1998-10-19 Resolution 130 - Laserfiche WebLink

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• The interest on the Refunding Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. However, interest on the Refunding Bonds is included in calculating corporate alternative minimum taxable income. Although Bond Counsel will render an opinion that interest on the Refunding Bonds is excludable from federal gross income tax and exempt from taxation in the State of Indiana for all purposes except the Indiana financial institutions tax and the Indiana inheritance tax, certain Indiana state taxes, the accrual or receipt of interest on the Refunding Bonds may otherwise affect a holder's federal income tax or state tax liability. The nature and extent of these and other tax consequences will depend upon the holder's particular tax status and a holder's other items of income or deduction. Taxpayers who may be affected by such other tax consequences include, without limitation, financial institutions, certain insurance companies, S corporations, certain foreign corporations, individual recipients of Social Security or railroad retirement benefits, and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry the Refunding Bonds. Bond Counsel expresses no opinion regarding any such other tax consequences. The foregoing does not purport to be a comprehensive discussion of the tax consequences of owning the Refunding Bonds. Prospective purchasers of the Refunding Bonds should consult their own tax advisers with regard to the other tax consequences of owning the Refunding Bonds. ORIGINAL ISSUE DISCOUNT If initial public offering price of all or certain maturities the Refunding Bonds is less than the principal amount payable at maturity, such Refunding Bonds will be considered. to be issued with original issue discount (such Refunding Bonds, the "Discount Bonds"). The difference between the initial public offering price of the Discount Bonds, as set forth on the cover page of this Official Statement (assuming it is the first. price at which a substantial amount of that maturity is sold) (the "Issue Price' for such maturity), and the amount payable at maturity of the Discount Bonds will be treated as "original issue discount " A taxpayer who purchases a Discount Bond in the initial public offering at the Issue Price for such maturity and. who holds such Discount Bond to maturity may treat the full amount of original issue discount as interest which is excludable from the gross income of the owner of that Discount Bond for federal income tax purposes and will not, under present federal income tax law, realize taxable capital gain upon payment of the Discount Bond at maturity. The original issue discount on each of the Discount Bonds is treated as accruing daily over the term of such Refunding Bond on the basis of the yield to maturity determined on the basis of compounding at the end of each six-month period (or shorter period from the date of the original issue) ending on March 1 and September 1 (with straight line interpolation between compounding dates.) Section 1288 of the Code provides, with respect to tax-exempt obligations such as the Discount Bonds, that the amount of original issue discount accruing each period will be added to the owner's tax basis for the Discount Bonds. Such adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Discount Bonds (including sale, redemption or payment at maturity). Owners of Discount Bonds who dispose of Discount Bonds prior to maturity should consult their tax advisors concerning the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or other disposition of such Discount Bonds prior to maturity. -17-