Agenda - Council - 08/13/2013 - Laserfiche WebLink

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TAX MATTERS The Series 2013A Bonds Tax Exemption. In the opinion of Briggs and Morgan, Professional Association, , as bond counsel, under existing laws, regulations, rulings, and decisions, and assuming continuing compliance by the Company and the School with covenants made to satisfy requirements of the Internal Revenue Code of 1986, as amended (the "Code"), interest on the Series 2013A Bonds is not included in gross income for federal income tax purposes and, to the same extent, is not included in taxable net income of individuals, estates, and trusts for Minnesota income tax purposes. Interest on the Series 2013A Bonds is not an item of tax preference for purposes of the computation of the alternative minimum tax imposed on individuals and corporations under federal law and on individuals, estates, and trusts under Minnesota law. Interest on the Series 2013A Bonds is included in adjusted current earnings of corporations in determining alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. Interest on the Series 2013A Bonds is subject to the Minnesota franchise tax imposed on corporation, including financial institutions. In expressing its opinion, bond counsel will rely on an opinion of John Cairns Law, P.A., as counsel to the Company, to the effect that, among other things: (i) the Company is a nonprofit corporation and an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the "Code") and is exempt from federal income taxation under Section 501(a) of the Code; and (ii) to the best of his knowledge after reasonable investigation consisting of interviews with officers of the Company most likely to have relevant information as of the date thereof, no portion of the facilities financed with the proceeds of the Series 2013A Bonds is to be used in or for any unrelated trade or business of the Company, determined by applying Section 513(a) of the Code. Bond counsel will also rely upon the opinion of John Cairns Law, P.A., as counsel to the School, to the effect that, among other things: (i) the School is a nonprofit corporation and an organization described in Section 501(c)(3) of the Code and is exempt from federal income taxation under Section 501(a) of the Code; and (ii) to the best of his knowledge after reasonable investigation consisting of interviews with officers of the School most likely to have relevant information as of the date thereof, no portion of the facilities to be financed or refinanced with the proceeds of the Series 2013A Bonds is or will be used by the School in or for any unrelated trade or business of the School, determined by applying Section 513(a) of the Code. The Code establishes certain requirements (the "Federal Tax Requirements") that must be satisfied subsequent to the issuance of the Series 2013A Bonds in order that, for federal income tax purposes, interest on the Series 2013A Bonds will continue to be excluded from gross income for federal income tax purposes. The Federal Tax Requirements include, but are not limited to, requirements relating to the expenditure of proceeds of the Series 2013A Bonds, requirements relating to the operation of the facilities financed by the Series 2013A Bonds, restrictions on the investment of proceeds of the Series 2013A Bonds prior to expenditure, and the requirement that certain earnings on the "gross proceeds" of the Series 2013A Bonds be paid to the federal government. Noncompliance with the Federal Tax Requirements may cause interest on the Series 2013A Bonds to become subject to federal and Minnesota income taxation retroactive to their date of issue irrespective of the date on which such noncompliance occurs or is ascertained. 34