OKOTOKS, AB, Dec. 3 /CNW/ - (TSX-MTL) Mullen Group Ltd. ("Mullen Group" and/or the "Corporation") is pleased to provide the following information to assist U.S. individual unitholders of Mullen Group Income Fund (the "Fund") in reporting distributions received from Mullen Group during 2009 on their Internal Revenue Service ("IRS") Form 1040, "U.S. Individual Income Tax Return" ("Form 1040"). On May 1, 2009, the holders of trust units of the Fund and the holders of Class B limited partnership units of Mullen Co. Limited Partnership approved a Plan of Arrangement that resulted in the conversion of the Fund from an open-ended income trust to a corporation called Mullen Group Ltd.
This summary is of a general nature only and is not intended to be legal or tax advice to any particular holder of the Fund's trust units. Holders of the Fund's trust units should consult their own legal and tax advisors as to their particular tax consequences of holding the Fund's trust units.
In consultation with its U.S. tax advisors, Mullen Group believes that the Fund's trust units should be properly classified as equity in a corporation, rather than debt, and that dividends paid to individual U.S. unitholders should be "qualified dividends" for U.S. federal income tax purposes. As such, the portion of the distributions made during 2009 that are considered dividends for U.S. federal income tax purposes should qualify for the reduced rate of tax applicable to long-term capital gains. However, the individual taxpayer's situation must be considered before making this determination.
Mullen Group has not received an IRS letter ruling or a tax opinion from its tax advisors on these matters.
Trust Units Held Outside a Qualified Retirement Plan
With respect to cash distributions paid during the year to U.S. individual unitholders, 100% percent should be reported as "qualified dividends" and no amount should be reported as a return of capital.
The portion of the distributions treated as "qualified dividends" should be reported on Line 9b of Form 1040, unless the fact situation of the U.S. individual unitholder determines otherwise. Commentary on page 22 of the Form 1040 Instruction Booklet for 2009 with respect to "qualified dividends" provides examples of individual situations where the dividends would not be "qualified dividends". Where, due to individual situations, the dividends are not "qualified dividends", the amount should be reported on Schedule B - Part II - Ordinary Dividends and Line 9a of Form 1040.
U.S. unitholders are encouraged to utilize the Qualified Dividends and Capital Gain Tax Worksheet of Form 1040 to determine the amount of tax that may be otherwise applicable.
The taxable portion (for Canadian income tax purposes) of the distributions is subject to a minimum 15% Canadian withholding tax that is withheld prior to any payments being distributed to unitholders. Where trust units are held in a cash account, we believe the full amount of the withholding tax should be creditable, subject to numerous limitations, for U.S. tax purposes in the year in which the withholding tax is withheld. Where trust units are held in a qualified retirement account, the same withholding tax applies but the amount is not creditable for U.S. tax purposes.
The amount of Canadian tax withheld should be reported on Form 1116, "Foreign Tax Credit (Individual, Estate, or Trust)". Information regarding the amount of Canadian tax withheld in 2009 should be determined from your own records and is not available from Mullen Group. Amounts over-withheld, if any, from Canada should be claimed as a refund from the Canada Revenue Agency no later than two years after the calendar year in which the payment was paid, and should not be claimed as a credit against your U.S. federal tax liability.
Investors should report their dividend income in accordance with this information and subject to advice from their tax advisors. U.S. individual unitholders who held their Fund's trust units through a stockbroker or other intermediary should receive tax reporting information from their stockbroker or other intermediary. We expect that the stockbroker or other intermediary will issue a Form 1099-DIV, "Dividends and Distributions" or a substitute form developed by the stockbroker or other intermediary. Mullen Group is not required to furnish such unitholders with Form 1099-DIV. Information on the Forms 1099-DIV issued by the brokers or other intermediaries may not accurately reflect the information in this press release for a variety of reasons. Investors should consult their brokers and tax advisors to ensure that the information presented here is accurately reflected on their tax returns. Brokers and/or intermediaries may or may not be required to issue amended Forms 1099-DIV.
Trust Units Held Within a Qualified Retirement Plan
No amounts are required to be reported on a Form 1040 where the Fund's trust units were held within a qualified retirement plan.
This press release may contain forward-looking statements that are subject to risk factors associated with the oil and natural gas business and the overall economy. Mullen Group believes that the expectations reflected in this press release are reasonable, but results may be affected by a variety of variables. Mullen Group relies on litigation protection for "forward-looking" statements.
Mullen Group is a company that owns a network of independently operated businesses. Today the Mullen Group is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in western Canada and as one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen Group has strong business relationships and industry leadership. Mullen Group provides management and financial expertise, technology and systems support to its independent businesses.
Mullen Group is a publicly traded corporation listed on the Toronto Stock Exchange under the symbol "MTL". Additional information is available on our website at www.mullen-group.com.
SOURCE Mullen Group Ltd.
For further information: For further information: Mr. David E. Olson - Vice President, Finance and Chief Financial Officer, 121A, 31 Southridge Drive, Okotoks, Alberta, Canada, T1S 2N3, Tel: (403) 995-5200, Fax: (403) 995-5296