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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): December 26, 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
8.22 Tax Opinion of Davis Polk & Wardwell, dated December 26, 1996,
relating to the registrant's Reverse Equity Notes due September
30, 1997, as described in Pricing Supplement No. 51 dated
December 13, 1996 to the Prospectus Supplement dated May 1,
1996 and the Prospectus dated May 1, 1996 related to
Registration Statement No. 333-01655.
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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Name: Patricia A. Kurtz
Title: Assistant Secretary
Date: January 7, 1997
Index to Exhibits
Exhibit No. Description
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8.22 Tax Opinion of Davis Polk & Wardwell, dated December 26, 1996,
relating to the registrant's Reverse Equity Notes due September
30, 1997, as described in Pricing Supplement No. 51 dated
December 13, 1996 to the Prospectus Supplement dated May 1,
1996 and the Prospectus dated May 1, 1996 related to
Registration Statement No. 333-01655.
Exhibit 8.22
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4571
December 26, 1996
Morgan Stanley Group Inc.
1585 Broadway
New York, NY 10036
Re: Morgan Stanley Group Inc.
Reverse Equity Notes Due September 30, 1997
Dear Sirs:
We have acted as special tax counsel for you in connection with the
issuance of your $11,589,858.45 aggregate principal amount Reverse Equity
Notes Due September 30, 1997 (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 foreign persons, 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.
We understand that the Company presently intends to treat the coupon
payments on the Notes as ordinary income to the United States Holders. Under
this treatment, the coupon payments would be taxable to United States Holders
as ordinary income as such payments accrue.
Under existing general United States federal income tax principles,
upon retirement of the Note, a United States Holder will recognize gain or
loss equal to the difference between the amount realized (other than amount
attributable to accrued coupon payments) on the retirement and the Holder's
tax basis in the Note. Any loss recognized on the retirement of a Note will be
treated as capital loss. Although the matter is not free from doubt, any gain
recognized thereon should also be treated as capital in character. An accrual
basis taxpayer may be required to recognize ordinary income upon the
expiration of the Calculation Period to the extent of the excess, if any, of
the Repayment Price over the Issue Price, and such Holder's tax basis in the
Note will be increased by the amount of any such income recognized. The
distinction between capital income and ordinary income is potentially
significant in several respects. For example, limitations apply to a United
States Holder's ability to offset capital losses against ordinary income.
Prospective investors should be urged to consult with their tax advisors
regarding the character of any gain recognized on the Notes.
Any gain or loss recognized on the sale or exchange of a Note prior
to retirement generally will be treated as capital in character. For these
purposes, the amount realized does not include any amount attributable to any
accrued but unpaid coupon payments on the Note.
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.
Certain noncorporate United States Holders may be subject to backup
withholding at a rate of 31% on payments of principal, premium and coupon
payments 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,
