Rule 424(b)(2)
Registration No.
33-70466
PRICING SUPPLEMENT NO. 23 , DATED September 17, 1996
(To Prospectus dated November 8, 1993 and Prospectus Supplement dated
November 9, 1993)
ALABAMA GAS CORPORATION
Medium-Term Notes, Series A
CUSIP #01028QAV0
FIXED RATE NOTE
Trade Date: September 17, 1996
Principal Amount: $ 5,000,000
Original Issue Date: 9/20/96
Issue Price: 100 % (Par)
Commission Rate: 0.6%
Net Proceeds: $ 4,970,000
Interest Rate
Per Annum: 7.14 %
Stated Maturity Date: 9/15/03
Interest Payment Dates: May 1 and November 1
Presenting Agent: Salomon Brothers Inc., as agent
Additional Terms:
none
Successor Trustee: Effective December 4, 1995, The Bank of New York
succeeded Nations Bank of Georgia, National Association as Trustee and
as paying agent under the Indenture.
CERTAIN TAX CONSIDERATIONS: The attached discussion under the heading
"Certain Tax Considerations" supersedes, in all respects, the
discussion set forth under the heading "Certain Tax Considerations" on
page S-11 of the Prospectus Supplement of Alabama Gas Corporation dated
November 9, 1993.
Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Prospectus Supplement dated November 9, 1993.
<PAGE>
CERTAIN TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is
based upon laws, regulations, rulings and decisions now in effect, all
of which are subject to change (including changes in effective dates)
and possible differing interpretations. This discussion deals only
with Notes held as capital assets and does not purport to deal with
persons in special tax situations such as financial institutions,
insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against
currency risks or as a position in a "straddle" for tax purposes, or
persons whose functional currency is not the United States dollar.
This discussion also does not deal with holders other than original
purchasers (except where otherwise specifically noted). Persons
considering the purchase of the Notes should consult their own tax
advisors concerning the application of United States Federal income tax
laws to their particular situations as well as any consequences of the
purchase, ownership and disposition of the Notes arising under the laws
of any other taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner
of a Note that is for United States Federal income tax purposes (i) a
citizen or resident of the United States, (ii) a corporation,
partnership or the entity created or organized in or under the laws of
the United States or of any political subdivision thereof, (iii) an
estate or trust the income of which is subject to United States Federal
income taxation regardless of its source or (iv) any other person whose
income or gain in respect of a Note is effectively connected with the
conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a holder of a Note that is not a U.S. Holder.
U. S. Holders
Payments of Interest
Payments of interest on a Note generally will be taxable to a
U.S. Holder as ordinary income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of
tax accounting).
Original Issue Discount
The following summary is a general discussion of the United
States Federal income tax consequences to U.S. Holders of the purchase,
ownership and disposition of Notes issued with original issue discount
("OID"). The following summary is based on the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), and on certain
final and temporary regulations (the "OID Regulations") issued by the
U.S. Department of Treasury (the "Treasury") on January 27, 1994. The
OID Regulations generally apply to debt instruments issued on or after
April 4, 1994. On December 16, 1994, certain proposed regulations were
issued by the Treasury (the "Proposed Contingent Payment OID
Regulations") that interpret the original issue discount provisions of
the Code primarily as they apply to instruments that provide for one or
more contingent payments. On June 14, 1996 the Proposed Contingent
Payment OID Regulations were issued as final regulations, along with
certain amendments to the OID Regulations, generally effective August
13, 1996. It is not contemplated that any of the Notes, including any
Floating Rate Notes, will constitute contingent payment debt
instruments for purposes of the Final Contingent Payment OID
Regulations; therefore the Final Contingent Payment OID Regulations are
not addressed herein. If, at the time of issue, it is determined that
any Floating Rate Notes will not qualify as "variable rate debt
instruments" under the OID Regulations and therefore will be treated as
contingent payment debt instruments, the proper United States Federal
income tax treatment of such Floating Rate Notes will be more fully
described in the applicable Pricing Supplement.
