__________________________________________________________________
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): March 7, 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
8.7 Tax Opinion of Davis Polk & Wardwell, dated March 7, 1996,
relating to the registrant's Exchangeable Notes due March 29,
2002, exchangeable for shares of common stock of Johnson &
Johnson, as described in Pricing Supplement No. 57 dated March
7, 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
---------------------------
Patricia A. Kurtz
Assistant Secretary
Date: March 15, 1996
Index to Exhibits
Exhibit No. Description
8.7 Tax Opinion of Davis Polk & Wardwell, dated
March 7, 1996, relating to the registrant's
Exchangeable Notes due March 29, 2002,
exchangeable for shares of common stock of
Johnson & Johnson, as described in Pricing
Supplement No. 57 dated March 7, 1996 to the
Prospectus Supplement dated March 29, 1995
and the Prospectus dated March 29, 1995
related to Registration Statement No.
33-57833.
Exhibit 8.7
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4571
March 7, 1996
Morgan Stanley Group Inc.
1585 Broadway
New York, N.Y. 10036
Re: Morgan Stanley Group Inc. Exchangeable
Notes Due March 29, 2002
Dear Sirs:
We have acted as special tax counsel for you in connection with the
issuance of your $80,000,000 Exchangeable Notes Due March 29, 2002
exchangeable for shares of common stock of Johnson & Johnson (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. 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.
There can be no assurance that the ultimate tax treatment of the
Notes would not differ significantly from the description herein. Prospective
investors should be urged to consult their tax advisors as to the possible
consequences of holding the Notes.
United States Holders
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) an 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. 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
maturity of the Notes, a United States Holder will recognize gain or loss
equal to the difference between the amount realized at maturity (i.e., the sum
of the par amount and the Supplemental Redemption Amount received) by the
Holder and such Holder's tax basis in the Note. Any loss recognized at
maturity will be treated as capital loss. It is unclear, however, under
existing law whether gain recognized at maturity will be treated as ordinary
or capital in character. Subject to further guidance from the Internal
Revenue Service, we understand that you intend to treat such gain as interest
income and to report such amounts accordingly.
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 may 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 sale or other exchange of a Note
prior to maturity will be treated as capital in character.
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
report properly 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.
Foreign Holders
As used herein, the term "Foreign Holder" means a person or entity
that, for United States federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership, or a non-resident
fiduciary of a foreign estate or trust.
A Foreign Holder will generally not be subject to United States
federal income taxes, including withholding taxes, on payments of principal,
premium, if any, or interest on a Note, or any gain arising from the sale or
disposition of a Note provided that (i) any such income is not effectively
connected with the conduct of a trade or business within the United States,
(ii) such Foreign Holder is not a person who owns (directly or by attribution)
ten percent or more of the total combined voting power of all classes of stock
of the Company, (iii) the Foreign Holder (if an individual) is not present in
the United States 183 days or more during the taxable year of the disposition
and (iv) the required certification of the non-United States status of the
beneficial owner is provided.
The 31% "backup" withholding and information reporting requirements
will generally not apply to payments by the Company or its agents of
principal, premium, if any, and interest on a Note, and to proceeds of the
sale or redemption of a Note before maturity, if the required certification of
the holder's non-United States status is provided.
Foreign Holders of Notes should consult their tax advisors regarding
the application of information reporting and backup withholding in their
particular situations, the availability of an exemption therefrom, and the
procedure for obtaining such an exemption, if available. Any amounts withheld
from a payment to a Foreign Holder under the backup withholding rules 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 United States Internal Revenue Service (the
"Service").
A Note held by an individual who at the time of his death is not a
citizen or domiciliary of the United States will not be subject to United
States federal estate tax as a result of such individual's death, provided
that (i) interest paid to such individual on such Note would not be
effectively connected with the conduct by such individual of a trade or
business within the United States and (ii) such individual is not a person who
owns (directly or by attribution) ten percent or more of the total combined
voting power of all classes of stock of the Company.
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
