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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 23, 1996
MORGAN STANLEY GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9085 13-2838811
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1585 Broadway, New York, New York 10036
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (212) 761-4000
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Item 7(c). Exhibits
8.3 Tax Opinion of Davis Polk & Wardwell, dated February 23, 1996,
relating to the registrant's Exchangeable Notes due March 1,
2004, exchangeable for shares of common stock of Citicorp, as
described in Pricing Supplement No. 45 dated February 23, 1996
to the Prospectus Supplement dated March 29, 1995 and the
Prospectus dated March 29, 1995 related to Registration
Statement No. 33-57833.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MORGAN STANLEY GROUP INC.
Registrant
/s/ Patricia A. Kurtz
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Patricia A. Kurtz
Assistant Secretary
Date: March 1, 1996
Index to Exhibits
Exhibit No. Description
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8.3 Tax Opinion of Davis Polk & Wardwell, dated
February 23, 1996, relating to the
registrant's Exchangeable Notes due March 1,
2004, exchangeable for shares of common stock
of Citicorp, as described in Pricing
Supplement No. 45 dated February 23, 1996 to
the Prospectus Supplement dated March 29,
1995 and the Prospectus dated March 29, 1995
related to Registration Statement No.
33-57833.
Exhibit 8.3
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4571
February 23, 1996
Morgan Stanley Group Inc.
1585 Broadway
New York, NY 10036
Re: Morgan Stanley Group Inc.
Exchangeable Notes Due March 1, 2004
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Dear Sirs:
We have acted as special tax counsel for you in connection with the
issuance of your $10,000,000 aggregate principal amount Exchangeable Notes due
March 1, 2004, exchangeable for shares of common stock of Citicorp (the
"Notes"). In our opinion, the discussion set forth below is a summary of the
material U.S. federal income tax considerations that are generally relevant to
holders of the Notes. The summary is based on tax laws in effect as of the
date hereof, which are subject to change by legislative, judicial or
regulatory action that in some cases may have retroactive effect. This summary
does not address all of the tax considerations that may be relevant to a
holder in light of such holder's particular circumstances. In particular,
this summary addresses only persons who hold Notes as capital assets within
the meaning of Section 1221 of the Internal Revenue Code of 1986 (the "Code"),
and does not deal with persons subject to special rules, such as certain
financial institutions, insurance companies, dealers in options or securities
or purchasers holding Notes as a part of a hedging transaction or straddle or
as part of a "synthetic security" or other integrated investments. This
summary also does not deal with holders other than initial holders of the
Notes who purchase Notes at the Issue Price. Because of the absence of
authority on point, there are substantial uncertainties regarding the U.S.
federal income tax consequences of an investment in the Notes.
As used herein, the term "United States Holder" means a holder of a
Note that is (i) a United States citizen or a resident of the United States
for U.S. federal income tax purposes, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any political subdivision thereof, (iii) and estate or trust the income of
which is subject to U.S. federal income taxation regardless of its source or
(iv) a person otherwise subject to U.S. federal income taxation on a net
income basis in respect of such holder's ownership of the Notes.
The Notes will be treated as debt for United States federal income
tax purposes. The Notes will not be treated as issued with original issue
discount for such purposes because the amount of discount is within the de
minimis range under applicable Treasury regulations.
Although proposed Treasury regulations addressing the treatment of
contingent debt instruments were issued on December 15, 1994, such
regulations, which generally would require current accrual of contingent
amounts and would affect the character of gain on the sale, exchange or
retirement of a Note, by their terms apply only to debt instruments issued on
or after the 60th day after the regulations are finalized.
Under general United States federal income tax principles, upon
exercise of the Exchange Right, a United States Holder will recognize gain or
loss equal to the difference between the amount realized (which, if the
Company delivers Citicorp Stock, will be the fair market value of such stock
at the time of the exchange, plus any cash received in lieu of fractional
shares) on the exchange and such Holder's tax basis in the Note. A United
States Holder receiving Citicorp Stock will have a basis in the Citicorp Stock
equal to its fair market value at the time of the exchange and a holding
period in such stock beginning the day after the date of the exchange. Any
loss recognized on any exchange will be treated as capital loss. It is
unclear, however, under existing law whether gain recognized on any exchange
will be treated as ordinary or capital in character. Prospective investors
should consult their tax advisors regarding the character of gain recognized
upon exercise of the Exchange Right.
United States Holders that have acquired debt instruments similar to
the Notes and have accounted for such debt instruments under proposed, but
subsequently withdrawn, Treasury regulation Section 1.1275-4 may be deemed to
have established a method of accounting that must be followed with respect to
the Notes, unless consent of the Commissioner of the Internal Revenue Service
is obtained to change such method. Absent such consent, such a Holder would
be required to account for the Note in the manner prescribed in withdrawn
Treasury regulation Section 1.1275-4. The Internal Revenue Service, however,
would not be required to accept such method as correct.
Any gain or loss recognized on the payment of the principal amount at
maturity or on the sale or other taxable disposition of a Note prior to
maturity will be treated as capital in character.
There can be no assurance that the ultimate tax treatment of the
Notes would not differ significantly from the description herein. Prospective
investors are urged to consult their tax advisors as to the possible
consequences of holding the Notes.
Certain noncorporate United States Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and interest
(including original issue discount, if any) on, and the proceeds of
disposition of, a Note. Backup withholding will apply only if the Holder (i)
fails to furnish its Taxpayer Identification Number ("TIN") which, for an
individual, would be his Social Security number, (ii) furnishes an incorrect
TIN, (iii) is notified by the Internal Revenue Service that it has failed to
properly report payments of interest and dividends or (iv) under certain
circumstances, fails to certify, under penalty of perjury, that it has
furnished a correct TIN and has not been notified by the Internal Revenue
Service that it is subject to backup withholding for failure to report
interest and dividend payments. United States Holders should consult their tax
advisors regarding their qualification for exemption from backup withholding
and the procedure for obtaining such an exemption if applicable.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such Holder's United States federal
income tax liability and may entitle such Holder to a refund, provided that
the required information is furnished to the Internal Revenue Service.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the offering of the Notes. We also consent
to the use of our name under the caption "United States Federal Taxation" in
the pricing supplement relating to the Notes (the "Pricing Supplement").
Capitalized terms appearing herein and not defined have the meanings assigned
to such terms in the Pricing Supplement.
Very truly yours,
Davis Polk & Wardwell
