CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
September 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 466
Gentlemen:
We have acted as counsel for Nike Securities L.P., Depositor
of FT 466 (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 September 22, 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 Trust will be
administered, and investments by the Trust from proceeds of
subsequent deposits, if any, will be made, in accordance with the
terms of the Indenture. The Trust holds (i) preferred stock in
foreign and domestic corporations (the "Equity Securities"); (ii)
interests in real estate investment trusts (the "REIT Shares");
and (iii) trust preferred stock, which for purposes of Federal
income taxes is assumed to be debt (the "Debt Obligations"). All
of the assets of the Trust are referred to herein as the "Trust
Assets."
Neither the Sponsor nor its counsel has independently
examined the assets to be deposited in and held by the Trust.
However, although no opinion is expressed herein regarding such
matters, for purposes of the opinion set forth below, it is
assumed that (i) the Equity Securities qualify as equity for
Federal income tax purposes and that, accordingly, amounts
received by the Trust with respect to the Equity Securities will
qualify as dividends as defined in Section 316 of the Internal
Revenue Code of 1986 (the "Code"); (ii) the Debt Obligations
qualify as debt for Federal income tax purposes; and (iii) each
REIT Share represents a share in an entity treated as a real
estate investment trust 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, 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 the 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 Trust 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 the Trust. Each Unit
holder will also be required to include in taxable income for
Federal income tax purposes, original issue discount with respect
to his or her interest in any Debt Obligation which was issued
with original issue discount at the same time and in the same
manner, as though the Unit holder were the direct owner of such
interest. Original issue discount will be treated as zero with
respect to Debt Obligations if it is "de minimis" within the
meaning of Section 1273 of the Code. If a Debt Obligation is a
"high yield discount obligation" within the meaning of Section
163(e)(5) of the Code, certain special rules may apply. A Unit
holder may elect to include in taxable income for Federal income
tax purposes market discount as it accrues with respect to his or
her interest in any Debt Security which he or she is considered
to have acquired with market discount at the same time and in the
same manner as though the Unit holder were the direct owner of
such interest.
(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 Trust Asset (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 the Trust. For Federal income tax purposes, a
Unit holder's pro rata portion of distributions received by the
Trust from the Equity Securities that constitute "dividends" as
defined in Section 316 of the Code is taxable as ordinary income
to the extent of the corporation'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
Equity Security, and to the extent that such dividends exceed a
Unit holder's tax basis in such Equity Security, shall be treated
as gain from the sale or exchange of property. Certain
distributions on the REIT Shares may qualify as "capital gain
dividends," taxable to shareholders (and, accordingly, to the
Unit holders as owners of a pro rata portion of the REIT Shares)
as long-term capital gain, regardless of how long a shareholder
has owned such shares. Distributions of income and capital gains
declared on REIT Shares 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 REIT Shares) on December 31 of the year they are declared,
even when paid by the REIT 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 Trust Assets is received by such Unit
holder from the 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 gains dividends paid by
the REIT with respect to each Equity 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 the REIT Shares, to the extent such Unit holder has
owned his or her Units for less than six months or the Trust has
held the REIT Shares for less than six months, 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 REIT Share. In
addition, such basis will be increased by the Unit holder's
aliquot share of the accrued original issue discount with respect
to each Debt Obligation for which there was original issue
discount at the time such Debt Obligation was issued, and by
accrued market discount which the Unit holder has elected to
annually include in income with respect to each Debt Obligation,
and reduced by the Unit holder's aliquot share of the amortized
acquisition premium, if any, which the Unit holder has properly
elected to amortize under Section 171 of the Code on each Debt
Obligation. The tax basis reduction requirements of the Code
relating to amortization of premium may, under some
circumstances, result in the Unit holder realizing a taxable gain
when his or her Units are sold or redeemed for an amount equal to
or less than original cost.
(v) Each Unit holder will have a taxable event when a Trust
Asset is disposed of (whether by sale, exchange, liquidation,
redemption, payment on maturity or otherwise) or when a Unit
holder redeems or sells his or her Units. A Unit holder's tax
basis in his or her Units will equal his or her tax basis in his
or her pro rata portion of all the assets of the 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 or her Units and of his or her fractional interest
in each Debt Obligation must be reduced by the Unit holder's
share of the amortized acquisition premium, if any, on Debt
Obligations which the Unit holder has properly elected to
amortize under Section 171 of the Code, and must be increased by
the Unit holder's share of the accrued original issue discount
with respect to each Debt Obligation which, at the time the Debt
Obligation was issued, had original issue discount, and by the
accrued market discount which the Unit holder has elected to
annually include in income. 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 designated capital gain
dividends paid by a REIT, with respect to each Equity Security
which is not taxable as ordinary income. For Federal income tax
purposes, a Unit holder's pro rata portion of dividends as
defined by Section 316 of the Code, paid by a corporation, are
taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits." A Unit holder's
pro rata portion of dividends which exceed such current and
accumulated earnings and profits will first reduce a Unit
holder's tax basis in such Equity Security (and accordingly his
or her basis in such Units), and to the extent that such
dividends exceed a Unit holder's tax basis in such Equity
Security shall be treated as gain from the sale or exchange of
property.
