TEPPCO Partners, L.P. (TPP)

TAX MATTERS

1.             Tax Returns, Proceedings and Elections.  Tax returns, proceedings, and elections shall be governed by the provisions of this Schedule 5.2 as it may be amended from time to time by a vote of the Partners.

(a)           Enterprise is designated the tax matters partner (“TMP”) as defined in Section 6231(a)(7) of the Code.  The designation of TMP shall be effective only for operations conducted by the Partnership pursuant to this Agreement.

(b)           The TMP shall cause to be prepared all necessary federal, state, and local Partnership income, excise, and property tax returns and, except for excise taxes, furnish a copy of the proposed return to the Partners for their review not later than one month prior to the due date, including extensions, for filing such returns.  The TMP shall timely file such returns and, upon the written request of a Partner, shall provide the Partners with schedules which are consistent with the treatment of all items on those returns.  The TMP agrees to use all reasonable efforts in the preparation and filing of such tax returns but, in doing so, shall incur no Liability to any Partner with respect to such returns or any elections relating thereto.  On or before the last day of May after the end of the taxable year, the TMP will cause each Partner to be provided with estimates of all information reasonably necessary or appropriate to file its respective tax returns and reports.

(c)           The Partners shall furnish the TMP with such information as it may reasonably request to aid in the preparation of the Partnership returns and which will permit it to provide the Internal Revenue Service with sufficient information so that proper notice can be mailed to such Partners as provided in Section 6223 of the Code.

(d)           To the extent and in the manner provided by applicable Regulations, the TMP shall keep each Partner informed of all administrative and judicial proceedings for the adjustment of Partnership items (as defined in Section 6231(a)(3) of the Code) at the Partnership level.

(e)           If an administrative proceeding contemplated under Section 6223 of the Code has begun, the Partners shall notify the TMP of their treatment of any Partnership item on

their federal income tax return in a manner which is or may be inconsistent with the treatment of that item on the Partnership return.

(f)            The TMP shall not enter into any extension of the period of limitations as provided under Section 6229 of the Code without the prior written consent of the Partners.

(g)           Any Partner who enters into a settlement agreement with the Secretary of the Treasury with respect to Partnership items shall promptly notify the other Partners of such settlement agreement.

(h)           The TMP shall not bind the other Partners to a settlement agreement without obtaining the written concurrence of the Partners who will be bound by such agreement.

(i)            The TMP shall notify all Partners of any intention to file a petition with a court for a readjustment of any Partnership items.  Such notice shall be given within a reasonable time so that the Partners may participate in choosing the forum for the filing of any petition.  This provision shall not apply to any Partner who does not have an interest in the outcome of such matter.  Whether a Partner has an interest in the outcome will be determined using the standard in Section 6226(d) of the Code.  Further, the TMP or other Partner who had brought the action under Section 6226 of the Code, shall provide the other Partners with notice of any intention to seek review of a determination by any court under that Section.

(j)            No Partner may file a request for an administrative adjustment of Partnership items for any Partnership taxable year pursuant to Section 6227 of the Code without first notifying all other Partners.  If the other Partners agree with the requested adjustment, the TMP shall file the request for administrative adjustment on behalf of the Partnership.

(k)           If any part of an administrative adjustment request filed by a Partner is not allowed by the Internal Revenue Service, the Partner filing such request shall seek the concurrence of other Partners with regard to the filing of a petition with a court and with regard to seeking review of the determination by any court in the same manner as provided in Section l(i) of this Schedule 5.2.

(l)            The TMP and other Partners shall use all reasonable efforts to comply with the responsibilities as outlined herein and in Sections 6222 through 6233 of the Code, but shall incur no Liability to any other Partner for failure to fulfill such responsibilities.

(m)          The provisions of this Schedule 5.2 shall survive the termination of the Partnership or the termination of any Partner’s interest in the Partnership and shall remain binding on the Partners for a period of time necessary to resolve with the Internal Revenue Service or the Department of the Treasury any and all matters regarding the federal income taxation of the Partnership and any applicable state income tax matters.

2.             Elections. The Partners agree that the TMP is directed to make the following elections on behalf of the Partnership in the appropriate returns of the Partnership prepared pursuant to Section 1 above:

(a)           To adopt the accrual method of accounting;

(b)           To compute the allowance for depreciation or cost recovery using the shortest permissible life and most rapid recovery method permitted under the Code;

(c)           To elect the calendar year as the Fiscal Year of the Partnership;

(d)           To elect to amortize all organization costs of the Partnership under Section 709 of the Code; and

(e)           To make such other elections as the Partners may direct.

3.             Section 754 Election.  The Partnership shall make an election pursuant to Section 754 of the Code to adjust the basis of Partnership property.