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(the "Code"). In addition, such interest may be includible in the amount upon which certain foreign corporations are required to pay the branch profits tax imposed under Section 884 of the Code. Prospective corporate purchasers of the Series 1989 Bonds should consult their professional tax advisors concerning the potential impact of receipt of interest income on such Bonds upon their Federal tax liability. Financial Institutions' Costs of Carrying Tax -Exempt Bonds Under the Code, financial institutions are denied 100 percent of the interest expense deduction that is allocable, by formula, to the carrying of tax-exempt obligations acquired after August 7, 1986; the former provision of the Internal Revenue Code of 1954, which provided for a 20 percent disallowance of the interest expense deduction, continues to apply with respect to tax-exempt obligations acquired on or before August 7, 1986, as well as to new issues specifically designated as "qualified tax-exempt obligations" under Section 265 of the Code, as discussed below. A general exception to the 100 percent disallowance rule of Section 265 of the Code is provided for certain tax-exempt obligations that are not "private activity bonds" as defined in the Code (other than "qualified 501(c)(3) bonds") and that are issued by a governmental issuer that reasonably expects to issue (together with any of its subordinate entities and authorities) not more than $10,000,000 in principal amount of tax-exempt obligations in the same calendar year. The exception applies only if the issuer specifically designates the issue as "qualified tax-exempt obligations" under Section 265 of the Code. Financial institutions considering the purchase of the Series 1989 Bonds should consult with their professional tax advisors to determine the effect of the interest expense disallowance related to tax-exempt bonds upon their Federal income tax liability. The Series 1989 Bonds have not been designated by the issuer as "qualified tax-exempt obligations" for purposes of Section 265 of the Code. Other Federal Income Tax Consequences Ownership of the Series 1989 Bonds may also result in other Federal income tax consequences to certain taxpayers, including, but not limited to, financial institutions, property and casualty insurance companies, certain subchapter S corporations with substantial passive income and subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry the bonds. No opinion or representation concerning these matters is being given or made by the issuer of the Series 1989 Bonds, Bond Counsel or any other party associated with issuance, offering or sale of the Series 1989 33