2.0. ERMUSR 08-29-2018 - Laserfiche WebLink

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Foreign Insurance Companies Foreign companies carrying on an insurance business in the United States are subject to a tax on income which is effectively connected with their conduct of any trade or business in the United States, including "net investment income." Net investment income includes tax-exempt interest such as interest on the Bonds. Branch Profits Tax A foreign corporation is subject to a branch profits tax imposed by Section 884 of the Code. A branch's ear ings and profits may include tax-exempt municipal bond interest, such as interest on the Bonds. Passive Investment Income of S Corporations Pas.ive investment income, including interest on the Bonds, may be subject to federal income taxation un.er Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the clo.e of the taxable year if more than a certain percentage of the gross receipts of such S corporation is pas.ive investment income. Ge eral Th: preceding is not a comprehensive list of all federal or State tax consequences which may arise from the receipt or accrual of interest on the Bonds. The receipt or accrual of interest on the Bonds may oth rwise affect the federal income tax (or Minnesota income tax or franchise tax) liability of the reci.ient based on the particular taxes to which the recipient is subject and the particular tax status of other items of income or deductions. All prospective purchasers of the Bonds are advised to consult their owl tax advisors as to the tax consequences of, or tax considerations for, purchasing or holding the Bo ds. BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS Th- Bonds will be designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended, relating to the ability of financial institutions to deduct fro income for federal income tax purposes, interest expense that is allocable to carrying and acquiring tax-exempt obligations. Financial institutions are not generally entitled to a deduction for interest exp-nses allocable to the owners of tax-exempt obligations purchased after August 7, 1986. RATING Ap plication for a rating for the Bonds has been made to Moody's Investors Service("Moody's"), 7 World Tra.e Center, 250 Greenwich Street, 23rd Floor, New York, New York. If a rating is assigned, it will refl-ct only the opinion of Moody's. Any explanation of the significance of the rating may be obtained onl from Moody's. Th;re is no assurance that a rating, if assigned, will continue for any given period of time, or that such rati g will not be revised, suspended or withdrawn, if, in the judgment of Moody's, circumstances so w. ant. A revision, suspension or withdrawal of a rating may have an adverse effect on the market price oft e Bonds. - 23 - 32