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EXHIBIT 3.2
[LETTERHEAD OF SAUL, EWING, REMICK & SAUL LLP]
June 26, 2000
Salomon Smith Barney Inc. The Chase Manhattan Bank
7 World Trade Center 4 New York Plaza
40th Floor New York, New York 10004
New York, New York 10048
Re: Tax Exempt Securities Trust, Maryland Trust 112
Ladies and Gentlemen:
We have acted as special Maryland counsel to you as Sponsors (the
"Sponsors") and trustee of the above-referenced tax-exempt securities trust
(the "Trust"), which includes an individual trust (the "Maryland Trust")
holding certain bonds and other securities (the "Bonds"). You have asked that
we, acting in such capacity, render an opinion to you with respect to certain
matters relating to the tax treatment under the laws of Maryland of the
Maryland Trust and of the units of fractional undivided interest in the
Maryland Trust (the "Units") to be issued pursuant to the Registration
Statement (No. 333-94313) on Form S-6 filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Registration
Statement").
As a basis for our opinions, we have examined such provisions of Maryland
law as we considered relevant. We are relying on the opinions of Paul,
Hastings, Janofsky & Walker LLP, special counsel to the Sponsors, as to the
federal income tax consequences of an investment in the Trust.
Each Unit represents a fractional undivided interest in the Maryland Trust.
In the opinion of Paul, Hastings, Janofsky & Walker LLP, for federal income
tax purposes:
(a) the Maryland Trust is not an association taxable as a corporation;
(b) a holder of units ("Holder") is considered the owner of a pro rata
portion of each Bond in the Maryland Trust under the grantor trust rules of
Sections 671-678 of the Internal Revenue Code of 1986, as amended;
(c) a Holder will be considered to have received the interest on such
Holder's pro rata portion of each Bond when interest on the Bond is
received by the Maryland Trust;
(d) a Holder will recognize taxable gain or loss when all or part of such
Holder's pro rata portion of a Bond in the Maryland Trust is disposed of
(whether by sale, exchange, redemption, or payment at maturity) or when the
Holder redeems or sells such Holder's units.
It is our understanding and the following opinions assume, that the Maryland
Trust will have no income other than interest income on the Bonds including,
when earned or received, any amount attributable to original issue discount
which is treated as interest income for federal income tax purposes and gain
on the disposition of the Bonds.
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June 26, 2000
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In general, it is noted that under the terms of the Maryland statutes which
authorize the issuance of bonds of the State of Maryland, its political
subdivisions and authorities, the Bonds, the income therefrom and any profit
made on the sale or sale thereof shall at all times be free from taxation of
every kind by the State of Maryland and by the municipalities and all other
political divisions of the State of Maryland; in general, those statutes do
not refer to estate or inheritance taxes or franchise taxes on financial
institutions which are measured by net earnings or any other taxes not levied
or assessed directly on those bonds, their transfer or the income therefrom.
Based in part, upon our understanding that the Maryland Trust consists of
Bonds issued by the State of Maryland, the Government of Puerto Rico, the
Government of Guam and their respective political subdivisions and
authorities; and that, in the opinion of bond counsel the interest on the
Bonds will be excluded form gross income for federal income tax purposes
(except in certain circumstances referred to in the Prospectus), Saul, Ewing,
Remick & Saul LLP, special Maryland counsel for this trust are the opinion
that for Maryland State and local tax purposes:
1. The Maryland Trust will not be treated as an association taxable as a
corporation, and the income of the Maryland Trust will be treated as the
income of the Holders. The Maryland Trust is not a "financial institution"
subject to the Maryland Franchise Tax measured by net earnings. The
Maryland Trust is not subject to Maryland property taxes imposed on the
intangible personal property of certain corporations.
2. Except as described below is the case of interest paid on private
activity bonds constituting a tax preference for federal income tax
purposes, a Holder will not be required to include such Holder's pro-rata
share of the earnings of, or distributions from, the Maryland Trust in such
Holder's Maryland taxable income to the extent that such earnings or
distributions represent interest excludable from gross income for federal
income tax purposes received by the Maryland Trust or obligations of the
State of Maryland, the Government of Puerto Rico, or the Government of Guam
and their respective political subdivisions and authorities. Interest on
Bonds is not subject to the Maryland Franchise Tax imposed on "financial
institutions."
3. In the case of taxpayers who are individuals, Maryland Presently
imposes an income tax on items of tax preference with reference to such
items as defined in the Internal Revenue Code, as amended, for purposes of
calculating the federal alternative minimum tax. Interest paid on certain
private activity bonds is a preference item for purposes of calculating the
federal alternative minimum tax. Accordingly, if the Maryland Trust holds
such bonds; 50% of the interest on such bonds in excess of a threshold
amount is taxable by Maryland.
4. A Holder will recognize taxable gain or loss, except in the case of an
individual Holder who is not a Maryland resident, when the Holder disposes
of all or part of such Holder's pro rate portion of the Bonds in the
Maryland Trust. A Holder will be considered to have disposed of all or part
of such Holder's pro rata portion of each Bond when the Holder sells or
redeems all or some of such Holder's Units. A Holder will also be
considered to have disposed of all or part of such Holder's pro rata
portion of a Bond when all or part of the Bond is disposed of by the
Maryland Trust or is redeemed or paid at maturity. Gain included in the
gross income of Holders for federal income tax purposes is, however,
subtracted from income for Maryland income tax purposes to the extent that
the gain is derived from the disposition of Bonds issued by the State of
Maryland and its political subdivisions. Profits realized on the sale or
exchange of Bonds are not subject to the Maryland Franchise Tax imposed on
"financial institutions."
5. Units of the Maryland Trust will be subject to Maryland inheritance
and estate tax only if held by Maryland residents.
6. Neither the Bonds nor the Units will be subject to Maryland personal
property tax.
7. The sales of Units in Maryland or the holder of Units in Maryland will
not be subject to Maryland Sales or Use Tax.
At your request, we have also reviewed certain official statements relating
to Bonds of the State of Maryland and certain of its subdivisions, agencies or
instrumentalities available to us as of this date with respect only to general
risk factors relating to such Bonds. We have not reviewed each official
statement relating to each of the Bonds included in the Maryland Trust. We
have neither reviewed the accuracy or completeness of, or otherwise verified,
the information
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June 26, 2000
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contained in those official statements nor have we reviewed any risk factors
which are discussed in the Prospectus other than those relating specifically
to Bonds issued by the State of Maryland, its political subdivisions and their
respective authorities. Based solely upon the review described above, we
confirm that, in our opinion, (i) the materials in the Prospectus under "State
Risks Factors; neither contain any untrue statement of, nor omit to state a
material fact included in, any of the official statements we have reviewed
with respect to Maryland and (ii) the summary of matters of Maryland law
contained in the Prospectus under "Taxes" is accurate. We hereby consent to
the reference to this firm in the Prospectus comprising a part of the
Registration Statement and we consent to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
Saul, Ewing, Remick & Saul LLP
/s/ Robert A. Spar
By __________________________________
Robert A. Spar
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