1. My Start Page

Tax Information

Tax Fact Sheet

AllianceBernstein Holding L.P.
NYSE: AB

Summary

AllianceBernstein Holding L.P. (“AllianceBernstein Holding”) is a publicly traded limited partnership whose Units are listed on the New York Stock Exchange (NYSE: AB). Unitholders in AllianceBernstein Holding effectively own a limited partnership interest in the holding company, which holds an approximately 37.8% interest in AllianceBernstein L.P. (“AllianceBernstein”). AllianceBernstein is a private limited partnership which conducts the asset management operations.

Important Notice

IRS Circular 230 Disclosure: As provided for in U.S. Treasury Regulations, the discussion of U.S. tax matters contained in this Tax Fact Sheet was not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Furthermore, the information contained in this Tax Fact Sheet serves as a guideline and is only provided for general informational purposes. This document should not be considered as offering any tax advice and, as tax laws are complex, you should consult your tax advisor for such advice.

Summary Tax Benefits for Unitholders of AllianceBernstein Holding
  • Higher quarterly cash distributions due to lower federal and state taxes for AllianceBernstein Holding.
  • Deferral of portion of taxable income on each Unitholder's pro rata share of partnership income as a result of amortization deductions.
  • Time value of tax deferral.
Show
Tax Benefits to AllianceBernstein Holding

AllianceBernstein Holding (NYSE: AB) is a publicly traded limited partnership and does not pay the typical 35% federal corporate income tax rate on its profits. Instead, AllianceBernstein Holding pays a 3.5% federal tax on certain gross business revenues.

Show
Tax Implications to Unitholders of AllianceBernstein Holding

Because AllianceBernstein Holding is a partnership, it pays lower federal and state taxes compared to corporations. AllianceBernstein Holding’s tax savings permit greater quarterly cash distributions to Unitholders.

Investors who purchase Units receive additional tax deductions that defer a portion of the federal income taxes they would normally pay on their pro rata share of the partnership’s taxable income. These deductions result from a portion of the purchase price being allocated to tax deductible goodwill. The deductions, however, reduce the Unitholder’s tax basis and thus can result in higher taxes when the Units are sold.

Show
Taxable Income for Unitholders

Unitholders are not taxed on their quarterly cash distributions, but rather on their pro rata share of the partnership’s taxable income. Unitholders are required to report their pro rata share of the partnership’s taxable income on their tax return. AllianceBernstein provides this information to each Unitholder annually on a Schedule K1. Schedule K1’s are mailed no later than March 1 following the close of the Partnership’s year-end. Schedule K1’s are also available on the tax department website at: www.taxpackagesupport.com/ab.

Show
Investor Profile

Individual investors - Tax implications for individual investors depend on the vehicle in which AllianceBernstein Holding Units are held (see Tax-exempt/tax-advantaged vehicles below).

Institutional investors - The tax implications for institutions will be governed by each institution’s tax status.

Mutual funds, or Regulated Investment Companies under the American Jobs Creation Act of 2004, may derive qualifying income for purposes of the 90% gross income test from AllianceBernstein Holding. A Mutual Fund can generally have no more than 25% of its assets in publicly traded partnerships, and can own no more than 10% of any one publicly traded partnership.

Tax-exempt/tax-advantaged vehicles such as IRAs, pension and profit sharing plans, foundations, endowments and certain trusts may not find an investment in AllianceBernstein Holding Units appropriate. Partnership Operating income is generally treated as unrelated business taxable income (UBTI) subject to taxation. Nevertheless, some pension funds, foundations and endowments have invested in publicly traded partnerships such as AllianceBernstein Holding.

Non-U.S. investors generally must file a U.S. tax return reporting income from AllianceBernstein Holding, and will be taxed at regular U.S. graduated rates. Tax laws require that an estimate of this tax be withheld at the highest individual tax rate (for individuals presently 35%) as prepayment of the taxes. Tax laws in the investor’s home country may allow a foreign tax credit for the U.S. taxes paid on this income.

