EXHIBIT 3.2
98/0000204
CHAPMAN AND CUTLER
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
August 15, 2000
Van Kampen Funds Inc.
One Parkview Plaza
Oakbrook Terrace, Illinois 60181
The Bank of New York
101 Barclay Street
New York, New York 10286
Re: Van Kampen Focus Portfolios, Series 243
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Gentlemen:
We have acted as counsel for Van Kampen Funds Inc., Depositor of Van
Kampen Focus Portfolios, Series 243 (the "Fund"), in connection with the
issuance of Units of fractional undivided interest in the Fund, under a Trust
Agreement dated August 15, 2000 (the "Indenture") among Van Kampen Funds Inc.,
as Depositor, American Portfolio Evaluation Services, a division of Van Kampen
Investment Advisory Corp., as Evaluator, Van Kampen Investment Advisory Corp.,
as Supervisory Servicer, and The Bank of New York, as Trustee. The Fund is
comprised of the following separate unit investment trusts: Morgan Stanley U.S.
Multinational Index Portfolio, Series 5A, Morgan Stanley U.S. Multinational
Index Portfolio, Series 5B, Software Portfolio, Series 5A and Software
Portfolio, Series 5B (each a "Trust").
In this connection, we have examined the Registration Statement, the
Prospectus, the Indenture, and such other instruments and documents as we have
deemed pertinent.
The assets of the Trust will consist of a portfolio of equity
securities (the "Equity Securities") as set forth in the Prospectus. For
purposes of this opinion, it is assumed that each Equity Security is equity for
federal income tax purposes.
Based upon the foregoing and upon an investigation of such matters of
law as we consider to be applicable, we are of the opinion that, under existing
United States Federal income tax law:
(i) The Trust is not an association taxable as a corporation for Federal
income tax purposes but will be governed by the provisions of
subchapter J (relating to Trusts) of chapter 1, Internal Revenue Code
of 1986 (the "Code").
(ii) A Unitholder will be considered as owning a pro rata share of each
asset of the Trust in the proportion that the number of Units held by
him bears to the total number of Units outstanding. Under subpart E,
subchapter J of chapter 1 of the Code, income of the Trust will be
treated as income of each Unitholder in the proportion described, and
an item of Trust income will have the same character in the hands of a
Unitholder as it would have in the hands of the Trustee. Each
Unitholder will be considered to have received his pro rata share of
income derived from each Trust asset when such income is considered to
be received by the Trust. A Unitholder's pro rata portion of
distributions of cash or property by a corporation with respect to an
Equity Security ("dividends" as defined by Section 316 of the Code )
are taxable as ordinary income to the extent of such corporation's
current and accumulated "earnings and profits." A Unitholder's pro
rata portion of dividends which exceed such current and accumulated
earnings and profits will first reduce the Unitholder's tax basis in
such Equity Security, and to the extent that such dividends exceed a
Unitholder's tax basis in such Equity Security, shall be treated as
gain from the sale or exchange of property.
(iii) The price a Unitholder pays for his Units, generally including sales
charges, is allocated among his pro rata portion of each Equity
Security held by Trust (in proportion to the fair market values
thereof on the valuation date closest to the date the Unitholder
purchases his Units), in order to determine his tax basis for his pro
rata portion of each Equity Security held by the Trust.
(iv) Gain or loss will be recognized to a Unitholder (subject to various
nonrecognition provisions under the Code) upon redemption or sale of
his Units, except to the extent an in kind distribution of stock is
received by such Unitholder from the Trust as discussed below. Such
gain or loss is measured by comparing the proceeds of such redemption
or sale with the adjusted basis of his Units. Before adjustment, such
basis would normally be cost if the Unitholder had acquired his Units
by purchase. Such basis will be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to each Equity
Security which are not taxable as ordinary income.
(v) If the Trustee disposes of a Trust asset (whether by sale, exchange,
liquidation, redemption, payment on maturity or otherwise) gain or
loss will be recognized to the Unitholder (subject to various
nonrecognition provisions under the Code) and the amount thereof will
be measured by comparing the Unitholder's aliquot share of the total
proceeds from the transaction with his basis for his fractional
interest in the asset disposed of. Such basis is ascertained by
apportioning the tax basis for his Units (as of the date on which his
Units were acquired) among each of the Trust assets (as of the date on
which his Units were acquired) ratably according to their values as of
the valuation date nearest the date on which he purchased such Units.
