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

treated as a partnership for tax purposes, our company’s allocable share of those items of the PropertyPartnership) for each of our company’s fiscal years ending with or within such unitholder’s tax year. SeeItem 10.E. “Additional Information — Taxation”. However, the cash distributed to a unitholder may not besufficient to pay the full amount of such unitholder’s tax liability in respect of its investment in our company,because each unitholder’s tax liability depends on such unitholder’s particular tax situation. If our company isunable to distribute cash in amounts that are sufficient to fund our unitholders’ tax liabilities, each of ourunitholders will still be required to pay income taxes on its share of our company’s taxable income.As a result of holding our units, our unitholders may be subject to U.S. federal, state, local or non-U.S. taxesand return filing obligations in jurisdictions in which they are not resident for tax purposes or otherwise notsubject to tax.Our unitholders may be subject to U.S. federal, state, local, and non-U.S. taxes, including unincorporatedbusiness taxes and estate, inheritance or intangible taxes that are imposed by the various jurisdictions in whichwe do business or own property now or in the future, even if our unitholders do not reside in any of thosejurisdictions. Our unitholders may be required to file income tax returns and pay income taxes in some or all ofthese jurisdictions. Further, our unitholders may be subject to penalties for failure to comply with theserequirements. Based on our organizational structure following the spin-off, as well as our company’s expectedincome and assets, the BPY General Partner and the Property General Partner currently believe that a unitholderis unlikely to incur an additional tax return filing obligation, solely as a result of owning our units, outside of thejurisdiction in which such unitholder is resident for tax purposes or otherwise is subject to tax. However, noassurance can be provided that this is currently the case or will be the case in the future. It is the responsibility ofeach unitholder to file all U.S. federal, state, local, and non-U.S. tax returns that may be required of suchunitholder.Our unitholders may be exposed to transfer pricing risks.To the extent that our company, the Property Partnership, the Holding Entities or our operating entitiesenter into transactions or arrangements with parties with whom they do not deal at arm’s length, includingBrookfield, the relevant tax authorities may seek to adjust the quantum or nature of the amounts received or paidby such entities if they consider that the terms and conditions of such transactions or arrangements differ fromthose that would have been made between persons dealing at arm’s length. This could result in more tax beingpaid by such entities, and therefore the return to investors could be reduced.The BPY General Partner and the Property General Partner believe that the base management fee and anyother amount that is paid to the Managers will be commensurate with the value of the services being provided bythe Managers and comparable to the fees or other amounts that would be agreed to in an arm’s lengtharrangement. However, no assurance can be given in this regard.If the relevant tax authority were to assert that an adjustment should be made under the transfer pricingrules to an amount that is relevant to the computation of the income of the Property Partnership or our company,such assertion could result in adjustments to amounts of income (or loss) allocated to our unitholders by ourcompany for tax purposes. In addition, our company might also be liable for transfer pricing penalties in respectof transfer pricing adjustments unless reasonable efforts were made to determine, and use, arm’s length transferprices. Generally, reasonable efforts in this regard are only considered to be made if contemporaneousdocumentation has been prepared in respect of such transactions or arrangements that support the transfer pricingmethodology.United StatesThe U.S. Internal Revenue Service, or IRS, may disagree with our valuation of the spin-off distribution.Our U.S. unitholders will be considered to receive a taxable distribution as a result of the spin-off equal tothe fair market value of our units received by them in the spin-off plus the amount of cash received in lieu of26