Agenda - 03-02-2006-8bOS - Laserfiche WebLink

Browse Search

Tax Treatment [OIP & OID language] Opinion of Special Counsel. In the opinion of Special Counsel, under existing law, interest components of payments so designated and made by the County with respect to the 2006A Certificates (1) will not be included in gross income for federal income tax purposes, (2) t~~ill 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 existing State of North Carolina income taxation. Special Counsel will express no other opinion regarding the federal or North Carolina tax consequences of the ownership of or the receipt or accrual of interest on the 2446A Certificates. Special Counsel's opinion does not address the tax-exempt status of payments on the 2446A Certificates derived from parties other than the County (for example, payments derived from proceeds of a foreclosure on the Mortgaged Property), even if those payments are denominated as interest with respect to the 2446A Certificates. Special 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 198b, as amended through the date of deliver•~~ of the 2446A Certificates (the "Code"), regarding, among other matters, the use, expenditure and investment of the proceeds derived from the sale of the 2006A Certificates and the timely payment to the United States of any arbitrage profit with respect to the 2046A Certificates. The County's failure to comply with such covenants could cause interest on the 2446A Certificates to be included in gross income for federal income tax purposes retroactively to the date of issuance of the 2046A Certificates. Other Tax Consequences. In addition to the matters addressed above, prospective purchasers of the 200&A Certificates should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including without limitation financial institutions, property and casualty insurance companies, certain S corporations, certain foreign corporations subject to the branch profits tax, corporations subject to the environmental tax, recipients of Social Security or Railroad Retirement benefits and taxpayers t~~ho may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the 2006A Certificates should consult their tax advisors as to the applicability and impact of such consequences. Interest on the 2446A Certificates may or may not be subject to state or local taxation in jurisdictions other than North Carolina. Prospective purchasers of the 2406A Certificates should consult their own tax advisors as to the status of interest on the 2006A Certificates under the tax laws of any such jurisdiction other than North Carolina. CONTINUING DISCLOSURE OBLIG:~TION In accordance with the requirements of Rule 15c2-12 promulgated by the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 ("Rule 1 Sc2-12"), C-883836v4 13361.00022 31