CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
August 22, 2000
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: FT 450
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 450 (the "Fund"), in connection with the issuance of units
of fractional undivided interest in the Trust of said Fund (the
"Trust"), under a Trust Agreement, dated August 22, 2000 (the
"Indenture"), between Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee, First Trust Advisors L.P., as
Evaluator and First Trust Advisors L.P., as Portfolio Supervisor.
In this connection, we have examined the Registration
Statement, the form of Prospectus proposed to be filed with the
Securities and Exchange Commission, the Indenture and such other
instruments and documents we have deemed pertinent. The opinions
expressed herein assume that the Trusts will be administered, and
investments by a Trust from proceeds of subsequent deposits, if
any, will be made, in accordance with the terms of the Indenture.
The assets of the Trust will consist of a portfolio of equity
securities (the "Equity Securities") and, if applicable, "Zero
coupon" U.S. Treasury bonds (the "Treasury Obligations")
(collectively, the "Securities") as set forth in the Prospectus.
For purposes of the following discussion and opinion, it is
assumed that the Equity Securities are equity for federal income
tax purposes, the interest on the Treasury Obligations is
included in gross income for Federal income tax purposes and that
the Treasury Obligations are debt for Federal income tax
purposes.
Based upon the foregoing and upon an investigation of such
matters of law as we consider to be applicable, we are of the
opinion that, under existing United States Federal income tax
law:
(i) The Trust is not an association taxable as a
corporation for Federal income tax purposes; each Unit
holder will be treated as the owner of a pro rata
portion of each asset of the Trust under the Internal
Revenue code of 1986, as amended (the "Code"); the
income of the Trust will be treated as income of each
Unit holder thereof under the Code, and an item of
Trust income will have the same character in the hands
of a Unit holder as it would have in the hands of the
Trust. Each Unit holder will be considered to have
received his pro rata share of income derived from each
Trust asset when such income is considered to be
received by the Trust.
(ii) A Unit holder will have a taxable event when
the Trust disposes of a Security (whether by sale,
exchange, liquidation, redemption, payment at maturity
or otherwise) or upon the sale or redemption of Units
by such Unit holder. The price a Unit holder pays for
his Units, generally including sales charges, is
allocated among his pro rata portion of each Security
held by the Trust (in proportion to the fair market
values thereof on the valuation date closest to the
date the Unit holder purchases his Units) in order to
determine his tax basis for his pro rata portion of
each Security held by the Trust. The Treasury
Obligations are treated as stripped bonds and may be
treated as bonds issued at an original issue discount
as of the date a Unit holder purchases his Units.
Because the Treasury Obligations represent interests in
"stripped" U.S. Treasury bonds, a Unit holders tax
basis for his pro rata portion of each Treasury
Obligation held by the Trust (determined at the time he
acquires his Units, in the manner described above)
shall be treated as its "purchase price" by the Unit
holder. Original issue discount is effectively treated
as interest for federal income tax purposes and the
amount of original issue discount in this case is
generally the difference between the bonds purchase
price and its stated redemption price at maturity. A
Unit holder will be required to include in gross income
for each taxable year the sum of his daily portions of
original issue discount attributable to the Treasury
Obligations held by the Trust as such original issue
discount accrues and will in general be subject to
federal income tax with respect to the total amount of
such original issue discount that accrues for such year
even though the income is not distributed to the Unit
holders during such year to the extent it is not less
than a "de minimis" amount as determined under Treasury
Regulations relating to stripped bonds. To the extent
the amount of such discount is less than the respective
"de minimis" amount, such discount is generally treated
as zero. In general, original issue discount accrues
daily under a constant interest rate method which takes
into account the semi-annual compounding of accrued
interest. In the case of the Treasury Obligations,
this method will generally result in an increasing
amount of income to the Unit holders each year. For
Federal income tax purposes, a Unit holders pro rata
portion of dividends as defined by Section 316 of the
Code paid by a corporation with respect to an Equity
Security held by the Trust are taxable as ordinary
income to the extent of such corporations current and
accumulated "earnings and profits." A Unit holders
pro rata portion of dividends paid on such Equity
Security which exceed such current and accumulated
earnings and profits will first reduce a Unit holders
tax basis in such Equity Security, and to the extent
that such dividends exceed a Unit holders tax basis in
such Equity Security shall generally be treated as
capital gain. In general, the holding period of such
capital gain will be determined by the period of time a
Unit holder has held his Units.
