<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 14, 1995
REGISTRATION NO. 33-62433
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
GREEN TREE FLOORPLAN RECEIVABLES MASTER TRUST
(ISSUER WITH RESPECT TO OFFERED CERTIFICATES)
GREEN TREE FLOORPLAN FUNDING CORP.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------
DELAWARE 6189 41-1823871
(STATE OR OTHER
JURISDICTION OF
INCORPORATION OR
ORGANIZATION)
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
500 LANDMARK TOWERS
345 ST. PETER STREET, SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------
JOEL H. GOTTESMAN, ESQ.
1100 LANDMARK TOWERS
345 ST. PETER STREET, SAINT PAUL, MINNESOTA 55102-1639
(612) 293-3400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPIES TO:
CHARLES F. SAWYER RENWICK D. MARTIN
DORSEY & WHITNEY P.L.L.P. BROWN & WOOD
220 SOUTH SIXTH STREET, MINNEAPOLIS, ONE WORLD TRADE CENTER, NEW YORK, NEW
MINNESOTA 55402 YORK 10048
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE
PUBLIC: As soon as practicable after the effective date of this Registration
Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
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- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE FEE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Floorplan Receivable Trust
Certificates, Series 1995-
1, Class A................. $409,400,000 100% $409,400,000 $141,172.41
- ---------------------------------------------------------------------------------------
Floorplan Receivable Trust
Certificates, Series 1995-
1, Class B................. $ 18,400,000 100% $ 18,400,000 $ 6,344.83
- ---------------------------------------------------------------------------------------
Total................... $427,800,000 100% $427,800,000 $147,517.24(2)
- ---------------------------------------------------------------------------------------
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee on
the basis of the proposed maximum aggregate offering price, pursuant to
Rule 457(c).
(2) Previously paid.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee............................................ $147,517.24
Blue Sky fees and expenses...................................... 10,000.00
Accountant's fees and expenses.................................. 30,000.00
Attorney's fees and expenses.................................... 75,000.00*
Trustee's fees and expenses..................................... 15,000.00*
Printing and engraving expenses................................. 150,000.00
Rating Agency fees.............................................. 150,000.00*
Miscellaneous................................................... 2,482.76
-----------
Total......................................................... $580,000.00
===========
</TABLE>
- --------
* Estimated
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<C> <S>
1.1 Proposed form of Underwriting Agreement
3.1 Certificate of Incorporation of Green Tree Floorplan Funding Corp.
3.2 Bylaws of Green Tree Floorplan Funding Corp.
4.1 Form of Pooling and Servicing Agreement
4.2 Form of Series 1995-1 Supplement to the Pooling and Servicing Agreement
4.3 Form of Receivables Purchase Agreement
5.1 Opinion and consent of Dorsey & Whitney P.L.L.P. as to legality
*8.1 Opinion and consent of Dorsey & Whitney P.L.L.P. as to tax matters
23.1 Consent of Dorsey & Whitney P.L.L.P. (included as part of Exhibit 5.1)
23.2 Consent of Dorsey & Whitney P.L.L.P. (included as part of Exhibit 8.1)
24.1 Power of attorney from officers and directors of the Registrants signed
by an attorney-in-fact
</TABLE>
--------
*Filed herewith.
(b) Financial Statements:
Not Applicable
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS DULY CAUSED THIS AMENDMENT NO. 5 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF SAINT PAUL, STATE OF MINNESOTA ON DECEMBER 14, 1995.
Green Tree Floorplan Funding Corp.
/s/ John W. Brink
By: _________________________________
JOHN W. BRINK
VICE PRESIDENT AND TREASURER
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS AMENDMENT NO. 5 TO
THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
SIGNATURE TITLE DATE
/s/ Lawrence M. Coss Chairman of the
- ------------------------------------- Board and President December 14,
LAWRENCE M. COSS (Principal 1995
Executive Officer)
/s/ John W. Brink Vice President and
- ------------------------------------- Treasurer December 14,
JOHN W. BRINK (Principal 1995
Financial Officer
and Principal
Accounting Officer)
and Director
/s/ Richard G. Evans Director
- ------------------------------------- December 14,
RICHARD G. EVANS 1995
II-2
<PAGE>
INDEX TO EXHIBITS
Exhibit Form of
Number Description* Filing
- ------ ----------- ------
1.1 Proposed form of Underwriting Agreement
3.1 Certificate of Incorporation of Green
Tree Floorplan Funding Corp.
3.2 Bylaws of Green Tree Floorplan Funding
Corp.
4.1 Form of Pooling and Servicing Agreement
4.2 Form of Series 1995-1 Supplement to the
Pooling and Servicing Agreement
4.3 Form of Receivables Purchase Agreement
5.1 Opinion and consent of Dorsey & Whitney
P.L.L.P. as to legality
*8.1 Opinion of Dorsey & Whitney P.L.L.P. as
to tax matters Electronically Filed
23.1 Consent of Dorsey & Whitney P.L.L.P.
(included as part of Exhibit 5.1)
23.2 Consent of Dorsey & Whitney P.L.L.P.
(included as part of Exhibit 8.1)
24.1 Power of attorney from officers and directors
of the Registrant signed by an attorney-in-fact
- ----------
* Filed herewith.
