Following the acquisition of Magellan Midstream Partners, L.P. (MMP) by ONEOK, Inc. (OKE) on September 25, 2023, former MMP unitholders need to understand the tax implications, particularly concerning the Magellan Midstream Partners K-1 form. This document provides essential information regarding your investment in MMP and its tax consequences related to the acquisition.
Navigating Your MMP K-1 Form After the Acquisition
Magellan Midstream Partners unitholders who held units before the acquisition received a final Schedule K-1 form. This Magellan Midstream Partners K-1 for the 2023 tax year was made available online at taxpackagesupport.com/MMP and mailed out in early March 2024. It’s crucial to note that receiving a Schedule K-1 does not automatically confirm ownership of MMP common units; it’s a tax reporting document related to your previous holdings.
If you have questions about your previously held MMP common units, your primary point of contact should be the brokerage firm where you held your units. For specific inquiries related to your Magellan Midstream Partners K-1, you can reach out to Tax Package Support directly:
- Phone: 800-230-1032
- Online: www.taxpackagesupport.com/MMP
Key Tax Implications of the ONEOK Acquisition for MMP Unitholders
It’s important to understand that this information is for general guidance only and should not be considered exhaustive tax advice. Consulting with a qualified tax advisor is strongly recommended to address your specific circumstances.
When Did the MMP Acquisition by ONEOK Conclude?
The transaction officially closed on September 25, 2023. This date is significant for determining tax implications and the timeline for receiving relevant tax documents like the Magellan Midstream Partners K-1.
What Compensation Was Received for MMP Units?
Upon the acquisition, MMP unitholders received 0.667 shares of ONEOK common stock and $25 in cash for each MMP unit held. This totaled a consideration value of $69.38 per unit. Cash was provided in lieu of any fractional shares of OKE common stock.
U.S. Federal Income Tax Consequences for MMP Unitholders
For U.S. federal income tax purposes, the exchange of MMP units for OKE common stock and cash is generally treated as a taxable sale of your MMP units. This means you will likely need to report this transaction on your tax return.
The total proceeds per unit for tax calculation purposes include the value of 0.667 shares of OKE common stock (based on OKE’s closing price on September 25, 2023, which was $66.54) plus the $25 cash payment, totaling $69.38.
It is critical to consult a tax advisor who is knowledgeable about partnership taxation and, specifically, the taxation of Master Limited Partnership unitholders to understand the full implications for your Magellan Midstream Partners K-1 and overall tax situation. ONEOK’s investor relations department and personnel cannot provide tax advice.
Understanding Your Tax Basis in New OKE Shares
Your tax basis in the ONEOK common stock received from the acquisition should be equal to the closing price of OKE shares on the transaction closing date, September 25, 2023, which was $66.54.
The holding period for your OKE common stock begins on September 26, 2023, regardless of how long you held your MMP units.
Tax Implications for Foreign Investors
For foreign unitholders of MMP, the acquisition is also treated as a taxable sale of MMP units for U.S. federal income tax purposes. Brokers handling the transfer for foreign unitholders are responsible for withholding 10% of the total proceeds from the sale, as mandated by Treasury Regulation Section 1.1446-4. The total proceeds are calculated in the same way as for U.S. holders, based on the value of OKE stock and cash received, totaling $69.38 per unit. Foreign investors should also pay close attention to their Magellan Midstream Partners K-1 for reporting purposes.
Tax Form for ONEOK Shareholders
As a corporation, ONEOK provides tax information to its shareholders annually via IRS Form 1099-DIV. You will receive this form for reporting dividends received from your ONEOK shares, separate from the Magellan Midstream Partners K-1 which relates to your prior MMP investment.
Accessing Official Documents
For further information, you can access official documents filed with the SEC by ONEOK, including the registration statement and proxy statement/prospectus, online at www.sec.gov. These documents are also available on ONEOK’s investor relations website at http://ir.oneok.com/.
Disclaimer: The link to the Tax Package Support website is provided for convenience only. ONEOK does not operate this website and is not responsible for the accuracy of the information provided there. Always consult with your broker and a qualified tax advisor to confirm your basis information and for personalized tax advice related to your Magellan Midstream Partners K-1 and the acquisition.
