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If a unit with the Bonding Knife Ritual (BKR) upgrade is falling back and has been targeted by the Terrify psychic power (which applies a -1 Leadership modifier) in the previous player turn, does it make the regroup test with a -1 modifier, or at it's unmodified leadership?

BKR has two different definitions in the Tau codex which would result in different outcomes to this situation.

Page 32 defines BKR as: A unit consisting entirely of models with this special rule (not counting drones) benefits from Heroic Morale, even if they are not accompanied by an Independent Character.

Page 104 defines BKR as: A unit with this special rule always tests to regroup on its unmodified Leadership.

Heroic Morale (BRB page 166) says: A unit that contains one or more Independent Characters does not need a double 1 to Regroup if reduced to below 25% of its starting numbers, but instead tests as if it has at least 25% remaining.

Has this come up before? Are these rules supposed to be combined, or is one of them incorrect?

Page 104 is (I'm assuming, I don't have the codex on hand) a brief summary. Whereas, Page 32 is the actual rule.

Ah okay, so I should just ignore the definition on page 104 and regard it as an improperly worded summarization?

I believe so. Again I'm not 100% sure, but I think pg 104 is just brief summaries of the various rules.

Nothing says to ignore modifiers and you have to be careful with how the modifiers are worded.

If it's a morale modifier or a leadership modifier.

A unit with LD9 has to roll for morale at -2. They roll at 7.

A stubborn unit with LD9 has to roll for morale at -2. They roll at 9.

A stubborn unit with LD9 has to roll for morale after being hit by Horrify. They roll at 6. Why? Because Stubborn ignores morale modifiers while LD modifiers lower the actual stats and is not a "penalty" per say.

In the case of the bonding knife you have the penalty of -1 for Terrify BUT even if you have one last model, he will regroup at -1 instead of double 1.

Unlike Stubborn, Heroic Morale never refers to ignoring modifiers to LD or morale.

 Erik_Morkai wrote:
Nothing says to ignore modifiers and you have to be careful with how the modifiers are worded
<snip>
Unlike Stubborn, Heroic Morale never refers to ignoring modifiers to LD or morale.

My confusion stemmed from the Tau codex's Bonding Knife Ritual special rule on page 109, which states that the unit "always tests to regroup on its *unmodified* Leadership". The word unmodified would mean to ignore modifiers. But this definition is different than the definition given earlier in the book on page 32 which only references the unit always benefitting from heroic morale. As Happyjew pointed out, this seems like it is an error in the codex as a result of trying to summarize the rule and condense it's wording.