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18.2. United States Federal Income Taxation

The following summary sets forth the material U.S. federal income tax considerations related to the purchase, ownership, and disposition of Common LP Units. Unless otherwise stated, this summary deals only with partners that are U.S. Persons (as defined below) who purchase their Common LP Units in this offering and who hold their Common LP Units as capital assets within the meaning of Section 1221 of the Code. The following discussion is only a discussion of the material U.S. federal income tax matters as described herein and does not purport to address all of the U.S. federal income tax consequences that may be relevant to a particular Limited Partner of KUE ("Limited Partner") in light of such Limited Partner's specific circumstances. In addition, except as expressly stated, the following summary does not address the U.S. federal income tax consequences that may be relevant to special classes of Limited Partners who may be subject to special rules or treatment under the Code, such as financial institutions, insurance companies, regulated investment companies, real estate investment trusts, partnerships, or other pass-through entities, dealers or traders in securities, tax-exempt organizations, expatriates, any person who owns or is deemed to own, for U.S. federal income tax purpose, 10% or more of the total combined voting power of all classes of voting stock of the corporate subsidiaries of KUE, persons that have a "functional currency" other than the United States dollar, and any individual who is a non-U.S. Person (as defined below) and who is present in the U.S. for 183 days or more in a taxable year. This discussion does not include any description of the tax laws of any state or local governments within the U.S. No ruling has been or will be sought from the IRS regarding any matter discussed herein. Counsel to KUE has not rendered any legal opinion regarding any tax consequences relating to KUE or an investment in KUE. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the positions taken by KUE as set forth below.

For purposes of this discussion, the term "U.S. Person" means (1) a citizen or resident of the U.S., (2) a corporation created or organized in or under the laws of any State of the U.S. (including the District of Columbia), (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source, (4) a trust if either (a) a court within the U.S. is able to exercise primary supervision over the administration of such trust and one or more U.S. Persons have the authority to control all substantial decisions of such trust or (b) the trust has a valid election in effect to be treated as a U.S. Person for U.S. federal income tax purposes, or (5) any other person or entity that is treated for U.S. federal income tax purposes as if it were one of the foregoing. The term "non-U.S. Person" means any person other than a U.S. Person.

18.2.1 United States Federal Income Taxation of KUE and its Subsidiaries

Partnership Status of KUE. KUE believes that it should be classified as a partnership for United States federal income tax purposes. Accordingly, KUE is not a taxable entity and incurs no U.S. federal income tax liability. Instead, each Partner will be allocated its share of KUE's income or loss, as the case may be, for United States federal income tax purposes as set forth in the Limited Partnership Agreement. In addition, each U.S. Partner's share of income or loss from KUE generally will be required to be includable in income for state and local tax purposes in the jurisdiction in which the investor is a resident and in the jurisdictions in which KUE operates. Each U.S. Partner will be responsible for paying the income tax on that portion of KUE's income allocated to such investor. No assurances can be given that any cash distribution will be made from KUE to the partners to pay such income tax liabilities.

Under the Code, certain non-U.S corporations may be treated as U.S. corporations for U.S. federal income tax purposes, thereby subjecting such non-U.S. corporations to U.S. federal income tax on their income. Recently enacted U.S. tax legislation includes one such provision. Under this legislation, referred to as the anti-inversion legislation, non-U.S. corporations that acquire interests in a U.S. corporation or partnership and meet certain ownership, operational and other tests may be treated as U.S. corporations for federal income tax purposes. The legislation grants broad regulatory authority to the U.S. Secretary of Treasury to provide such regulations as may be appropriate to determine whether a non-U.S. corporation is treated as a U.S. corporation or as are necessary to carry out the intent of the provision, including adjusting its application as necessary to prevent the avoidance of its purpose. Recently issued

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