For United States Federal income tax purposes, a Note will have
OID to the extent that the Note's stated redemption price at maturity
exceeds its issue price, if such excess equals or exceeds a de minimis
amount (generally 1/4 of 1% of the Note's stated redemption price at
maturity multiplied by the number of complete years from its issue date
to maturity). The issue price of each Note in an issuance of Notes is
the initial offering price to the public at which a substantial amount
of such Notes has been sold (excluding sales to bond houses, brokers,
and similar persons and sales to organizations acting in the capacity
of underwriters, placement agents, or wholesalers). The "stated
redemption price at maturity" of a Note is the sum of all payments due
on the Note other than qualified stated interest payments. "Qualified
stated interest" is stated interest that is unconditionally payable in
cash or property (other than debt instruments of the issuer) at least
annually at a single fixed rate that appropriately takes into account
for the length of the interval between payments. In addition, under
the OID Regulations, if a Note bears interest for one or more accrual
periods at a rate below the rate applicable for the remaining term of
such Note (e.g., Notes with teaser rates or interest holidays), and if
the greater of either the resulting foregone interest on such Note or
any "true" discount on such Note (i.e., the excess of the Note's stated
principal amount over its issue price) equals or exceeds the specified
de minimis amount, then the stated interest on the Note would be
treated as OID rather than qualified stated interest.
Payments of qualified stated interest on a Note are taxable to a
U.S. Holder as ordinary income at the time such payments are accrued or
are received (in accordance with the U.S. Holder's regular method of
tax accounting). A U.S. Holder of a Note issued with OID and a
maturity of more than one year must include OID in income as ordinary
income over the term of the Note, regardless of such U.S. Holder's
regular method of tax accounting. In general, a U.S. Holder must
include in gross income the sum of the daily portions of OID that
accrue on the Note for each day during the taxable year (or portion of
the taxable year) on which such U.S. Holder held the Note.
Accordingly, a U.S. Holder of a Note issued with OID must include in
income amounts attributable to OID before receiving cash attributable
to that income.
To determine the "daily portion" of OID on any Note with OID, OID
accruing during an accrual period (generally, the period between dates
on which interest is paid) is divided by the number of days in the
accrual period. An "accrual period" may be of any length and may vary
in length over the term of the Note, provided that each accrual period
is no longer than one year and each scheduled payment of principal or
interest occurs either on the final day of an accrual period or on the
first day of an accrual period. The amount of OID accruing during an
accrual period is generally determined by using the constant yield to
maturity method, and is equal to the excess of (i) the product of the
Note's adjusted issue price at the beginning of the accrual period and
its yield to maturity (determined on the basis of compounding at the
close of each accrual period and appropriately adjusted to take into
account the length of the particular accrual period) over (ii) the
amount of any qualified stated interest payments allocable to the
accrual period. The Note's "adjusted issue price" at the beginning of
any accrual period generally equals the sum of (i) the issue price of
the Note plus (ii) the aggregate amount of OID includible in the gross
income of the holder of the Note in all prior accrual periods, reduced
by the amount of any payments on the Note in prior accrual periods
other than payments of qualified stated interest. Under these rules,
U.S. Holders generally will have to include in income increasingly
greater amounts of OID in successive accrual periods.
A. U.S. Holder of a Note with OID that purchases the Note for an
amount that is greater than the Note's revised issue price as of the
purchase date but less than the stated redemption price at maturity,
will be considered to have purchased the Note at an "acquisition
premium." The "revised issue price" of a Note is the sum of (i) the
issue price of Note, and (ii) the aggregate amount of OID previously
includible in the gross income of all holders of the Note (without
regard to the reduction of such OID by any acquisition premium). Under
the acquisition premium rules, the amount of OID which such U.S. Holder
must include in its gross income with respect to such Note for any
taxable year (or portion thereof in which the U.S. Holder holds the
Note) will be reduced (but not below zero) by the portion of the
acquisition premium properly allocable to the period.
