OTHER-2024-032-Preliminary official statement

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Bond Counsel ' s opinion will not specifically address any issues relating to the treatment of premiums paid on Premium Bonds . Owners of Premium Bonds should consult their tax advisors with respect to the tax consequences of owning or disposing of a Premium Bond , ORIGINAL ISSUE DISCOUNT The 2024 Bonds maturing on October 1 , (collectively, the "Discount Bonds ") are being sold at initial offering prices which are less than the principal amounts payable at maturity . Under the Code, the difference between (a) the initial offering prices to the public (excluding bond houses and brokers) at which a substantial amount of each maturity of the Discount Bonds is sold and (b) the principal amount payable at maturity of such Discount Bonds constitutes original issue discount treated as interest which (in the case of the 2024A Bonds) will be excluded from the gross income of the owners of such Discount Bonds for federal income tax purposes . In the case of an owner of an Discount Bond, the amount of original issue discount on such Discount Bond is treated as having accrued daily over the term of such Discount Bond on the basis of a constant yield compounded at the end of each accrual period and is added to the owner ' s cost basis of such Discount Bond in determining, for federal income tax purposes , the gain or loss upon the sale, redemption or other disposition of such Discount Bond (including its sale, redemption or payment at maturity) . Amounts received on the sale, redemption or other disposition of an Discount Bond which are attributable to accrued original issue discount on such Discount Bond will be treated (in the case of the 2024A Bonds ) as interest exempt from gross income, rather than as a taxable gain, for federal income tax purposes, and will not be a specific item of tax preference for purposes of the federal alternative minimum tax imposed on corporations and individuals . However, it should be noted that with respect to certain owners , a portion of the original issue discount that accrues in each year w may result in other collateral federal income tax consequences for certain taxpayers in the year of accrual . Consequently, owners of a Discount Bond should be aware that the accrual of original issue discount on any Discount Bond in each year may result in a federal alternative minimum tax liability or other collateral federal income tax consequences , even though such corporate owner may not have received any cash payments attributable to such original issue discount in such year . Original issue discount is treated as compounding semiannually (which yield is based on the initial public offering price of such Discount Bond) at a rate determined by reference to the yield to maturity of each individual Discount Bond . The amount treated as original issue discount on an Discount Bond for a particular semiannual accrual period is equal to (a) the product of ( 1 ) the yield to maturity for such Discount Bond (determined by compounding at the close of each accrual period) and (2 ) the amount which would have been the tax basis of such Discount Bond at the beginning of the particular accrual period if held by the original purchaser, less (b) the amount of interest payable on such Discount Bond during the particular accrual period . The tax basis is determined by adding to the initial public offering price on such Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior accrual periods . If an Discount Bond is sold between semiannual compounding dates , original issue discount which would have accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period . The Code contains additional provisions relating to the accrual of original issue discount in the case of owners of the Discount Bonds who subsequently purchase any Discount Bonds after the initial offering or at a price different from the initial offering price during the initial offering of the 2024 Bonds . Owners of Discount Bonds should consult their own tax advisors with respect to the precise determination for federal and state income tax purposes of the amount of original issue discount accrued upon the sale, redemption or other disposition of a Discount Bond as of any date and with respect to other federal, state and local tax consequences of owning and disposing of an Discount Bond . It is possible that under the applicable provisions governing the determination of state or local taxes, accrued original issue discount on 20