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CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
September 6, 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 459
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 459 (the "Fund"), in connection with the issuance of units
of fractional undivided interest in the Trusts of said Fund (the
"Trusts"), under a Trust Agreement, dated September 6, 2000 (the
"Indenture") between Nike Securities L.P., as Depositor, The
Chase Manhattan Bank, as Trustee, and First Trust Advisors L.P.,
as Evaluator and 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 as we have deemed pertinent. The
opinions expressed herein assume that the Trusts will be
administered, and investments by the Trusts from proceeds of
subsequent deposits, if any, will be made in accordance with the
terms of the Indenture. The Trusts hold interests in qualified
regulated investment companies ("RICs") under the Code (the
"Securities"). It is assumed that the Securities constitute
shares in funds qualifying as regulated investment companies for
federal income tax purposes.
Neither the Sponsor nor its counsel has independently
examined the assets to be deposited in and held by the Trusts.
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) Each Trust is not an association taxable as a
corporation for Federal income tax purposes, but will be governed
by the provisions of subchapter J (relating to trusts) of chapter
1, of the Code.
(ii) Each Unit holder will be considered the owner of a pro
rata share of each Security of a Trust in the proportion that the
number of Units held by a Unit holder bears to the total number
of Units outstanding. Under subpart E, subchapter J of Chapter 1
of the Code, income of the Trusts will be treated as income of
each Unit holder in the proportion described above; 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 Trustee. Each
Unit holder will be considered to have received his or her pro
rata share of income derived from each Trust asset when such
income is considered to be received by a Trust.
(iii) The price a Unit holder pays for his or her Units,
generally including sales charges, is allocated among his or her
pro rata portion of each Security held by a Trust (in proportion
to the fair market values thereof on the valuation date closest
to the date the Unit holder purchases his or her Units) in order
to determine his or her tax basis for his or her pro rata portion
of each Security held by a Trust. For Federal income tax
purposes, a Unit holder's pro rata portion such of distributions
received by the Trusts from the Securities, other than
distributions which are designated as capital gains dividends or
exempt-interest dividends, are taxable as ordinary income to the
extent of the RIC's current and accumulated "earnings and
profits." A Unit holder's pro rata portion of dividends which
exceeds such current and accumulated earnings and profits will
first reduce a Unit holder's tax basis in such Security, and to
the extent that such dividends exceed a Unit holder's tax basis
in such Security, shall be treated as gain from the sale or
exchange of property. Certain distributions on the Securities
may qualify as "capital gain dividends," taxable to shareholders
(and, accordingly, to the Unit holders as owners of a pro rata
portion of the Securities) as long-term capital gain, regardless
of how long a shareholder has owned such shares. Certain
distributions on the Securities may qualify as "exempt interest
dividends," which generally are excluded from a Unitholder's
gross income for federal income tax purposes. Some or all of the
exempt interest dividends, however, may be taken into account in
determining a Unit holder's alternative minimum tax, and may have
other tax consequences (e.g., they may affect the amount of your
social security benefits that are taxed.) In addition,
distributions of income and capital gains declared on Securities
in October, November, or December will be deemed to have been
paid to the shareholders (and, accordingly, to the Unit holders
as owners of a pro rata portion of the Securities) on December 31
of the year they are declared, even when paid by the RIC during
the following January and received by shareholders or Unit
holders in such following year.
(iv) Gain or loss will be recognized to a Unit holder
(subject to various nonrecognition provisions under the Code)
upon redemption or sale of his or her Units, except to the extent
an in kind distribution of Securities is received by such Unit
holder from a Trust as discussed below. Such gain or loss is
measured by comparing the proceeds of such redemption or sale
with the adjusted basis of his or her Units. Before adjustment,
such basis would normally be cost if the Unit holder had acquired
his or her Units by purchase. Such basis will be reduced, but
not below zero, by the Unit holder's pro rata portion of
dividends except for designated capital gain dividends and exempt
interest dividends paid by the RIC with respect to each Security
which is not taxable as ordinary income. However, any loss
realized by a Unit holder with respect to the disposition of his
or her pro rata portion of Securities, to the extent such Unit
holder has owned his or her Units for less than six months or a
Trust has held the Securities for less than six months, will be
disallowed to the extent of the exempt interest dividends the
Unit holder received. If such loss is not entirely disallowed,
it will be treated as long-term capital loss to the extent of the
Unit holder's pro rata portion of any capital gain dividends
received (or deemed to have been received) with respect to each
Security.
