1991-03-08 Resolution 36 - Laserfiche WebLink

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.~ In the opinion of Baker & Daniels, South Bend, Indiana, Bond Counsel. under law existing and in effect on the date of such opinion, and assuming continuing ^ com~.~liance by the Authority with its Tax Covenants (as hereinafter defined), the interest on the Bonds is excludable from grass income far purposes of Federal income taxation pursuant to Section 103 of the Goda as in afftaet on thQ data of delivery of the Bonds. In the opinion of Bond Counsel, undax exiting law, interest on the Bonds is exempt from taxation in the State of Indiana for all pur.poees except .the Indiana fine+ncial inytitutione tax and the Indiana inhcritnncc tax, As amended by the Tax Reform Act of 1586, the Code prescribes a number of qual.ificati.ons and conditions, including continuing issuer compliance, for the interest an state and local govern,~ent obligations to be and remain excludable from .gross income for federal inco~:e tax purposes. Under the Trust Agreement, the Authority nos made certain covenants (the "Tar. Covenants.'`) not to take any action or to fail to take any gc.tion with respect ro the procaAds of the Bonds ar any investment earnings thereon which would result in constituting the Bonds as ''arbitrage bonds" under the Code or would otherwise oeuee the interest on the Bonds to cease to be excludable from gross income fur purposes of Federal income taxation. .The Authority sboll comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable. Noncompliance with the £orcgoing Tar. Covenants may cause the interest an the Bonds to be includable in gross income for federal income tax purposes retroactively to the data of issuance of the Bands. • Further, even assuming campiignca by the .Authority with its 'pax Covenants, certain provisions of the Go de may affect certain owners of the Bonds. Tho Cade imposes alternative ~ainimurn taxation on corporstien6 (as defined for Fader8l income tax purposes) and individuals,. The 8onda are not "private activity bonds" for the purpose of treatment of interest thereon as a dixcct prefercnca item 1n calculating the alternative minimum cox. However, for corporations {aa dcfincd £or fcdcral incvmc tax purposes) the alternative minimus tax is determined under the code at 20t of each corparatian's alternative minimum taxable income. Such alternatiive minimum taxable income includes 75~ of the amount by which "adjusted current earnings" exceed "alternative minimum taxable income." Interest on a Bond would be includable in the "ad~usted current earnings" of a corporation for purpaeas of such alternative mini.RUm tax. Fn addition, the Code imposes an environmental tax. on corporations for the years beginning after 1986 and before 199b .equal to 0.128 of the excess of "modified alternative minimum taxable income" aver a specified amount, generally $2 million. In~erest on a Bond would be taken into account. in computing such er~virorunental tax. FlxrttieY, the Cade imposes a branch profits tax on U.S, branches of foreign corporations equal to 30is of the adjusted earnings and profits of such earpararions attributable to income that is effectively connected, or treated as such, with the conduct cf trade or business in the United States. Interest on the Bonds would be includable in such earnings and profits. •