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the environmental tax on their federal corporate income tax <br />liability. <br />Interest Reporting Recpiirements <br />Under the Internal Revenue Code of 1986, all taxpayer_a <br />are required to report on their federal income tax ret,trna for <br />tax years beginning after Oecemher 31, 1986, the amount of <br />Interest received or Accrued during the tax year that is exempt. <br />from federal income tax. Tats provision applies to interest on <br />the Motes. <br />Taxable Social Security Benefits Calculations <br />Under present federal tax law, a percentage of social <br />security benefits receivers by a taxpayer are to be included in <br />gross income for income tax purposon if the taxpeyer's "wodifted <br />adjusted groom income" plus a specified percentage Of social <br />security benefits r'eae:Pived exceeds a st.lprtlAfeA dol lac amnunt <br />based upon the tixpayPr s filing status. "M,+dtfters a,i)u,stecl <br />gross Income" fr,r trrlx purpose includes interest receives{ or <br />accrued on gt.at." and local goVorTulent obligations that is exempt. <br />from income tax. <br />prnr:pectiv" of the Notes who are rec:Ptvin) <br />social rsecurlty hanaflt.r,-aiwild consult their professional t.ax <br />Advirtorrt an to the effect. interest income derived from the Ci>t.e <br />ert.herwine exerrpt fr<,m tnxat.ion may have upon their in:nme tax <br />1.1Oki) illty. <br />Financial Institutionn' Cont of carrying Tax Exempt Obligations <br />Under the Interrnal Revenue Code of 1986, financial <br />inatitutionn will he decried 100 percent of their interent expense <br />deductions that are allocable, by formula, to tax-exempt <br />obligations acquired after August 7, 1986; the former provision <br />of the Internal Revenue Code of 1954 with respect to a 20 percent <br />disallowance continues to apply wP h respect to tax-exempt <br />obligations acquired on or before August 7, 1986. These <br />provisions Are effective for tax yearn t)eginnlnq after December <br />31, 1986. <br />A general exception to the 100 percent disallowance <br />rule is provided for certain tax-exempt obligations that are not <br />"private activity bonds" as defined in the Internal Revenue Code <br />of 1986 (other than "qualified 501(c)(3) bonds") and that are <br />issued by an issuer that reasonably anticipates to issue <br />(together with its subordinate entities and authorities) not more <br />than $10,000,000 of tax-exempt obligations in any calendar year. <br />The exceptiolr will apply only if the issuer specifically <br />31 <br />