Under the OID Regulations, Floating Rate Notes are either treated
as variable rate debt instruments or contingent payment debt
obligations and are subject to special rules. A Note is a "variable
rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Note by more than a
specified de minimis amount and (b) it provides for stated interest,
paid or compounded at least annually, at current values of (i) one or
more qualified floating rates, (ii) a single fixed rate and one or more
qualified floating rates, (iii) a single objective rate, or (iv) a
single fixed rate and a single objective rate that is a qualified
inverse floating rate.
A "qualified floating rate" is any floating rate that can
reasonably be expected to measure contemporaneous variations in the
cost of newly borrowed funds in the currency in which the Note is
denominated (for example, LIBOR). Although a multiple of a qualified
floating rate will generally not constitute a qualified floating rate,
a variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than zero but not more than 1.35 will
constitute a qualified floating rate. A variable rate equal to the
product of a qualified floating rate and a fixed multiple that is
greater than zero but not more than 1.35, increased or decreased by a
fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating
rates that can reasonably be expected to have approximately the same
values throughout the term of the note together will constitute a
single qualified floating rate. Two or more qualified floating rates
will be conclusively presumed to meet the requirements of the preceding
sentence if the value of all rates on the issue date are within 25
basis points of each other.
The OID Regulations provide that an otherwise qualified floating
rate that has restrictions will not be a qualified floating rate unless
the restrictions fall into one of the following categories: (a) a cap,
a floor or a periodic adjustment restriction (a "governor") that is
fixed throughout the term of the note, (b) a cap or similar restriction
that is not reasonably expected as of the issue date significantly to
decrease the expected yield on the note determined without the cap, (c)
a floor or similar restriction that is not reasonably expected as of
the issue date to significantly increase the expected yield on the note
determined without the floor, or (d) a governor or similar restriction
that is not reasonably expected as of the issue date significantly to
increase or decrease the expected yield on the note without the
governor. Floating Rate Notes subject to caps, floors, or governors
that do not meet the above requirements could be treated as debt
instruments providing for contingent payments.
An "objective rate" is a rate other than a qualified floating
rate, that is determined by a single fixed formula and is based on (i)
one or more qualified floating rates, (ii) one or more rates each of
which would be a qualified floating rate for a debt instrument
denominated in a currency other than the currency in which the Note is
denominated, (iii) the yield or the changes in the price of one or more
items of actively traded personal property (other than stock or debt of
the issuer or a related party), (iv) a combination of these objective
rates, or (v) other rates designated from time to time by the Internal
Revenue Service (the "IRS"). Despite the foregoing, a variable rate of
interest on a Floating Rate Note will not constitute an objective rate
if it is reasonably expected that the average value of the rate during
the first half of the Floating Rate Note's term will be either
significantly less than or significantly greater than the average value
of the rate during the final half of the Note's term.
A "qualified inverse floating rate" is any objective rate that is
equal to a fixed rate minus a qualified floating rate, and that
reasonably can be expected to inversely reflect contemporaneous
variations in the cost of newly borrowed funds disregarding permissible
restrictions discussed above in the definition of a qualified floating
rate.
The OID Regulations also provide that if a variable rate debt
instrument provides for stated interest at a fixed rate for an initial
period of less than one year followed by a variable rate that is either
a qualified floating rate or an objective rate and if the variable rate
on such instrument's issue date is intended to approximate the fixed
rate, then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or an objective
rate, as the case may be. A fixed rate and a variable rate will be
conclusively presumed to meet the requirements of the preceding
sentence if the value of the variable rate on the issue date does not
differ from the value of the fixed rate by more than 25 basis points.
If a Floating Rate Note that provides for stated interest at
either a single qualified floating rate or a single objective rate
throughout the term thereof qualifies as a "variable rate debt
instrument" under the OID Regulations, then any stated interest on the
Floating Rate Note which is unconditionally payable in cash or property
(other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly.
