EXHIBIT 8.01
SIDLEY & AUSTIN
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
DALLAS One First National Plaza WASHINGTON, D.C.
______ Chicago, Illinois 60603 ______
LOS ANGELES Telephone 000 000 0000 LONDON
______ Facsimile 000 000 0000 ______
NEW YORK SINGAPORE
Founded 1866 ______
TOKYO
WRITER'S DIRECT NUMBER
January 28, 1997
Xxxxxxx Xxxxx Investment Partners Inc.
General Partner of
ML Principal Protection X.X.
Xxxxxxx Xxxxx World Headquarters
South Tower, 6th Floor
World Financial Center
New York, New York 10080-6106
Re: Registration Statement on Form S-1
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Dear Sir or Madam:
We refer to Post-Effective Amendment No. 1 to the Registration
Statement on Form S-1 (Registration No. 333-7593), filed by ML Principal
Protection L.P. (the "Partnership") and ML Principal Protection Trading L.P.
(the "Trading Partnership") with the Securities and Exchange Commission under
the Securities Act of 1933 (the "Securities Act") on or about January 28, 1997.
Pursuant to Rule 429 under the Securities Act, the form of prospectus set forth
in the Registration Statement (the "Prospectus") also relates to the
Registration Statement on Form S-1 (Reg. No. 33-73914) declared effective on
July 14, 1994.
We have reviewed such data, documents, questions of law and fact and
other matters as we have deemed pertinent for the purpose of this opinion.
Based upon the foregoing, we hereby confirm our opinions expressed under the
caption "Federal Income Tax Consequences" in the Prospectus that: (i) each of
the Partnership and the Trading Partnership in which the Partnership will invest
will be taxed as a partnership for federal income tax purposes (assuming that
Xxxxxxx Xxxxx Investment Partners Inc. makes a capital contribution to the
Trading Partnership in at least the amount contemplated by the Prospectus);
(ii) each Partner will be required to report on his tax return his allocable
share of the Partnership's income, gains, losses, and deductions; (iii) based
upon the contemplated trading activities of the Trading Partnership, the Trading
Partnership should be treated as engaged in the conduct of a trade or business
for federal income tax purposes, and, as a result, the ordinary and necessary
business expenses incurred by
SIDLEY & AUSTIN CHICAGO
Xxxxxxx Xxxxx Investment Partners Inc.
January 28, 1997
Page 2
the Trading Partnership in conducting its commodity futures trading business
should not be subject to limitation under section 67 of the Internal Revenue
Code of 1986, as amended (the "Code") or under section 68 of the Code; and (iv)
based on the contemplated trading activities of the Trading Partnership and of
the Partnership, the income earned by the Partnership will not constitute
"unrelated business taxable income" under section 511 of the Code to employee
benefit plans and other tax-exempt entities which purchase Units; provided that
such Units purchased by such plans and entities are not "debt-financed" within
the meaning of Section 514 of the Code.
We also advise you that in our opinion the description set forth under
the caption "Federal Income Tax Consequences" in the Prospectus correctly
describes (subject to the uncertainties referred to therein) the material
aspects of the federal income tax treatment to United States individual
investors, as of the date hereof, of an investment in the Partnership.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the inclusion in the Prospectus of our opinion set
forth under the caption "Federal Income Tax Consequences."
Very truly yours,
SIDLEY & AUSTIN