(iii) A Unit holders portion of gain, if any, upon
the sale or redemption of Units or the disposition of
Securities held by the Trust will generally be
considered a capital gain, except in the case of a
dealer or a financial institution. A Unit holders
portion of loss, if any, upon the sale or redemption of
Units or the disposition of Securities held by the
Trust will generally be considered a capital loss,
except in the case of a dealer or a financial
institution.
(iv) Under the Indenture, under certain
circumstances, a Unit holder tendering Units for
redemption may request an in kind distribution of
Securities upon the redemption of Units or upon the
termination of the Trust. As previously discussed,
prior to the redemption of Units or the termination of
the Trust, a Unit holder is considered as owning a pro
rata portion of each of the Trusts assets. The
receipt of an in kind distribution will result in Unit
holders receiving an undivided interest in Securities
and possibly cash. The potential federal income tax
consequences which may occur under an in kind
distribution with respect to each Security owned by the
Trust will depend upon whether or not a Unit holder
receives cash in addition to Securities. A Unit holder
will not recognize gain or loss with respect to a
Security if a Unit holder only receives Securities in
exchange for his pro rata portion of the Securities
held by the Trust. However, if a Unit holder also
receives cash in exchange for a fractional share of a
Security held by the Trust, such Unit holder will
generally recognize gain or loss based upon the
difference between the amount of cash received for the
fractional share by the Unit holder and his tax basis
in such fractional share of a Security held by the
Trust. The total amount of taxable gains (or losses)
recognized upon such redemption will generally equal
the sum of the gain (or loss) recognized under the rule
described above by the redeeming Unit holder with
respect to each Security owned by the Trust.
A domestic corporation owning Units in the Trust may be
eligible for the 70% dividends received deduction pursuant to
Section 243(a) of the Code with respect to such Unit holders pro
rata portion of dividends received by the Trust (to the extent
such dividends are taxable as ordinary income, as discussed
above, and are attributable to domestic corporations), subject to
the limitations imposed by Sections 246 and 246A of the Code.
To the extent dividends received by the Trust are
attributable to foreign corporations, a corporation that owns
Units will not be entitled to the dividends received deduction
with respect to its pro rata portion of such dividends since the
dividends received deduction is generally available only with
respect to dividends paid by domestic corporations.
Section 67 of the Code provides that certain itemized
deductions, such as investment expenses, tax return preparation
fees and employee business expenses will be deductible by
individuals only to the extent they exceed 2% of such
individuals adjusted gross income. Unit holders may be required
to treat some or all of the expenses of the Trust as
miscellaneous itemized deductions subject to this limitation.
A Unit holder will recognize taxable gain (or loss) when all
or part of his pro rata interest in a Security is either sold by
the Trust or redeemed or when a Unit holder disposes of his Units
in a taxable transaction, in each case for an amount greater (or
less) than his tax basis therefor, subject to various non-
recognition provisions of the Code.
It should be noted that payments to the Trust of dividends
on Equity Securities that are attributable to foreign
corporations may be subject to foreign withholding taxes and Unit
holders should consult their tax advisers regarding the potential
tax consequences relating to the payment of any such withholding
taxes by the Trust. Any dividends withheld as a result thereof
will nevertheless be treated as income to the Unit holders.
Because under the grantor trust rules, an investor is deemed to
have paid directly his share of foreign taxes that have been paid
or accrued, if any, an investor may be entitled to a foreign tax
credit or deduction for United States tax purposes with respect
to such taxes. The Taxpayer Relief Act of 1997 imposes a
required holding period for such credits.
Any gain or loss recognized on a sale or exchange will,
under current law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the
matters set forth herein, and, except as expressly set forth
above, we express no opinion with respect to any other taxes,
including foreign, state or local taxes or collateral tax
consequences with respect to the purchase, ownership and
disposition of Units.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 333-42674)
relating to the Units referred to above and to the use of our
name and to the reference to our firm in said Registration
Statement and in the related Prospectus.
Very truly yours,
CHAPMAN AND CUTLER
EFF/erg