Show
Goodwill Amortization of AllianceBernstein Holding Units (IRC Section 754)

AllianceBernstein Holding has made an Internal Revenue Code Section 754 election, which allows the Partnership to pass through to Unitholders the tax benefit of amortization deductions that reduce taxable income. The amortization amount is calculated by the AllianceBernstein Tax Department and is generally attributable to goodwill. It is based on the investor’s purchase price of the Units, partnership tax basis and other factors. This amortization deduction is included in the amount reported on the Schedule K-1 Part III line 1 - ordinary business income (and disclosed separately on line 20 as the Section 743(b) adjustment). Certain items, including this goodwill, are amortized over 15 years and applicable to Unitholders who purchased Units after 1997 or obtained their Units through inheritance.

For each year the Units are owned, the Unitholder’s tax basis is reduced by the amount of that year’s amortization. In the year the Units are sold, the Unitholder must recapture the amortization (i.e., the deduction and reduction of basis in each year owned) as ordinary income. Capital gains tax may apply to any remaining gain. A Unitholder may have to recognize an amount of ordinary income even if the Unitholder has an overall capital loss on the sale of the Units.

Show
Sample Tax Calculation

Below is a hypothetical example of an investor buying 1,000 AllianceBernstein Holding (NYSE:AB) Units and selling after one year. The purpose of the example is to further assist investors in understanding the various tax implications of investing in AllianceBernstein Holding Units. This example is illustrative only and is generally applicable to an individual taxpayer. Certain passive activity rules and state income tax considerations are ignored.

Sample Tax Calculation

Assumptions:*
Purchase Price per Unit$60
Goodwill Amount$45
Annual Cash Distribution per Unit$3.50 [A]
Unitholder’s Taxable Income per Unit $3.70 [B]
Purchase Price per Unit$60
Sample Goodwill Calculation:
Goodwill Amount$45
Amortization Period15 yrs
Annual Amortization per Unit$3.00
Unitholder’s Taxable Income per Unit$3.70 [B]
(Less Amortization per Unit)($3.00) [C]
Unitholder’s Share of Partnership
Annual Taxable Income per Unit$0.70 [D]
Annual Cash Distribution per Unit($3.50) [A]

Adjustment to Net Tax Basis

($2.80) [E]
New Tax Basis per Unit - end year 1 $57.20 [F]
Unitholder’s Share of Partnership
Annual Taxable Income per Unit$0.70 [D]

Explanation:
In the example, the unitholder would receive $3,500 ($3.50 [A] x 1,000 Units) in cash distributions and report taxable income of $700 ($0.70 [D] x 1,000 Units) for the year. Cash distributions [A] should not be reported as dividend or taxable income; the distributions are considered return of capital that reduces a unitholder's tax basis. This reduction is partially offset by the unitholder's share of taxable income [D], which increases the tax basis. The unitholder's tax basis is adjusted to reflect these two amounts [E]. The new tax basis per Unit at the end of the year would be $57.20 [F] ($60-$2.80 [E]). Assuming sale at the beginning of year 2, the unitholder would be subject to tax at the unitholder's ordinary tax rates on the recapture of previous amortization deductions taken of $3,000 ($3.00 [C] x 1,000 Units times the number of years the Units were held). Capital gains taxes may apply to any remaining gain.

A unitholder's taxable income [D] is shown on a Schedule K-1. The taxable income pre-amortization [B] is not shown on the Schedule K-1 but can be calculated using information disclosed.

*Assumptions include no increase or decrease in cash distributions each year.

Show
State Income Tax

Most states require that income or losses derived from an investment in a partnership, such as AllianceBernstein Holding be included in the resident taxpayer's state income tax return. Additionally, some states require that a non-resident partner file a non-resident income tax return with the state in which the partnership conducts business. The states in which AllianceBernstein and AllianceBernstein Holding conduct business are: California, Colorado, Florida, Georgia, Illinois, Massachusetts, Minnesota, New York, Ohio, Pennsylvania, Texas, Washington, and District of Columbia. The partnership's business is predominantly conducted in New York which requires non-resident partners to file a tax return and pay New York state taxes.

Show

Although AllianceBernstein and AllianceBernstein Holding believe the information contained herein is accurate, the partnerships make no guarantee as to the completeness or application of this tax fact sheet to every individual or institutional investor situation. Please consult your tax advisor on specific issues related to your tax situation.

Corporate Contacts

Full Listing of Corporate Contacts

For Investor Relations, Media Relations and all other corporate contacts.

Meet Our Directors

Contact any or all of our directors with questions or concerns.

The Ombudsman

Internal support with an external ear and mindset.