Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

7.   Income Taxes

We are a limited liability company that has elected to be treated as a corporation for federal income tax purposes. Our income taxes consist solely of deferred income tax. Deferred income tax assets and liabilities are recognized for temporary differences between the basis of our assets and liabilities for financial and tax reporting purposes. We have excluded non-deductible goodwill associated with our investment in KMP. Changes in tax legislation are included in the relevant computations in the period in which such changes are effective. Currently, our only such temporary difference results from our investment in KMP.

Income taxes included in our interim consolidated statements of income are as follows (in millions, except percentages):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Income tax (benefit) expense	$	(9.9	)	$	4.7		$	(11.4	)	$	29.1
Effective tax rate		39.8	%		35.4	%		38.4	%		36.1	%

For the three and nine months ended September 30, 2011, our effective tax rate was higher than the statutory federal rate of 35% primarily due to an increase in our share of non-deductible goodwill associated with our investment in KMP and state income taxes. For the three months ended September 30, 2010, our effective tax rate was higher than the statutory federal rate of 35% primarily due to state income taxes, partially offset by an increase in our share of non-deductible goodwill associated with our investment in KMP. For the nine months ended September 30, 2010, our effective tax rate was higher than the statutory federal rate primarily due to state income taxes and an increase in our state tax rate.