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76 <br /> the remaining term of the Premium Bond based on the owner's yield over the remaining term of the <br /> Premium Bond, determined based on constant yield principles (in certain cases involving a Premium <br /> Bond callable prior to its stated maturity date, the amortization period and yield may be required to be <br /> determined on the basis of an earlier call date that results in the lowest yield on such Premium Bond). An <br /> owner of a Premium Bond must amortize the bond premium by offsetting the qualified stated interest <br /> allocable to each interest accrual period under the owner's regular method of accounting against the bond <br /> premium allocable to that period and subtract such bond premium from the owner's basis in such <br /> Premium Bond. If the bond premium allocable to an accrual period exceeds the qualified stated interest <br /> allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the <br /> owner of a Premium Bond may realize a taxable gain upon disposition of the Premium Bond even though <br /> it is sold or redeemed for an amount less than or equal to the owner's original acquisition cost. <br /> Bond Counsel's opinion will not specifically address any issues relating to the treatment of <br /> premium paid on, or attributable to,Premium Bonds. Owners and prospective purchasers of Premium <br /> Bonds should consult their own tax advisors regarding the treatment of bond premium for federal <br /> income tax purposes and any North Carolina or other state and local tax consequences in <br /> connection with receipt of bond premium or otherwise with respect to the ownership and <br /> disposition of Premium Bonds. <br /> OTHER TAX CONSEQUENCES <br /> Ownership or transfer of, or the accrual or receipt of interest on, the 2019B Bonds may result in <br /> collateral federal, State of North Carolina, and other state or local tax consequences to certain taxpayers, <br /> including, without limitation, financial institutions, property and casualty insurance companies, certain <br /> foreign corporations doing business in the United States, certain S corporations with excess passive <br /> income, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be <br /> deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations,taxpayers <br /> who may be eligible for the federal earned income tax credit, and taxpayers subject to franchise, estate, <br /> inheritance, gift or capital gains taxes. Owners and prospective purchasers of the 2019B Bonds should <br /> consult their tax advisors as to any such possible tax consequences. Except to the extent covered in its <br /> legal opinion,Bond Counsel expresses no opinion regarding any such collateral tax consequences. <br /> Interest on the 2019B Bonds may or may not be subject to state or local taxation in jurisdictions <br /> other than North Carolina. Owners and prospective purchasers of the 2019B Bonds should consult their <br /> own tax advisors as to the status of interest on the 2019B Bonds under the tax laws of any such <br /> jurisdiction other than North Carolina. Bond Counsel will express no opinion as to any such matters. <br /> No assurance can be given that future legislation, including amendments to the Code or <br /> interpretations thereof, if enacted into law, or certain litigation or judicial decisions, if upheld, will not <br /> contain provisions or produce results which could, directly or indirectly, reduce the benefit of the <br /> excludability of interest on the 2019B Bonds from gross income for federal income tax purposes. <br /> The Internal Revenue Service (the "Service") has an ongoing program of auditing tax-exempt <br /> obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is <br /> includable in the gross income of the owners thereof for federal income tax purposes. No assurances can <br /> be given as to whether or not the Service will commence an audit of the 2019B Bonds. <br /> Interest paid on tax-exempt obligations, such as the 2019B Bonds, will be subject to information <br /> reporting in a manner similar to interest paid on taxable obligations. Although such reporting requirement <br /> does not, in and of itself, affect the excludability of interest with respect to the 2019B Bonds from gross <br /> income for federal income tax purposes, such reporting requirement causes the payment of interest with <br /> 20 <br />