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

federal income tax purposes, directly to the Property Partnership, our company, or our unitholders, and any suchincome or gain may be subject to a corporate income tax, in the U.S. or other jurisdictions, at the level of theHolding Entity. Any such additional taxes may adversely affect our company’s ability to maximize its cash flow.Certain of our Holding Entities or operating entities may be, or may be acquired through, an entity classifiedas a “passive foreign investment company” for U.S. federal income tax purposes.U.S. holders may face adverse U.S. tax consequences arising from the ownership of a direct or indirectinterest in a “passive foreign investment company”, or PFIC. Based on our organizational structure following thespin-off, as well as our expected income and assets, the BPY General Partner and the Property General Partnercurrently believe that one or more of our current Holding Entities and operating entities are likely to be classifiedas PFICs. In addition, we may in the future acquire certain investments or operating entities through one or moreHolding Entities treated as corporations for U.S. federal income tax purposes, and such future Holding Entities orother companies in which we acquire an interest may be treated as PFICs. Our unitholders that are taxable in theU.S. may experience adverse U.S. tax consequences as a result of owning an indirect interest in a PFIC throughour company. Investments in PFICs can produce taxable income prior to the receipt of cash relating to suchincome, and unitholders that are U.S. taxpayers generally would be required to take such income into account indetermining their taxable income. In addition, gain from the sale of stock of a PFIC generally is subject to tax atordinary income rates, and an interest charge generally applies. The adverse consequences of owning an interestin a PFIC, as well as certain tax elections for mitigating these adverse consequences, are described in greaterdetail in Item 10.E. “Additional Information — Taxation — U.S. Tax Considerations — Consequences to U.S.Holders — Passive Foreign Investment Companies”. You should consult an independent tax adviser regardingthe implication of the PFIC rules for an investment in our units.Tax gain or loss from the disposition of our units could be more or less than expected.If you sell your units and are taxable in the United States, then you will recognize gain or loss for U.S.federal income tax purposes equal to the difference between the amount realized and your adjusted tax basis inyour units. Prior distributions to you in excess of the total net taxable income allocated to you will havedecreased your tax basis in your units. Therefore, such excess distributions will increase your taxable gain ordecrease your taxable loss when you sell your units, and may result in a taxable gain even if the sale price is lessthan the original cost. A portion of the amount realized, whether or not representing gain, could be ordinaryincome to you.Our partnership structure involves complex provisions of U.S. federal income tax law for which no clearprecedent or authority may be available. The tax characterization of our partnership structure is also subjectto potential legislative, judicial, or administrative change and differing interpretations, possibly on aretroactive basis.The U.S. federal income tax treatment of our unitholders depends in some instances on determinations offact and interpretations of complex provisions of U.S. federal income tax law for which no clear precedent orauthority may be available. Holders should be aware that the U.S. federal income tax rules, particularly thoseapplicable to partnerships, are constantly under review by the Congressional tax-writing committees and otherpersons involved in the legislative process, the IRS, the U.S. Treasury Department and the courts, frequentlyresulting in changes which could adversely affect the value of our units or cause our company to change the wayit conducts its activities. In addition, our company’s organizational documents and agreements permit the BPYGeneral Partner to modify our limited partnership agreement, without the consent of our unitholders, to addresssuch changes. These modifications could have a material adverse impact on our unitholders. See Item 10.E.“Additional Information — Taxation — U.S. Tax Considerations — New Legislation or Administrative orJudicial Action”.29