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Tax Exemption Bond Counsel is of the opinion that under existing. law, the interest on the Bonds is excluded from gross income for federal income tax purposes and the Bonds are not "private activity bonds" under Section 141 of the Internal Revenue Code of 1986 (the "Code"); however, it should be noted that with respect to corporations (as defined for federal income tax purposes), interest on the Bonds is taken into account in determining adjusted net book income (adjusted current earnings for taxable years beginning after December 31, 1989) for the purpose of computing the alternative minimum tax imposed on such corporations. The opinion of Bond Counsel is subject to the condition that both the Authority and the Commission. comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest theron be (or continue to be) excluded from gross income for federal income tax purposes. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds on gross income for federal income tax purposes. to be retroactive to the date of issuance of the Bonds. The Authority and the Commission have covenanted to comply with all such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Bonds. Bond Counsel is also of the opinion that under existing law the Bonds and the interest thereon, are exempt from all present Indiana taxes except the Indiana inheritance tax. No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to income taxation. The Code imposes an alternative minimum tax with respect to individuals and corporations on alternative minimum taxable income. Interest on the Bonds will not be treated as a preference item in calculating alternative minimum taxable income. The Code provides, however, that for taxable years beginning in 1987, 1988 and 1989, a portion of the net income of a corporation reported on its financial statement and not otherwise included in the minimum tax base would be included for purposes of calculating the alternative minimum tax that may be imposed with respect to corporations. For taxable years beginning after 1989, the use of financial statement income will be replaced by the use of adjusted current earnings. Financial statement income and adjusted current earnings include income received that is otherwise exempt from taxation such as interest on the Bonds. The Code imposes an environmental tax with respect to corportions on the excess of a corporation's modified alternative minimum taxable income over $2,000,000. The environmental tax applies with respect to taxable years beginning after December 31, 1986 and before January I, 1992. The Code provides that in the case of an insurance company subject to the tax imposed by Section. 831 of the Code, for taxable years beginning after December 31, 1986 the amount which otherwise would be taken into account as "losses incurred" under Section 832(b)(5) shall be reduced by an amount equal to I S% of the interest on the Bonds that is received or accrued during the taxable year. Interest on the Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code. The foregoing does not 'purport to be a comprehensive discussion of the tax consequences of owning the Bonds. Prospective owners of the Bonds should consult their own tax advisors with respect to the foregoing and other tax consequences of owning the Bonds. -10-