Thus, a Floating Rate Note that provides for stated interest at either
a single qualified floating rate or a single objective rate throughout
the term of the Floating Rate Note and that qualifies as a "variable
rate debt instrument" under the OID Regulations will generally not be
treated as having been issued with OID unless the Floating Rate Note is
issued at a "true" discount (i.e., at a price below the Floating Rate
Note's stated principal amount) in excess of the specified de minimis
amount. OID on such a Floating Rate Note arising from "true" discount
is allocated to an accrual period using the constant yield method
described above by assuming that the variable rate is a fixed rate
equal to (i) in the case of a qualified floating rate or qualified
inverse floating rate, the value as of the issue date, of the qualified
floating rate or qualified inverse floating rate, or (ii) in the case
of any objective rate (other than a qualified inverse floating rate), a
fixed rate that reflects the yield that is reasonably expected for the
Floating Rate Note.
To determine the amount and accrual of OID and qualified stated
interest on any Floating Rate Note that qualifies as a "variable rate
debt instrument" other than those described above, the OID Regulations
provide that the Floating Rate Note is to be hypothetically converted
into an "equivalent" fixed rate debt instrument that has terms
identical to the Floating Rate Note, except that the equivalent
Floating Rate Note has a fixed rate substituted for the qualified
floating rate or objective rate provided under the Floating Rate Note.
Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Floating Rate Note is converted
into a fixed rate that reflects the yield that is reasonably expected
for the Floating Rate Note. In the case of a Floating Rate Note that
qualifies as a "variable rate debt instrument" and provides for stated
interest at a fixed rate in addition to either one or more qualified
floating rates or a qualified inverse floating rate, the Floating Rate
Note is treated as if it provided for a qualified floating rate (or a
qualified inverse floating rate, if the Floating Rate Note provides for
a qualified inverse floating rate) rather than the fixed rate. Under
such circumstances, the qualified floating rate or qualified inverse
floating rate that replaces the fixed rate must be such that the fair
market value of the Floating Rate Note as of the issue date is
approximately the same as the fair market value of an otherwise
identical debt instrument that provides for either the qualified
floating rate or qualified inverse floating rate rather than the fixed
rate. Subsequent to replacing the fixed rate with either a qualified
floating rate or a qualified inverse floating rate, the Floating Rate
Note is then hypothetically converted into an "equivalent" fixed rate
debt instrument in the manner described above.
Once the Floating Rate Note is hypothetically converted into an
"equivalent" fixed rate debt instrument pursuant to the foregoing
rules, the amount of OID and qualified stated interest, if any, are
determined for the "equivalent" fixed rate debt instrument by applying
the general OID rules to the "equivalent" fixed rate debt instrument.
A U.S. Holder of the Floating Rate Note will account for such OID and
qualified stated interest as if the U.S. Holder held the "equivalent"
fixed rate debt instrument. Appropriate adjustments will be made in
each accrual period in the amount of qualified stated interest or OID
assumed to have been accrued or paid with respect to the "equivalent"
fixed rate debt instrument in the event that such amounts differ from
the actual amount of interest accrued or paid on the Floating Rate Note
during the accrual period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Floating Rate Note
would be treated as a contingent payment debt obligation. As mentioned
in the introductory paragraph, the proper United States Federal income
tax treatment of Floating Rate Notes that are treated as contingent
payment debt obligations, if any, will be more fully described in the
applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the
Company prior to their stated maturity (a "call option") and/or (ii)
may be repayable at the option of the holder prior to their stated
maturity (a "put option"). Notes containing such features may be
subject to rules that differ from the general rules discussed above.
Investors intending to purchase Notes with such features should consult
their own tax advisors, since the OID consequences will depend, in
part, on the particular terms and features of the purchased Notes.
Under the OID Regulations, the IRS can apply or depart from the
OID Regulations as necessary or appropriate to achieve a reasonable
result where a principal purpose in structuring a Note or applying the
regulations described above is to achieve a result that is unreasonable
in light of the purpose of the applicable statutes (which generally are
intended to achieve the clear reflection of income for both borrowers
and lenders).
