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1994-05-17 Resolution 91
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1994-05-17 Resolution 91
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TAX MATTERS <br />• In the opinion of Baker & Daniels, South Bend, Indiana, Bond Counsel, under law existing and in effect <br />on the date of such opinion, and assuming continuing compliance by the Authority with its Tax Covenants (as <br />hereinafter defined), the interest on the Bonds is excludable from gross income for purposes of federal income <br />taxation pursuant to Section 103 of the Internal Revenue Code of 1986, as amended and as in effect on the date of <br />delivery of the Bonds (the "Code "). In the opinion of Bond Counsel, under law existing and in effect on the date <br />of such opinion, interest on the Bonds is exempt from taxation in the State of Indiana for all purposes except the <br />Indiana financial institutions tax and the Indiana inheritance tax. Bond Counsel expresses no other opinion regarding <br />any other tax consequences. <br />As amended by the Tax Reform Act of 1986, the Code prescribes a number of qualifications and <br />conditions, including continuing issuer compliance, for the interest on state and local government obligations to be <br />and remain excludable from gross income for federal income tax purposes. Under the Trust Agreement, the <br />Authority has made certain covenants (the "Tax Covenants ") not to take any action or to fail to take any action with <br />respect to the proceeds of the Bonds or any investment earnings thereon which would result in constituting the Bonds <br />as "arbitrage bonds" under the Code or would otherwise cause the interest on the Bonds to cease to be excludable <br />from gross income for purposes of federal income taxation. The Authority also has made certain covenants to <br />comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable. <br />Noncompliance with the foregoing Tax Covenants may cause the interest on the Bonds to be includable in gross <br />income for federal income tax purposes retroactive to the date of issuance of the Bonds, in which case the market <br />value of the Bonds would be materially and adversely affected. <br />The Bonds are not "private activity bonds" for the purpose of treatment of interest thereon as a direct <br />preference item in calculating the alternative minimum tax. However, for corporations (as defined for federal <br />income tax purposes), interest on the Bonds would be includable in the "adjusted current earnings" of a corporation <br />• for purposes of such alternative minimum tax. <br />The accrual or receipt of interest on the Bonds may otherwise affect a Bondholder's federal income tax or <br />state tax liability; however, the nature and extent of such other tax consequences will depend upon a Bondholder's <br />particular tax status and such Bondholder's other items of income or deduction. The taxpayers who may be affected <br />by such other consequences include, without limitation, S corporations, financial institutions, property and casualty <br />insurance companies, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may <br />be deemed to have incurred (or continued) indebtedness to purchase or carry tax- exempt obligations. <br />is <br />No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the <br />Bonds, in the event that interest on the Bonds becomes subject to income taxation. <br />The foregoing does not purport to be a comprehensive discussion of the tax consequences of owning the <br />Bonds. Prospective owners of the Bonds should consult their own tax advisors with respect to the foregoing and <br />other tax consequences of owning the Bonds. <br />-12- <br />
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