|ENTERPRISE PRODUCTS PARTNERS L P filed this Form 424B5 on 02/02/2018|
Classification and Treatment of the Notes
The determination of whether a security should be classified as indebtedness or equity for U.S. federal income tax purposes requires a judgment based on all relevant facts and circumstances. There is no statutory, judicial or administrative authority that directly addresses the U.S. federal income tax treatment of securities substantially similar to the notes. In connection with the issuance of the notes, Sidley Austin LLP will render its opinion to us generally to the effect that, under current law and assuming full compliance with the terms of the Indenture and other relevant documents, and based on certain assumptions and representations relied upon in rendering such opinion, although the matter is not free from doubt, the notes will be classified as indebtedness of Enterprise for U.S. federal income tax purposes. This opinion is not binding on the Internal Revenue Service (IRS) or any court and there can be no assurance that the IRS or a court will agree with this opinion.
If the IRS were to challenge successfully the classification of the notes as indebtedness of Enterprise, payments on the notes likely would be treated as guaranteed payments or distributions with respect to a preferred partnership interest. In such case, U.S. holders of the notes that are employee benefit plans, and most other organizations exempt from U.S. federal income tax including individual retirement accounts and other retirement plans, could be subject to U.S. federal income tax on their income with respect to the notes as unrelated business taxable income, and non-U.S. holders of the notes could be treated as engaged in a trade or business within the United States, be required to file a U.S. federal income tax return and pay taxes on their share of our income or gain and be subject to withholding. Holders are urged to consult their own tax advisors regarding the tax consequences to them if the notes are not treated as indebtedness for U.S. federal income tax purposes.
We intend to treat the notes as indebtedness for U.S. federal income tax purposes. Each holder of the notes will, by accepting the notes or a beneficial interest therein, be deemed to have agreed that the holder intends that the notes constitute indebtedness and will treat the notes as indebtedness for all U.S. federal, state and local tax purposes. The remainder of this discussion assumes that the classification of the notes as indebtedness will be respected for U.S. federal income tax purposes.
Certain Additional Payments
In certain circumstances (as described under Description of the NotesRight to Redeem Upon a Rating Agency Event), we may pay amounts on the notes that are in excess of stated interest or principal on the notes. These potential payments may implicate the provisions of the Treasury regulations relating to contingent payment debt instruments. We do not intend to treat the possibility of paying such additional amounts as causing the notes to be treated as contingent payment debt instruments. Our position is binding on a holder unless such holder discloses its contrary position in the manner required by applicable Treasury regulations. However, it is possible that the IRS may take a different position, in which case, if such position is sustained, a holder might be required to accrue ordinary interest income at a higher rate than the stated interest rate and to treat as ordinary income rather than capital gain any gain realized on the taxable disposition of the note. The remainder of this discussion assumes that the notes will not be treated as contingent payment debt instruments. You are encouraged to consult your own tax advisor regarding the possible application of the contingent payment debt instrument rules to the notes.
The following summary applies to you only if you are a U.S. holder (as defined below).
Definition of a U.S. Holder
A U.S. holder is a beneficial owner of notes that is, for U.S. federal income tax purposes: