Tax Implications of Choice of Entity for Argentina Financial ,
 The attached chart summarizes the tax implications of the various options for 
choice of legal entity for financial trading in Argentina.    The chart 
addressed income taxes only.  Moving the operations to Brazil will result in 
additional transactions taxes that are not addressed  in this analysis.  As 
you can see, the tax impact of each option depends the specific set of facts 
as to how Enron is operating its trading activity.  Of particular importance 
is the concept  that the US will tax the earnings of foreign jurisdictions 
even if there are no US employees involved in the transactions to the extent 
a US affiliate of Enron is deemed to be providing substantial assistance to 
the foreign entity that is involved in the financial trading activities.  

The current structure for financial trading in Argentina is the most tax 
efficient based upon the way Enron has chosen to conduct its business.  The 
earnings are limited to a single layer of tax in the US.  To the extent that 
the Sao Paulo office develops into an operation that can fully support all 
trading activity so that there is no support from the US, we may be able to 
restructure the operations to provide more flexibility to the traders in 
South America.  Even if we shift the activity to a Brazilian entity,  the 
traders will have to follow guidelines to avoid taxation in Argentina as well.

Lynn
brent.hendry@enron.com, don.black@enron.com