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Certain legal matters incident to the issuance of Bonds will be passed upon for <br />the County by the County Attorney and by Nabors, Giblin & Nickerson, P.A., <br />Disclosure Counsel. <br />TAX EXEMPTION <br />Federal Income Tax Matters <br />The Internal Revenue Code of 1986, as amended (the "Code") establishes certain <br />requirements which must be met subsequent to the issuance and delivery of the Bonds <br />in order that interest on the Bonds be and remain excluded from gross income for <br />purposes of federal income taxation. Non-compliance may cause interest on the Bonds <br />to be included in federal gross income retroactive to the date of issuance of the Bonds <br />regardless of the date on which such non-compliance occurs or is ascertained. These <br />requirements include, but are not limited to, provisions which prescribe yield and other <br />limits within which the proceeds of the Bonds and the other amounts are to be invested <br />and require that certain investment earnings on the foregoing must be rebated,on a <br />periodic basis to the Treasury Department of the United States. The County has <br />covenanted in the Resolution to comply with such requirements in order to maintain <br />the exclusion from federal gross income of the interest on the Bonds. <br />In the opinion of Bond Counsel, assuming compliance with the aforementioned <br />covenants, under existing laws, regulations, judicial decisions and rulings, interest on <br />the Bonds is excluded from gross income for purposes of federal income taxation. <br />Interest on the Bonds is not an item of tax preference for purposes of the federal <br />alternative minimum tax imposed on individuals or corporations; however, interest on <br />the Bonds may be subject to the alternative minimum tax when any Bond is held by a <br />corporation. The alternative minimum taxable income of a corporation must be <br />increased by 75% of the excess of such corporation's adjusted current earnings over its <br />alternative minimum taxable income (before this adjustment and the alternative tax <br />net operating loss deduction). "Adjusted Current Earnings" will include interest on the <br />Bonds. <br />Except as described above, Bond Counsel will express no opinion regarding the <br />federal income tax consequences resulting from the ownership of, receipt or accrual of <br />interest on, or disposition of Bonds. Prospective purchasers of Bonds should be aware <br />28 <br />