RES-2009-088 Resolution for the Sale of Refunding Bonds

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44 TAX TREATMENT Opinion of Bond Counsel. In the opinion of Sanford Holshouser LLP, Carrboro, North Caro- lina, Bond Counsel for the County ("Bond Counsel"), under existing law, interest on the Bonds (1) will not be included in gross income for federal income tax purposes, (2)will not be a specific item of tax preference for purposes of the federal alternative minimum income tax imposed on individuals and corporations;however,with respect to corporations(as defined for federal income tax purposes), such interest will be taken into account in determining adjusted current earnings for purposes of computing the alternative minimum income tax on corporations, and(3)will be exempt from exist- ing State of North Carolina income taxation. Bond Counsel will express no other opinion regarding the federal or North Carolina tax consequences of the ownership of or the receipt or accrual of inter- est on the Bonds. Bond Counsel will give its opinion in reliance upon certifications by County representatives and others as to certain facts relevant to the opinion.The County has covenanted to comply with the provisions of the Internal Revenue Code of 1986, as amended (the"Code"), regarding, among other matters, the use,expenditure and investment of the proceeds derived from the sale of the Bonds and the timely payment to the United States of any arbitrage profit with respect to the Bonds. The County's failure to comply with such covenants could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactively to date of issuance of the Bonds. The Bonds will not be designated as"qualified tag-exempt obligation." Other Tax Consequences. In addition to the matters addressed above, prospective purchas- ers of the Bonds should be aware that the ownership of tax-exempt obligations may result in colla- teral federal income tax consequences to certain taxpayers, including without limitation, financial institutions, property and casualty insurance companies, certain S corporations, certain foreign cor- porations subject to the branch profits tax, corporations subject to the environmental tax, recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have in- curred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchas- ers of the Bonds should consult their tax advisors as to the applicability and impact of such consequences. Interest on the Bonds may or may not be subject to state or local taxation in jurisdictions other than North Carolina. Prospective purchasers of the Bonds should consult their own tax advisors as to the status of interest on the Bonds under the tax laws of any such jurisdiction other than North Carolina. Discount Bonds and Premium Bonds . as lead underwriter, has advised the Local Government Commission of North Carolina that the initial public offering prices of the Bonds maturing on Feb- ruary 1, to inclusive, (the "Discount Bonds"), are less than the respective amounts payable at maturity.An amount not less than the difference between the initial public of- fering prices of the Discount Bonds and the amounts payable at maturity constitutes original issue discount("OID"). Owners of Discount Bonds should consult their own tax advisors as to the determi- nation for federal tax purposes of the amount of OID properly accruing each year with respect to the Discount Bonds and as to federal tax consequences and the treatment of OID for State of North Car- olina and local tax purposes. ' as lead underwriter, has also advised the Local Govern- ment Commission of North Carolina that the initial public offering prices of the Bonds maturing on February 1, to inclusive, (the"Premium Bonds'),are greater than the amounts payable 26