(v) Each Unit holder will have a taxable event when a
Security is disposed of (whether by sale, exchange, liquidation,
redemption, payment on maturity or otherwise), or when a Unit
holder redeems or sells his units. A Unit holder's tax basis in
his Units will equal his tax basis in his pro rata portion of all
the assets of a Trust. Such basis is ascertained by apportioning
the tax basis for his or her Units (as of the date on which the
Units were acquired) ratably, according to their values as of the
valuation date nearest the date on which he or she purchased such
Units. A Unit holder's basis in his Units and of his fractional
interest in each Trust asset must be reduced, but not below zero,
by the Unit holder's pro rata portion of dividends, except for
designate capital gains and exempt interest dividends paid by a
RIC, with respect to each Security which is not taxable as
ordinary income.
If more than 50% of the value of the total assets of the RIC
consist of stock or securities in foreign corporations, the RIC
may elect to pass through to its shareholders the foreign income
and similar taxes paid by the RIC in order to enable its share-
holders to take a credit (or deduction) for foreign income taxes
paid by the RIC. If this election is made, Unit holders of a
Trust, because they are deemed to own a pro rata portion of the
Securities held by such Trust, as described above, must include
in their gross income, for federal income tax purposes, both
their portion of dividends received by such Trust from the RIC
and also their portion of the amount which the RIC deems to be
their portion of foreign income taxes paid with respect to, or
withheld from, dividends, interest, or other income of the RIC
from its foreign investments. Unit holders may then subtract
from their federal income tax the amount of such taxes withheld,
or else treat such foreign taxes as deductions from gross income;
however as in the case of investors receiving income directly
from foreign sources, the above described tax credit or deduction
is subject to certain limitations.
(vi) 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 a Trust. As previously discussed, prior to
the redemption of Units or the termination of a Trust, a Unit
holder is considered as owning a pro rata portion of each of a
Trust's assets. The receipt of an in kind distribution will
result in a Unit holder receiving an undivided interest in whole
Securities and possibly cash. The potential Federal income tax
consequences which may occur under an in kind distribution will
depend upon whether or not a Unit holder receives cash in
addition to Securities. A Unit holder will not recognize gain or
loss if a Unit holder only receives Securities in exchange for
his or her pro rata portion in the Securities held by a Trust.
However, if a Unit holder also receives cash in exchange for a
fractional share of a Security held by a Trust, such Unit holder
will generally recognize gain or loss based upon the difference
between the amount of cash received by the Unit holder and his or
her tax basis in such fractional share of a Security held by a
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 rules described above by the redeeming
Unit holder with respect to each Security owned by a Trust.
Distributions from a Trust attributable to dividends
received by a Trust from the Securities will not be eligible for
the dividends received deduction for corporations.
Section 67 of the Code provides that certain miscellaneous
itemized deductions, such as investment expenses, tax return
preparation fees and employee business expenses will be
deductible by an individual only to the extent they exceed 2% of
such individual's adjusted gross income. Unit holders may be
required to treat some or all of the expenses of a Trust as
miscellaneous itemized deductions subject to this limitation.
However, because some of the Securities pay exempt interest
dividends, which are treated as tax-exempt interest for federal
income tax purposes, Unit holders will not be able to deduct some
of their share of Trust expenses. In addition, Unit holders will
not be able to deduct some of their interest expense for debt
they incurred or continued to purchase or carry Trust Units.
A Unit holder will recognize taxable gain (or loss) when all
or part of his or her pro rata interest in a Trust asset is
disposed of for an amount greater (or less) than his or her tax
basis therefor in a taxable transaction, subject to various non
recognition provisions of the Code.
If a Unit holder disposes of a Unit, he or she is deemed
thereby to have disposed of his or her entire pro rata interest
in all Trust assets including his or her pro rata portion of all
of a Trust's assets represented by the Unit.
In addition it should be noted that capital gains can be
recharacterized as ordinary income in the case of certain
financial transactions that are "conversion transactions"
effective for transactions entered into after April 30, 1993.
It should be noted that payments to a Trust of dividends on
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 a 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. A required holding period is imposed for such
credits.
A Unit holder who is a foreign investor (i.e., an investor
other than a United States citizen or resident or United States
corporation, partnership, estate or trust) may be subject to
United States Federal income taxes, including withholding taxes
on distributions from the Trust relating to such investor's share
of dividend income paid on Securities. A Unit holder who is a
foreign investor will not be subject to United States Federal
income taxes, including withholding taxes on any gain from the
sale or other disposition of, his or her pro rata interest in any
Security held by a Trust or the sale of his or her Units provides
that all of the following conditions are met:
(i) the gain is not effectively connected with the
conduct by the foreign investor of a trade or business
within the United States;
(ii) the foreign investor (if an individual) is not
present in the United States for 183 days or more during his
or her taxable year; and
(iii) the foreign investor provides all certification
which may be required of his status.
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 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. 333-44664)
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
