid and then if they sell the shares, what flows through to a mutual fund investor on the 1099 is if they bought it for $30 -- if the mutual fund bought it for $30 and they sold it for $40, a $10 capital gain is coming through to the mutual fund holder on their 1099.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Right.

 Kim Allen  - Kinder Morgan, Inc. - VP-IR, Treasurer 

 I think that example might make it more clear for people. Then the other thing I was going to point out was you're right on the KMR. It does address some issues that this legislation does not address. One is with respect to UBTI and the 401(k)s and IRAs. Secondly, if the own Kmart (ph), you would not have to deal with these issues that we're discussing here, which is the K-1 and the state tax filing.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 All right. Thanks, Kim. Kim is on our investor relations list if anyone wants to contact her for further discussion. Any further questions?

Operator 

 Steve Single (ph).

 Steve Single Analyst 

 Great job today. I just had two questions. One observation is relative to the question on the K-1s. A lot of the companies also have them online as well so individual holders can look online.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 That's true, yes.

 Steve Single Analyst 

 My questions -- number one, are you getting any pushback from any of the mutual funds with the concerns about timing of when they receive the K-1s? Is that a hindrance to them do you think?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 We have not heard anything. I cannot speak for the individual partnerships but nothing has come to our attention at the Coalition.

 Steve Single Analyst 

 The second question, not to murky the waters, are there any problems potentially or concerns with the recapture of depreciation when the MLP or the PTP is sold by the mutual fund?

 Jerry Jones  - PriceWaterhouseCoopers 

 Let me respond to that. This is Jerry Jones. By block of interest, when an interest is sold by any investor, whether it be a mutual fund or an individual, the PTP itself will calculate the amount of ordinary recapture attributable to that sale of block of units. So while a portion of that gain may be ordinary, the information is provided directly to the investor by the partnership.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 That is on the K-1, Jerry?

 Jerry Jones  - PriceWaterhouseCoopers 

 On a supplemental schedule to the K-1. It is not an actual part of the K-1; it is filed with the IRS but it is supplemental information provided to the investor.

 Steve Single Analyst 

 I was going to say that the mutual fund really does not -- as it relates to an investor that owns a mutual fund, they really do not have to worry about that though.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 That's right.

 Steve Single Analyst 

 That's great. Thanks.

Operator 

 Gina Lacrosse (ph).

 Gina Lacrosse Analyst 

 Hi. Regina LaCroce (ph). I just want a clarification. Someone did ask but if you are an unregistered partnership like an LLC and you have individual clients and institutional clients, my question is concerning their IRA money or in this case pension money.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Ms. LaCroce (ph), I understand you saying by unregistered it is not a publicly traded partnership?

 Gina Lacrosse Analyst 

 Exactly. That is where I was wondering. If the investor is not publicly traded -- so are they just investing clients' money as they would as if they were individuals?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 They are and if it is a tax-exempt, if it is tax-exempt money, it is going to give rise to unrelated business income tax.

 Gina Lacrosse Analyst 

 The same thing with the pension money?

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Yes ma'am.

 Gina Lacrosse Analyst 

 Thank you so much.

Operator 

 There are no more questions at this time.

 Mary Lyman  - Coalition of Publicly Traded Partnerships - Executive Director 

 Thank you, everyone who joined us, and I think this has been a very successful call. Again, if you have any questions, you can find contact information on our Web site, www.PTPcoalition.org, click on the coalition members link to find a list of coalition members and a list of their investor relations contacts and contact information for the coalition itself is also on the Web site. Thank you very much.

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