|ENTERPRISE PRODUCTS PARTNERS L P filed this Form 424B3 on 02/01/2018|
Calculation Agent determines that Three-Month LIBOR Rate has been discontinued, then the Calculation Agent will determine whether to calculate the relevant interest rate using a substitute or successor base rate that it has determined in its sole discretion is most comparable to Three-Month LIBOR Rate; provided that if the Calculation Agent determines there is an industry-accepted successor base rate, the Calculation Agent will use that successor base rate. In such instances, the Calculation Agent in its sole discretion may determine what business day convention to use, the definition of Business Day and London Business Day, the LIBOR Interest Determination Date to be used and any other relevant methodology for calculating such substitute or successor base rate, including any adjustment factor needed to make such substitute or successor base rate comparable to the LIBOR base rate, in a manner that is consistent with industry-accepted practices for such substitute or successor base rate, with respect to the calculation of interest on the notes during the Floating Rate Period. Any of the foregoing determinations or actions by the Calculation Agent could result in adverse consequences to the applicable interest rate on the notes during the Floating Rate Period, which could adversely affect the return on, value of and market for the notes.
If Enterprise Parent were treated as a corporation for U.S. federal income tax purposes or we or Enterprise Parent were subject to a material amount of entity-level taxation for state tax purposes, the cash available for payment on the notes would be substantially reduced.
Current law may change so as to cause Enterprise Parent to be treated as a corporation for U.S. federal income tax purposes or otherwise subject us or Enterprise Parent to a material amount of entity-level taxation. If Enterprise Parent were treated as a corporation for U.S. federal income tax purposes, it would pay U.S. federal income tax on its taxable income at the corporate tax rate and it likely would pay state taxes as well. Because a tax would be imposed upon it as a corporation, the cash available for payment on the notes (in its capacity as guarantor) would be substantially reduced. Therefore, treatment of Enterprise Parent as a corporation would result in a material reduction in its anticipated cash flows and could cause a reduction in the value of the notes.
Final Treasury Regulations under Section 7704(d)(1)(E) of the Internal Revenue Code interpret the scope of qualifying income requirements for publicly traded partnerships by providing industry-specific guidance. Enterprise Parent does not believe the final Treasury Regulations affect its ability to be treated as a partnership for federal income tax purposes.
In addition, at the state level, several states have been evaluating ways to subject partnerships and limited liability companies to entity-level taxation through the imposition of state income, franchise, capital, and other forms of business taxes. We currently own property or do business in a substantial number of states, many of which impose some form of tax obligation on us. Imposition of any of these taxes in jurisdictions in which we own assets or conduct business or an increase in the existing tax rates would reduce the cash available for payment on the notes.
If the Internal Revenue Service (IRS) makes audit adjustments to our or Enterprise Parents income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us or Enterprise Parent, in which case our or Enterprise Parents ability to service our debt (including the notes) and pay operating expenses could be negatively impacted.
Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes audit adjustments to income tax returns of entities treated as partnerships for federal income tax purposes, including us and Enterprise Parent, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from the entity. To the extent possible under the new rules, our managing member may elect to either pay such taxes, penalties and interest directly to the IRS or, if we are eligible, issue a revised Schedule K-1 to our members, including Enterprise Parent, with respect to an audited and adjusted return. The general partner of Enterprise Parent may also make such an election, including with respect to taxes, penalties and interest attributable to a revised Schedule K-1