1990-12-28 Resolution 30 - Laserfiche WebLink

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`„ i w ~ ~ a ~~ ~ ~ ~ TAX MATTERS ~~~ ~ ~ ~~ In the opinion of Baker & Daniels, Indianapolis, Indiana, Bond Counsel, under law existing and. in effect on the date of such opinion, .and assuming continuing compliance by the Authority with its Tax Covenants (as hereinafter defined), the interest on the Bonds is excludable from gross income for :purposes of Federal income taxation pursuant to Section 103 of the Code as in effect on the date of delivery of the Bonds. In the opinion of Bond Counsel, interest on the Bonds is exempt from taxation in the State of Indiana for all purposes except the Indiana financial institutions tax and the Indiana inheritance tax. As amended by the Tax Reform Act of 1986, the Code prescribes a number of qualifications and conditions, including continuing issuer. compliance, for the interest on state and local .government obligations to be and remain excludable from gross income for federal income tax purposes. Under the Trust Agreement, the Authority has made certain covenants (the "Tax Covenants") not to take any action or to fail to take any action with respect to the proceeds of the Bonds or any investment earnings thereon which would. result in constituting the Bonds as "arbitrage bonds" under the Code or-would otherwise cause the interest on the Bonds to cease to be excludable from gross income for purposes of Federal, income taxation. The Authority shall comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable.. Noncompliance with the foregoing Tax Covenants may cause the interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. Further, even assuming compliance by the Authority with its Tax Covenants, certain provisions of the Code may. affect certain owners of the Bonds. The Code imposes alternative minimum taxation on corporations (as defined .for Federal income tax purposes) and individuals. The Borids are not "private' activity bonds" for the purpose of treatment of interest thereon as a direct preference item in calculating the alternative minimum tax. However, for corporations (as defined for federal income tax purposes) the alternative minimum tax is determined under the Code at 20~ of each corporation's alternative minimum .taxable income. Such alternative minimum taxable. income includes 50$ of the amount by which "adjusted net book income" exceeds the corporation's "alternative minimum taxable .income." After. 1.989, such alternative minimum taxable income will include 75~ of the amount by which "adjusted current earnings" exceed. "alternative minimum taxable income." Interest on a Bond would be includable in the "adjusted net book income" and "adjusted current earnings" of a corporation. for purposes of such alternative minimum tax. In addition, the Code imposes an environmental tax on corporations for .the years beginning after 1986 and. before- 1992 equal to 0.12 of the excess of "modified alternative minimum taxable income" over a specified amount, generally $2 million.. Interest on a Bond would be taken into account in computing such environmental tax. Further, the Gode imposes a branch profits tax on U.S. branches of foreign corporations equal to 30~ of the adjusted earnings and profits. of such corporations attributable to income that is effectively connected, or treated as such, with the conduct of .trade or business in the United States. Interest on the Bonds would be includable in such earnings and profits.