U.S. Holders may generally, upon election, include in income all
interest (including stated interest, acquisition discount, OID, de
minimis OID, market discount, de minimis market discount, and unstated
interest, as adjusted by any amortizable bond premium or acquisition
premium) that accrues on a debt instrument by using the constant yield
method applicable to OID, subject to certain limitations and
exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or less ("Short-Term
Notes") will be treated as having been issued with OID. U.S. Holders
that do not use the accrual method of accounting for tax purposes
generally will not be required to recognize OID on Short-Term Notes
until they receive payment on such Notes. U.S. Holders on the accrual
method, regulated investment companies, common trust funds, and certain
others, however, must accrue OID on Short-Term Notes on a straight-line
basis unless they elect to accrue the OID on a constant yield basis
with daily compounding. For this purpose, OID on a Short-Term Note is
the amount by which the total principal and interest payments on such
Note exceed its issue price. U.S. Holders may elect to include OID on
Short-Term Notes in income based on acquisition discount rather than
OID. Acquisition discount is the excess of a Short-Term Note's stated
redemption price at maturity over the U.S. Holder's basis in the Note.
Gain recognized on the sale or exchange of a Short-Term Note by a U.S.
Holder that has not accrued OID or acquisition discount on the Short-Term Note
to the extent attributable to accrued interest and OID (or
acquisition discount), is treated as ordinary income. Such a U.S.
Holder also must defer deductions for net interest expense on any
borrowing attributable to the Short-Term Note to the extent that the
expense does not exceed accrued but unrecognized interest and OID (or
acquisition discount) on the Note.
Market Discount
If a U.S. Holder purchases a Note, other than a Note issued with
OID, for an amount that is less than its issue price (or, in the case
of a subsequent purchase, its stated redemption price at maturity) or
purchases a Note issued with OID for an amount that is less than the
Note's revised issue price as of the purchase date, the amount of the
difference will be treated as "market discount." A Note is not treated
as purchased at a market discount, however, if the market discount is
less than 1/4 of 1 percent of the Note's stated redemption price at
maturity (or the revised issue price in the case of a Note issued with
OID) multiplied by the number of complete years remaining to maturity
("de minimis market discount"). The revised issue price of a Note
issued with OID is the Note's initial issue price increased by the
amount of OID includible in the gross income of previous holders.
A U.S. Holder of a Note purchased at a market discount (other
than a de minimis market discount) will be required to treat any
partial principal payment (or, in the case of a Note issued with OID,
any payment that does not constitute qualified stated interest) on, or
any gain realized on the sale, exchange, retirement or other
disposition of, a Note as ordinary income to the extent of the lesser
of (i) the amount of such payment or realized gain or (ii) the market
discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. Market discount will be considered to accrue ratably
during the period from the date of acquisition to the maturity date of
the Note, unless the U.S. Holder elects to accrue market discount on
the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a
portion of the interest paid or accrued on any indebtedness incurred or
maintained to purchase or carry a Note with market discount until the
maturity of the Note or its earlier disposition in a taxable
transaction, because a current deduction is only allowed to the extent
the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as
it accrues (on either a ratable or semiannual compounding basis), in
which case the rules described above regarding the treatment as
ordinary income of gain upon the disposition of the Note and upon the
receipt of certain cash payments and regarding the deferral of interest
deductions will not apply. Generally, such currently included market
discount is treated as ordinary income and as interest for United
States Federal income tax purposes. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired in or after the first taxable year to which the
election applies, and may not be revoked without the consent of the
IRS.
Amortizable Bond Premium
If a U.S. Holder purchases a Note for an amount that is greater
than its stated redemption price at maturity, such U.S. Holder will be
considered to have purchased the Note with "amortizable bond premium"
equal in amount to such excess. A U.S. Holder may elect to amortize
such premium using a constant yield method over the remaining term of
the Note and may reduce interest on the Note otherwise required to be
included in income during any taxable year by the amortizable premium
allocable to the taxable year. However, if the Note may be optionally
redeemed after the U. S. Holder acquires it at a price in excess of its
stated redemption price at maturity, special rules would apply which
could result in a deferral of the amortization of some bond premium
until later in the term of the Note. Amortized bond premium will
reduce the U. S. Holder's basis in the Note. An election to amortize
bond premium will apply to certain other debt instruments that the U.
S. Holder acquired
at a premium, and the election may have different tax consequences
depending on when the debt instruments were issued or acquired.
