Sunoco 2015 Annual Report Download - page 35

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The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential
legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.
The present federal income tax treatment of publicly traded partnerships, including us, or an investment in our common
units, may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time,
members of Congress propose and consider substantive changes to the existing federal income tax laws that affect publicly
traded partnerships. One such legislative proposal would have eliminated the qualifying income exception to the treatment of
all publicly traded partnerships as corporations, upon which we rely for our treatment as a partnership for federal income tax
purposes. We are unable to predict whether any of these changes or other proposals will be reintroduced or will ultimately be
enacted. Any such changes could negatively impact the value of an investment in our common units. Any modification to the
federal income tax laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or
impossible to meet the exception for certain publicly traded partnerships to be treated as partnerships for federal income tax
purposes.
If the IRS contests the federal income tax positions we take, the market for our common units may be adversely affected and
the costs of any such contest will reduce cash available for distributions to our unitholders.
We have not requested a ruling from the IRS with respect to our treatment as a partnership for federal income tax
purposes. The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or
court proceedings to sustain some or all of the positions we take. A court may not agree with some or all of the positions we
take. Any contest with the IRS may materially and adversely impact the market for our common units and the prices at which
they trade. In addition, the costs of any contest with the IRS will be borne by us reducing the cash available for distribution to
our unitholders.
We have subsidiaries that will be treated as corporations for federal income tax purposes and subject to corporate-level
income taxes.
Even though we (as a partnership for U.S. federal income tax purposes) are not subject to U.S. federal income tax, some
of our operations are currently conducted through subsidiaries that are organized as corporations for U.S. federal income tax
purposes. The taxable income, if any, of subsidiaries that are treated as corporations for U.S. federal income tax purposes, is
subject to corporate-level U.S. federal income taxes which may reduce the cash available for distribution to us and, in turn, to
our unitholders. If the IRS or other state or local jurisdictions were to successfully assert that these corporations have more tax
liability than we anticipate or legislation was enacted that increased the corporate tax rate, the cash available for distribution
could be further reduced. The income tax return filings positions taken by these corporate subsidiaries require significant
judgment, use of estimates, and the interpretation and application of complex tax laws. Significant judgment is also required in
assessing the timing and amounts of deductible and taxable items. Despite our belief that the income tax return positions taken
by these subsidiaries are fully supportable, certain positions may be successfully challenged by the IRS, state or local
jurisdictions.
We treat each purchaser of common units as having the same tax benefits without regard to the actual common units
purchased. The IRS may challenge this treatment, which could result in a unitholder owing more tax and may adversely
affect the value of the common units.
Because we cannot match transferors and transferees of common units and because of other reasons, we will adopt
depreciation and amortization positions that may not conform to all aspects of existing Treasury Regulations. A successful
IRS challenge to those positions could adversely affect the amount of tax benefits available to our unitholders. It also could
affect the timing of these tax benefits or the amount of gain from the sale of common units and could have a negative impact
on the value of our common units or result in audit adjustments to tax returns of our unitholders.