1991-03-08 Resolution 36 - Laserfiche WebLink

Home Browse Search

Under the Code, ownership of tax-exempt obligations may ulna result in colMikhout • federal income tax consequences to certain taxpaycrs including, limitation, S .corporations, financial .institutions, property and casualty insutance companies, indivl0u81 recipients of Social Security yr Railroad Retirement banefitr and taxpayers who may be deetaed to hacionscurred (or ' continued) indebtadnars to purchase or carry tax-exempt oblig No provision has been made for redemption of tie Bonds, or for an increase in the interest rate on the Bondb, in th4 avant that interact on the Bonds becomes subject to income taxation. The foregoing dues nvt purport to be a compreheneivc diBCUeaion of the tax Consequences of owning the Bonds. Proapcrti•ae owners of the Bonds should conaulr their own L8x advisors with respect to the foregoing and other tax conscquoncen of o~+ning the Bonds. ORIGINAL 'SctT~ DISCOUNT ~'or Federal income tsx purpocpc, the LQaue l2antttl aondz maturing on August 1, 2007 through and .including August 1, 2012 (the. "Discount Rands°) will be considered to have "original issue discount' aquai to thn diffsr6nca between their respective original issue price end tY~e arnaun~ payable upon their respective maturities. Th= original issue pYicc of each Discount Sond will ba the initial offering price to the public at whic?~ a substantial ansount of such Discount $opds are sold, and the issue date will be the date on which such Discount Bonds arE first issued to the public. Under exisCing law, the original issue discount on a Discount Bone accrued In the hands of a holder is treated fvr Federal income tax purposes as interest which is excludable pursuant to Section; • 103 of the Coda fYv~n groan incona, arsuming compliance by the Issuer with its .Tax Covenants. Tha holder's basic for determining gain ar lots an a sale, maturity or other diepotition of a Discount Bond generally ,dill equal the hcldQr's: cost, incrtased by thm original issue discount that is accrued during the period that the Discvurrt Bond is held by such holder. Gt»ernlly, any gain or lose rocognizac by a holder on a sale, exchange or payment at maturity of a Discount Bond (beaed on the holder's basis) will be taxable as capital gain or leas (assuming the Discount Bond is held as a capital asset). A holder will recognize a taxable gain or loss on a Discount Bond called prior to maturity en the difference batwaon rho herder's basis and the call price of the Discount Bond, Owners of the Discount Bonds should consult their own tax advisers with respect to the vomputation for Fadaral income tax purposes of the amounts of original issue discount which accrue during the period in which such Discount-Bonds are held. Occners v£ tht Discount Bonds should also eon$ult shalt own tax advitorc with respect to the state and local tax consequences arising from the original issue dlscount of she Discount Honda.