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TSX SYMBOL: TDG.UN CALGARY, April 12 /CNW/ - The following information is being provided to assist U.S. individual unitholders of Trinidad Energy Services Income Trust ("Trinidad") in reporting distributions received from Trinidad during 2006 on their Internal Revenue Services ("IRS") Form 1040, "U.S. Individual Income Tax Form" ("Form 1040"). This summary is of a general nature only and is not intended to be legal or tax advice to any particular holder or potential holder of Trinidad trust units. Holders or potential holders of the Trinidad trust units should consult their own legal and tax advisors as to their particular tax consequences of holding Trinidad trust units. In consultation with its U.S. tax advisors, Trinidad believes that its trust units should be properly classified as equity in a corporation 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 2006 that are considered dividends for U.S. federal income tax purposes should qualify for the reduced rate of tax applicable to capital gains. However, the individual taxpayer's situation must be considered before making this decision. Trinidad has not received an IRS letter ruling on this matter, although it has obtained a tax opinion from its tax advisors. Trust Units Held Within a Qualified Retirement Plan No amounts are required to be reported on a Form 1040 where Trinidad trust units are held within a qualified retirement plan. Trust Units Held Outside a Qualified Retirement Plan With respect to cash distributions paid during the year to U.S. individual unitholders, 97.95 per cent should be reported as "qualified dividends" and 2.05 per cent should be reported as a return of capital (to the extent of the unitholder's U.S. tax basis in their respective units). "Qualified dividends" should be reported on Line 9b of Form 1040, unless the fact situation of the U.S. individual unitholders determines otherwise. Commentary on page 23 of the Form 1040 IRS Instruction booklet for 2006 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. For U.S. federal income tax purposes, in reporting a return of capital with respect to distributions received, U.S. unitholders are required to reduce the cost base of their trust units by the total amount of distributions received that represent a return of capital. This amount is non-taxable if it is a return of cost base in the trust units. If the full amount of the cost base has been recovered, any further return of capital distributions should be reported as capital gains. 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 paid to a non-resident of Canada is subject to a minimum 15 per cent Canadian withholding tax that is withheld prior to any payments being distributed to unitholders. Where trust units are held outside a qualified retirement account, the full amount of all withholding tax should be creditable, subject to numerous limitations, for U.S. tax purposes in the year in which the withholding taxes are withheld. Where trust units are held in a qualified retirement account, the same withholding taxes apply but the amount is not generally 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 2006 should be determined from your own records and is not available from Trinidad. 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. Investors should report their dividend income and capital gain (if any), and make adjustments to their tax basis in Trinidad's units, in accordance with this information and subject to advice from their tax advisors. U.S. individual unitholders who hold their Trinidad 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. Trinidad 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. Trinidad Energy Services Income Trust is a growth oriented income trust that trades on the TSX under the symbol TDG.UN. Trinidad's divisions operate in the drilling and well servicing sectors of the North American oil and gas industry. With the completion of the current rig construction programs, the Trust will have 106 drilling rigs ranging in depths from 1,000 - 6,500 metres. In addition to its drilling rigs, Trinidad has 20 service rigs that have been completely retrofitted or are new within the past five years and 17 pre-set and coring rigs. Trinidad is focused on providing modern, reliable, expertly designed equipment operated by well-trained and experienced personnel. Trinidad's drilling fleet is one of the most adaptable and competitive in the industry. The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.
For further information: Michael E. Heier, CEO or Brent Conway, CFO at (403) 265-6525, e-mail: email@example.com