A Unitholder's basis in his Units and of his fractional interest in
each Trust asset must be reduced, but not below zero, by the
Unitholder's pro rata portion of dividends with respect to the Equity
Security which is not taxable as ordinary income.
(vi) Under the Indenture, under certain circumstances, a Unitholder
tendering Units for redemption may request an in kind distribution of
Equity Securities upon the redemption of Units or upon the termination
of the Trust. As previously discussed, prior to the redemption of
Units or the termination of the Trust, a Unitholder is considered as
owning a pro rata portion of each of the Trust's assets. The receipt
of an in kind distribution will result in a Unitholder receiving an
undivided interest in whole shares of stock and possibly cash. The
potential federal income tax consequences which may occur under an in
kind distribution with respect to each Equity Security owned by the
Trust will depend upon whether or not a Unitholder receives cash in
addition to Equity Securities. An "Equity Security" for this purpose
is a particular class of stock issued by a particular corporation. A
Unitholder will not recognize gain or loss if a Unitholder only
receives Equity Securities in exchange for his or her pro rata portion
in the Equity Securities held by the Trust. However, if a Unitholder
also receives cash in exchange for a fractional share of an Equity
Security held by the Trust, such Unitholder will generally recognize
gain or loss based upon the difference between the amount of cash
received by the Unitholder and his tax basis in such fractional share
of an Equity Security held by the Trust. The total amount of taxable
gains (or losses) recognized upon such redemption will generally equal
the sum of the gain (or loss) recognized under the rules described
above by the redeeming Unitholder with respect to each Equity Security
owned by the Trust.
A domestic corporation owning Units in the Trust may be eligible for
the 70% dividends received deduction pursuant to Section 243(a) of the Code with
respect to such Unitholder's pro rata portion of dividends received by the Trust
(to the extent such dividends are taxable as ordinary income and are
attributable to domestic corporations), subject to the limitations imposed by
Sections 246 and 246A of the Code.
To the extent dividends received by the Trust are attributable to
foreign corporations, a corporation that owns Units will not be entitled to the
dividends received deduction with respect to its pro rata portion of such
dividends since the dividends received deduction is generally available only
with respect to dividends paid by domestic corporations.
Section 67 of the Code provides that certain itemized deductions, such
as investment expenses, tax return preparation fees and employee business
expenses will be deductible by individuals only to the extent they exceed 2% of
such individual's adjusted gross income. Unitholders may be required to treat
some or all of the expenses of the Trust as miscellaneous itemized deductions
subject to this limitation.
A Unitholder will recognize taxable gain (or loss) when all or part of
his pro rata interest in an Equity Security is either sold by the Trust or
redeemed or when a Unitholder disposes of his Units in a taxable transaction, in
each case for an amount greater (or less) than his tax basis therefor, subject
to various non-recognition provisions of the Code.
It should be noted that payments to the Trust of dividends on Equity
Securities that are attributable to foreign corporations may be subject to
foreign withholding taxes and Unitholders should consult their tax advisers
regarding the potential tax consequences relating to the payment of any such
withholding taxes by the Trust. Any dividends withheld as a result thereof will
nevertheless be treated as income to the Unitholders. Because under the grantor
trust rules, an investor is deemed to have paid directly his share of foreign
taxes that have been paid or accrued, if any, an investor may be entitled to a
foreign tax credit or deduction for United States tax purposes with respect to
such taxes. A required holding period is imposed for such credits.
Any gain or loss recognized on a sale or exchange will, under current
law, generally be capital gain or loss.
The scope of this opinion is expressly limited to the matters set forth
herein, and, except as expressly set forth above, we express no opinion with
respect to any other taxes, including foreign, state or local taxes or
collateral tax consequences with respect to the purchase, ownership and
disposition of Units.
Very truly yours,
CHAPMAN AND CUTLER
