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Exhibit 7 (Ex. 99.C1)
October 26, 2000
Investors Bank & Trust Company
Hancock Towers
200 Clarendon Street
Boston, Massachusetts 02116
Dear Sirs:
As counsel for PaineWebber Incorporated (the "Depositor"), we have
examined an executed copy of the Trust Indenture and Agreement dated as of
October 26, 2000 (the "Indenture") and Standard Terms and Conditions of Trust,
dated as of July 1, 1997 (the "Agreement"), both between the Depositor and
Investors Bank & Trust Company, as Trustee. The Indenture established a trust
called PaineWebber Pathfinders Trust, Treasury and Growth Stock Series 26 (the
"Trust") into which the Depositor deposited certain United States Treasury
obligations, or evidences thereof, and stocks (the "Securities"), and moneys to
be held by the Trustee upon the terms and conditions set forth in the Indenture
and Agreement. Under the Indenture, receipts of ownership were issued on the
Initial Date of Deposit representing 1,000,000 units of fractional undivided
interest in the Trust (the "Units").
Based upon the foregoing and upon an examination of such other
documents and an investigation of such matters of law as we have deemed
necessary, we are of the opinion that, under existing statutes and decisions:
1. The Trust is not an association taxable as a corporation for Federal
income tax purposes. Under the Internal Revenue Code of 1986, as amended (the
"Code"), each
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Unitholder will be treated as the owner of a pro rata portion of the Trust, and
income of the Trust will be treated as income of the Unitholder.
2. Each Unitholder will have a taxable event when the Trust disposes of a
Security (whether by sale, exchange, redemption, or payment at maturity) or when
the Unitholder redeems or sells its Unit or redeems its units for cash. For
purposes of determining gain or loss, the total tax cost of each Unit to a
Unitholder is allocated among each of the Securities, in accordance with the
proportion of the Trust comprised by each Security, to determine the
Unitholder's per Unit tax cost for each Security.
3. The Trust is not an association taxable as a corporation for New York
State income tax purposes. Under New York State Law, each Unitholder will be
treated as the owner of a pro rata portion of the Trust, and the income of the
Trust will be treated as income of the Unitholders.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement (File No. 333-46290) relating to the Units referred to
above and to the use of our name and to the reference to our firm in said
Registration Statement and in the related Prospectus.
Very truly yours,
CARTER, LEDYARD & MILBURN
