comply with any and all requirements as to rebate (and reports with
reference thereto) to the United States of America of certain
investment earnings on the proceeds of the Series M (Second Series)
The Board certifies that these Series M (Second Series)
Bonds are not "private activity bonds" within the meaning of the
Code, and the Board has been advised by Bond Counsel, and therefore
believes, that interest on the Series M (Second Series) Bonds is
not included as an item of tax preference in calculating the
alternative minimum tax for individuals.
The exemption from income taxation by the United States
of America of interest on the Series M (Second Series) Bonds is
subject to the following exceptions:
1. For purposes of the alternative minimum tax imposed
on corporations (as defined for federal income tax purposes),
interest on the Series M (Second Series) Bonds is taken into
account in determining adjusted current earnings for taxable years
beginning after December 31, 1989.
2. Section 265 of the Code denies a deduction for
interest on indebtedness incurred or continued to purchase or carry
the Series M (Second Series) Bonds, or, in the case of a financial
institution, that portion of a holder's interest expense allocated
to interest on the Series M (Second Series) Bonds.
3. With respect to insurance companies subject to the
tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i)
reduces the deduction for loss reserves by 15% of the sum of
certain items, including interest on the Series M (Second Series)
4. For taxable years beginning before January 1, 1996,
interest on the Series M (Second Series) Bonds earned by some
corporations could be subject to the environmental tax imposed by
Section 59A of the Code.
5. Interest on the Series M (Second Series) Bonds
earned by certain foreign corporations doing business in the United
States of America could be subject to a branch profits tax imposed
by Section 884 of the Code.
6. Passive investment income, including interest on the
Series M (Second Series) Bonds, may be subject to federal income
tax:ation under Section 1375 of the Code for Subchapter S corpora-
tions that have Subchapter C earnings and profits at the close of
the taxable year if greater than 25% of the gross receipts of such
Subchapter S corporation is passive investment income.
7. Section 86 of the Code requires recipients of
certain Social Security and certain Railroad Retirement benefits to
take into account, in determining the taxability of such benefits,