KNOT Offshore Partners LP Announces that Unitholders Remain Unaffected by U.S. Internal Revenue Service Regulations Effective January 1, 2023

Rhea-AI Summary

KNOT Offshore Partners LP (NYSE:KNOP) announced that the upcoming U.S. Treasury and IRS regulations on publicly traded partnerships will not affect its unitholders, effective January 1, 2023. These regulations mandate a 10% tax withholding for certain non-U.S. partners, potentially restricting non-U.S. investors' ability to hold such interests. However, KNOP has elected to be treated as a C corporation for tax purposes, which exempts its unitholders from these regulations. This corporate structure allows the Partnership to issue a Form 1099 instead of a Form K-1.

Positive

• KNOT Offshore Partners LP is exempt from new IRS regulations affecting non-U.S. partners due to its decision to be treated as a C corporation.
• The company issues Form 1099 to unitholders instead of Form K-1, simplifying tax reporting for investors.

Negative

• None.

ABERDEEN, Scotland--(BUSINESS WIRE)-- KNOT Offshore Partners LP (NYSE:KNOP) (“the Partnership”) today announced that the U.S. Treasury and Internal Revenue Service (“IRS”) final regulations concerning publicly traded partnerships that are taxed as partnerships for U.S. federal income tax purposes (“PTP”) that are coming into effect on January 1, 2023, will not affect its unitholders.

These regulations oblige brokers, withholding agents and qualified intermediaries to withhold a 10% tax on a non-U.S. partner’s disposition of an interest in a PTP. As a result, certain non-U.S. brokers may not permit non-U.S. persons to hold such PTP interests in their brokerage account.

KNOP elects to be treated as a C corporation for U.S. federal income tax purposes and therefore interests in the Partnership are not subject to these regulations.

About KNOT Offshore Partners LP

KNOT Offshore Partners LP owns, operates and acquires shuttle tankers primarily under long-term charters in the offshore oil production regions of the North Sea and Brazil. KNOT Offshore Partners LP is structured as a publicly traded master limited partnership but is classified as a corporation for U.S. federal income tax purposes, and thus issues a Form 1099 to its unitholders, rather than a Form K-1. KNOT Offshore Partners LP’s common units trade on the New York Stock Exchange under the symbol “KNOP”.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221228005182/en/

KNOT Offshore Partners LP

Gary Chapman

Chief Executive Officer and Chief Financial Officer

Email: ir@knotoffshorepartners.com

Tel: +44 1224 618 420

Source: Knot Offshore Partners LP

FAQ

Will the new IRS regulations impact KNOT Offshore Partners LP unitholders?

No, KNOT Offshore Partners LP announced that the new IRS regulations will not affect its unitholders.

When do the new IRS regulations on PTPs become effective?

The new IRS regulations concerning publicly traded partnerships become effective on January 1, 2023.

What tax form does KNOT Offshore Partners LP issue to its unitholders?

KNOT Offshore Partners LP issues a Form 1099 to its unitholders instead of a Form K-1.

What is the significance of KNOT Offshore Partners LP being treated as a C corporation?

Being treated as a C corporation allows KNOT Offshore Partners LP to avoid the IRS regulations that impose a 10% tax on non-U.S. partners.