FORM 20-F/A Brookfield Property Partners L.P. - Brookfield Asset ...

subject to U.S. federal income taxation regardless of its source; or (iv) a trust (a) that is subject to the primarysupervision of a court within the United States and all substantial decisions of which one or more U.S. personshave the authority to control or (b) that has a valid election in effect under applicable U.S. Treasury regulationsto be treated as a U.S. person.A “Non-U.S. Holder” is a beneficial owner of one or more of our units, other than a U.S. Holder or anentity classified as a partnership or other fiscally transparent entity for U.S. federal tax purposes.If a partnership holds our units, the tax treatment of a partner of such partnership generally will dependupon the status of the partner and the activities of the partnership. Partners of partnerships that hold our unitsshould consult an independent tax adviser.This discussion does not constitute tax advice and is not intended to be a substitute for tax planning.You should consult an independent tax adviser concerning the U.S. federal, state and local income taxconsequences particular to your receipt of our units pursuant to the spin-off and your ownership anddisposition of our units, as well as any consequences under the laws of any other taxing jurisdiction.Partnership Status of Our Company and the Property PartnershipEach of our company and the Property Partnership has made a protective election to be classified as apartnership for U.S. federal tax purposes. An entity that is treated as a partnership for U.S. federal tax purposesincurs no U.S. federal income tax liability. Instead, each partner is required to take into account its allocableshare of items of income, gain, loss, deduction, or credit of the partnership in computing its U.S. federal incometax liability, regardless of whether cash distributions are made. Distributions of cash by a partnership to a partnergenerally are not taxable unless the amount of cash distributed to a partner is in excess of the partner’s adjustedbasis in its partnership interest.An entity that would otherwise be classified as a partnership for U.S. federal income tax purposes maynonetheless be taxable as a corporation if it is a “publicly-traded partnership”, unless an exception applies. Ourcompany will be publicly-traded. However, an exception, referred to as the “Qualifying Income Exception”,exists with respect to a publicly-traded partnership if (i) at least 90% of such partnership’s gross income for everytaxable year consists of “qualifying income” and (ii) the partnership would not be required to register under theU.S. Investment Company Act of 1940 if it were a U.S. corporation. Qualifying income includes certain interestincome, dividends, real property rents, gains from the sale or other disposition of real property, and any gainfrom the sale or disposition of a capital asset or other property held for the production of income that otherwiseconstitutes qualifying income.The BPY General Partner and the Property General Partner intend to manage the affairs of our companyand the Property Partnership, respectively, so that our company will meet the Qualifying Income Exception ineach taxable year. Accordingly, the BPY General Partner believes that our company will be treated as apartnership and not as a corporation for U.S. federal income tax purposes.If our company fails to meet the Qualifying Income Exception, other than a failure which is determinedby the U.S. Internal Revenue Service, or the IRS, to be inadvertent and which is cured within a reasonable timeafter discovery, or if our company is required to register under the U.S. Investment Company Act of 1940, ourcompany will be treated as if it had transferred all of its assets, subject to liabilities, to a newly formedcorporation, on the first day of the year in which our company fails to meet the Qualifying Income Exception, inreturn for stock in such corporation, and then distributed the stock to our unitholders in liquidation. This deemedcontribution and liquidation likely would result in the recognition of gain (but not loss) to U.S. Holders, exceptthat U.S. Holders generally would not recognize the portion of such gain attributable to stock or securities ofnon-U.S. corporations held by us. If, at the time of such contribution, our company were to have liabilities inexcess of the tax basis of its assets, U.S. Holders generally would recognize gain in respect of such excess161