Disposition of a Note
Except as discussed above and except to the extent that gain or
loss is attributable to accrued but unpaid interest or accrued market
discount, upon the sale, exchange or retirement of a Note, a U. S.
Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or
retirement of the Note and such U. S. Holder's adjusted tax basis in
the Note. A U. S. Holder's adjusted tax basis in a Note generally will
equal such U. S. Holder's initial investment in the Note increased by
any OID included in income (and accrued market discount or acquisition
discount, if any, if the U.S. Holder has included such market discount
or acquisition discount in income) and decreased by the amount of any
payments previously received, other than qualified stated interest
payments, and by any amortized bond premium with respect to such Note.
Except to the extent of any accrued market discount which has not been
included as income, such gain or loss generally will be long-term if
the Note were held for more than one year.
Non-U.S. Holders
A non-U.S. Holder will not be subject to United States Federal
income tax on payment of principal, premium (if any) or interest
(including OID, if any) on a Note, unless such non-U. S. Holder
directly or indirectly owns at least 10% of the voting power in the
Company's stock, or is a controlled foreign corporation related to the
Company or a bank receiving interest described in section 881(c)(3)(A)
of the Code, if the non-U.S. Holder certifies, on IRS Form W-8 or other
substantially similar form, that the Holder is not a U. S. person. To
qualify for the exemption from taxation, the last United States payor
in the chain of payment prior to payment to a non-U.S. Holder (the
"Withholding Agent") must have received in the year in which a payment
of interest or principal occurs, or in either of the two preceding
calendar years, a statement that (i) is signed by the beneficial owner
of the Note under penalties of perjury, (ii) certifies that such owner
is not a U.S. Holder and (iii) provides the name and address of the
beneficial owner. The statement may be made on an Internal Revenue
Service ("IRS") Form W-8 or a substantially similar form, and the
beneficial owner must inform the Withholding Agent of any change in the
information on the statement within 30 days of such change. If a Note
is held through a securities clearing organization or certain other
financial institutions, the organization or institution may provide a
signed statement to the Withholding Agent. However, in such case, the
signed statement must be accompanied by a copy of the IRS Form W-8 or
the substitute form provided by the beneficial owner to the
organization or institution. The Treasury Department is considering
implementation of further certification requirements aimed at
determining whether the issuer of a debt obligation is related to
holders thereof.
Generally, a non-U.S. Holder will not be subject to United States
Federal income taxes on any amount which constitutes capital gain upon
retirement or disposition of a Note, provided the gain is not
effectively connected with the conduct of a trade or business in the
United States by the non-U.S. Holder. Additionally, a non-U.S. Holder
who is a non-resident alien individual who is present in the U. S. for
183 days or more during the taxable year when the sale or exchange
occurs may be subject to federal income taxation on the gain realized
on the disposition if certain other conditions are met. In that case,
the capital gain is generally subject to a 30% tax. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its
tax advisor in this regard.
A Note held by an individual who is not a citizen or resident of
the United States (as defined for United States federal estate tax
purposes) will not be subject to United States federal estate tax as a
result of such individual's death, if at the time of death the
individual did not directly or indirectly own 10% or more of the total
combined voting power of the Company's stock, unless such individual
held such Note in connection with the conduct of a United States trade
or business.
Backup Withholding
In general, if a non-corporate holder of a note fails to furnish
a correct identification number or certification of foreign or other
exempt status, fails to report dividend and interest income in full, or
fails to certify that such holder has provided a correct taxpayer
identification number and is not subject to backup withholding, 31%
federal backup withholding tax may be withheld on amounts of interest
payable to the holder. An individual's taxpayer identification number
is his or her social security number. In addition, upon the sale of a
Note to (or through) a broker, the broker must withhold 31% of the
entire purchase price, unless either (i) the broker determines that the
seller is a corporation or other exempt holder, or (ii) the seller
provides, in the required manner, certain identifying information.
Such a sale must also be reported by the broker to the IRS, unless the
broker determines that the seller is an exempt holder. The Backup
withholding tax is not an additional tax and may be credited against a
holder's regular federal income tax liability or refunded by the IRS
where applicable.
