Energy Transfer 2012 Annual Report Download - page 66

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The sale or exchange of 50% or more of our capital and profit interests during any twelve month period will result in the
termination of our partnership for federal income tax purposes.
We will be considered technically terminated for federal income tax purposes if there is a sale or exchange of 50% or more of the
total interests in our capital and profits within a twelve-month period. For purposes of determining whether the 50% threshold
has been met, multiple sales of the same unit will be counted only once. Our technical termination would, among other things,
result in the closing of our taxable year for all Unitholders which would require us to file two federal partnership tax returns (and
our Unitholders could receive two Schedules K-1 if relief was not available, as described below) for one fiscal year, and could
result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a Unitholder reporting
on a taxable year other than a calendar year, the closing of our taxable year may also result in more than twelve months of our
taxable income or loss being includable in such Unitholder's taxable income for the year of termination. Our termination currently
would not affect our classification as a partnership for federal income tax purposes. We would be treated as a new partnership for
tax purposes on the technical termination date, and would be required to make new tax elections and could be subject to penalties
if we were unable to determine in a timely manner that a termination occurred. The IRS has recently announced a publicly traded
partnership technical termination relief program whereby, if a publicly traded partnership that technically terminated requests
publicly traded partnership technical termination relief and such relief is granted by the IRS, among other things, the partnership
will only have to provide one Schedule K-1 to unitholders for the year notwithstanding two partnership tax years.
Unitholders will likely be subject to state and local taxes and return filing requirements in states where they do not live as a
result of investing in our Common Units.
In addition to federal income taxes, the Unitholders may be subject to other taxes, including state and local taxes, unincorporated
business taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in which we conduct business
or own property now or in the future, even if they do not live in any of those jurisdictions. Unitholders may be required to file
state and local income tax returns and pay state and local income taxes in some or all of the jurisdictions. We currently own
property or conduct business in many states, most of which impose an income tax on individuals, corporations and other entities.
As we make acquisitions or expand our business, we may control assets or conduct business in additional states that impose a
personal or corporate income tax. Further, Unitholders may be subject to penalties for failure to comply with those requirements.
It is the responsibility of each Unitholder to file all federal, state and local tax returns.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
A description of our properties is included in “Item 1. Business.” We own an office building for our executive office in Dallas,
Texas and office buildings in Houston and San Antonio, Texas. While we may require additional office space as our business
expands, we believe that our existing facilities are adequate to meet our needs for the immediate future, and that additional facilities
will be available on commercially reasonable terms as needed.
We believe that we have satisfactory title to or valid rights to use all of our material properties. Although some of our properties
are subject to liabilities and leases, liens for taxes not yet due and payable, encumbrances securing payment obligations under
non-competition agreements and immaterial encumbrances, easements and restrictions, we do not believe that any such burdens
will materially interfere with our continued use of such properties in our business, taken as a whole. In addition, we believe that
we have, or are in the process of obtaining, all required material approvals, authorizations, orders, licenses, permits, franchises
and consents of, and have obtained or made all required material registrations, qualifications and filings with, the various state
and local government and regulatory authorities which relate to ownership of our properties or the operations of our business.
Substantially all of our pipelines, which are described in “Item 1. Business” are constructed on rights-of-way granted by the
apparent record owners of the property. Lands over which pipeline rights-of-way have been obtained may be subject to prior liens
that have not been subordinated to the right-of-way grants. We have obtained, where necessary, easement agreements from public
authorities and railroad companies to cross over or under, or to lay facilities in or along, watercourses, county roads, municipal
streets, railroad properties and state highways, as applicable. In some cases, properties on which our pipelines were built were
purchased in fee. We also own and operate multiple natural gas and NGL storage facilities and own or lease other processing,
treating and conditioning facilities in connection with our midstream operations.
ITEM 3. LEGAL PROCEEDINGS
Sunoco, along with other refiners, manufacturers and sellers of gasoline, is a defendant in lawsuits alleging MTBE contamination
of groundwater. The plaintiffs typically include water purveyors and municipalities responsible for supplying drinking water and
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