(vi) Under the Indenture, under certain circumstances, a
Unit holder tendering Units for redemption may request an in kind
distribution of Trust Assets 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
Trust's assets. The receipt of an in kind distribution will
result in a Unit holder receiving Trust Assets 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 Trust Assets. A Unit
holder will not recognize gain or loss if a Unit holder receives
only Trust Assets in exchange for his or her pro rata portion in
the Trust Assets held by the Trust. However, if a Unit holder
also receives cash in exchange for a fractional share of a Trust
Asset held by the 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 Trust Asset 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 rules described above by the redeeming
Unit holder with respect to each Trust Asset 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 holder's pro
rata portion of dividends on the Equity Securities 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 Section 246
and 246A of the Code. However, dividends received on the REIT
Shares are not eligible for the dividends received deduction.
Certain special rules, however, may apply with regard to the
preferred stock of a public utility.
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 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 the Trust as
miscellaneous itemized deductions subject to this limitation.
The Code provides a complex set of rules governing the
accrual of original issue discount. These rules provide that
original issue discount generally accrues on the basis of a
constant compound interest rate. Special rules apply if the
purchase price of a Debt Obligation exceeds its original issue
price plus the amount of original issue discount which would have
previously accrued, based upon its issue price (its "adjusted
issue price"). Similarly, these special rules would apply to a
Unit holder if the tax basis of his or her pro rata portion of a
Debt Obligation issued with original issue discount exceeds his
or her pro rata portion of its adjusted issue price. It is
possible that a Debt Obligation that has been issued at an
original issue discount may be characterized as a "high-yield
discount obligation" within the meaning of Section 163(e)(5) of
the Code. To the extent that such an obligation is issued at a
yield in excess of six percentage points over the applicable
Federal rate, a portion of the original issue discount on such
obligation will be characterized as a distribution on stock
(e.g., dividends) for purposes of the dividends received
deduction which is available to certain corporations with respect
to certain dividends received by such corporations.
If a Unit holder's tax basis in his or her interest in any
Debt Obligation held by the Trust is less than his or her
allocable portion of such Debt Obligation's stated redemption
price at maturity (or, if issued with original issue discount,
his or her allocable portion of its revised issue price on the
date he or she buys such Units), such difference will constitute
market discount unless the amount of market discount is "de
minimis" as specified in the Code. Market discount accrues daily
computed on a straight line basis, unless the Unit holder elects
to calculate accrued market discount under a constant yield
method.
Accrued market discount is generally includible in taxable
income of the Unit holders as ordinary income for Federal tax
purposes upon the receipt of serial principal payments on Debt
Obligations, on the sale, maturity or disposition of such Debt
Obligations and on the sale of a Unit holder's Units unless a
Unit holder elects to include the accrued market discount in
taxable income as such discount accrues. If a Unit holder does
not elect to annually include accrued market discount in taxable
income as it accrues, deductions of any interest expense incurred
by the Unit holder to purchase or carry his or her Units will be
reduced by such accrued market discount. In general, the portion
of any interest which is not currently deductible is deductible
when the accrued market discount is included in income upon the
sale or redemption of the Debt Obligations or the sale of Units.
The tax basis of a Unit holder with respect to his or her
interest in an obligation is increased by the amount of original
issue discount (and market discount, if the Unit holder elects to
include market discount, if any, on the Debt Obligations in
income as it accrues) thereon properly included in the Unit
holder's gross income as determined for Federal income tax
purposes and reduced by the amount of any amortized premium which
the Unit holder has properly elected to amortize under Section
171 of the Code. A Unit holder's tax basis in his or her Units
will equal his or her tax basis in his or her pro rata portion of
all the assets of the Trust.
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.
As previously discussed, gain attributable to any Debt
Obligation deemed to have been acquired by the Unit holder with
market discount will be treated as ordinary income to the extent
the gain does not exceed the amount of accrued market discount
not previously taken into income. The tax basis reduction
requirements of the Code relating to amortization of bond premium
may, under certain circumstances, result in the Unit holder
realizing a taxable gain when his or her Units are sold or
redeemed for an amount equal to or less than his or her original
cost.
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 the Trust Assets represented by the Unit. This may result in
a portion of the gain, if any, on such sale being taxable as
ordinary income under the market discount rules (assuming no
election was made by the Unit holder to include market discount
in income as it accrues) as previously discussed.
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 the Trust of dividends
or interest on Trust Assets 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 income 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 or her 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) will 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 Equity Securities. A Unit holder who
is a foreign investor will not be subject to United States
Federal income taxes, including withholding taxes on interest
income (including any original issue discount) on the Debt
Obligations, or any gain from the sale or other disposition of,
his or her pro rata interest in any Equity Security or Debt
Obligation held by the Trust or the sale of his or her Units
provided that all of the following conditions are met:
(i) the interest income or gain is not effectively
connected with the conduct by the foreign investor of a
trade or business within the United States;
(ii) the interest is United States source income (which
is the case for most securities issued by United States
issuers), the Debt Obligation is issued after July 18, 1984,
the foreign investor does not own, directly or indirectly,
10% or more of the total combined voting power of all
classes of voting stock of the issuer of the Debt Obligation
and the foreign investor is not a controlled foreign
corporation related (within the meaning of Section 864(d)(4)
of the Code) to the issuer of the Debt Obligation;
(iii) with respect to any gain, 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
(iv) the foreign investor provides all certification
which may be required of his status.
It should be noted that the 1993 Tax Act includes a
provision which eliminates the exemption from United States
taxation, including withholding taxes, for certain "contingent
interest." This provision applies to interest received after
December 31, 1993. No opinion is expressed herein regarding the
potential applicability of this provision and whether United
States taxation or withholding taxes could be imposed with
respect to income derived from the Units as a result thereof.
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. 333-45816)
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