<PAGE>
Exhibit 8.1
December 14, 1995
Green Tree Financial Corporation
1100 Landmark Towers
345 St. Peter Street
St. Paul, Minnesota 55102-1639
Re: Registration Statement on Form S-1
File No. 33-62433
Federal Tax Characterization Issues
Gentlemen and Ladies:
We have acted as counsel to Green Tree Floorplan Funding Corp., a
Delaware corporation (the "Transferor"), in connection with the preparation of a
Registration Statement on Form S-1, File No. 33-62433, filed with the Securities
and Exchange Commission on September 7, 1995, as amended by Amendment No. 1
thereto filed on November 8, 1995, Amendment No. 2 thereto filed on December 4,
1995, and Amendment No. 3 hereto filed on December 13, 1995 (the "Registration
Statement"), relating to the registration of $409,400,000 of Floating Rate
Floorplan Receivable Trust Certificates, Series 1995-1, Class A (the "Class A
Certificates") and $18,400,000 of Floating Rate Floorplan Receivable Trust
Certificates, Series 1995-1, Class B (the "Class B Certificates" and, together
with the Class A Certificates, the "Offered Certificates") to be issued by Green
Tree Floorplan Receivables Master Trust (the "Trust"). The Offered Certificates
are to be issued under a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") substantially in the form filed as Exhibit 4.1 to the
Registration Statement, among the Transferor, Green Tree Financial Corporation,
a Delaware corporation, as Servicer ("Green Tree"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") and a Series 1995-1 Supplement
(the "Series 1995-1 Supplement") to the Pooling and Servicing Agreement
substantially in the form filed as Exhibit 4.2 to the Registration Statement.
<PAGE>
Green Tree Financial Corporation
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Page 2
You have requested our opinion with respect to the federal income tax
characterization of the Offered Certificates and the Trust. For purposes of
rendering our opinion we have examined the Registration Statement, the Pooling
and Servicing Agreement, the Series 1995-1 Supplement and the related documents
and agreements contemplated therein (collectively, the "Transaction Documents")
and we have reviewed such questions of law as we have considered necessary and
appropriate. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to them in the Pooling and Servicing Agreement
or the Series 1995-1 Supplement, as applicable.
Our opinion is based upon the existing provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), currently applicable Treasury
Department regulations issued thereunder, current published administrative
positions of the Internal Revenue Service (the "Service") contained in revenue
rulings and revenue procedures, and judicial decisions, all of which are subject
to change, either prospectively or retroactively, and to possibly differing
interpretations. Any change in such authorities may affect the opinions
rendered herein. In rendering our opinion, we have reviewed the partnership
anti-abuse rules contained in Section 1.701-2 of the Treasury Regulations, and
have determined that such rules will have no effect on our opinion.
Our opinion is also based on the projections, representations,
warranties, covenants and agreements set forth in the Transaction Documents and
the assumption that Green Tree, the Transferor, the Certificateholders, the
Trustee, and the holders of all other classes and series of certificates issued
by the Trust will at all times comply with the requirements of the Transaction
Documents. We have also relied in part on various factual representations made
to us by the Transferor, including the following:
1. There are and will be during the life of the Trust no contracts
or other agreements between the Transferor and the
Certificateholders other than as set forth in the Transaction
Documents.
2. The Certificateholders will not control the Transferor or
otherwise cause the Transferor to act as their agent, and will
not use the Transferor to conceal their own active involvement in
the conduct of the business of the Trust.
<PAGE>
Green Tree Financial Corporation
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Page 3
3. The net worth of the Transferor shall be not less than the
Minimum Net Worth.
4. Based on Green Tree's past experience with accounts and
receivables similar to the Accounts and Receivables, Green Tree
and the Transferor believe that the average period of time that
any Receivable will be outstanding will be approximately three
months.
Although we have not undertaken an independent investigation of any
factual matters, nothing contrary to any of these representations has come to
our attention in the course of our consideration of these matters. Any
alteration of such factual representations may adversely affect our opinion.
An opinion of counsel is predicated on all the facts and conditions
set forth in the opinion and is based upon counsel's analysis of the statutes,
regulatory interpretations and case law in effect as of the date of the opinion.
It is not a guarantee of the current status of the law and should not be
accepted as a guarantee that a court of law or an administrative agency will
concur in the opinion.
I. Federal Income Tax Characterization of the Offered Certificates.
---------------------------------------------------------------
In general, for federal income tax purposes, the characterization of a
transaction as a sale of property or a secured loan is a question of fact, the
resolution of which is based upon a determination of who will receive the
benefits of, and bear the burdens relating to, the property. Thus, the
determination of whether an instrument arising from such a transaction will be
treated as debt for federal income tax purposes, or instead will be treated as a
sale of the assets which secure such debt, depends on all the facts and
circumstances in each case. In general, the substance of the transaction in
which the Offered Certificates are issued should be consistent with treatment of
the Offered Certificates as debt. Although there are certain judicial
precedents holding that, under appropriate circumstances, a taxpayer should be
required to treat a transaction in accordance with the form chosen by the
taxpayer regardless of the transaction's substance, the application of these
authorities should not prevent the treatment of the Offered Certificates as debt
because the form, as well as the substance, of the transaction is consistent
with debt treatment. Even if it should be determined that certain aspects of
the transaction are indicative of a sale of the Receivables or an interest
therein, the transaction's form as a whole would at worst be viewed as ambiguous
rather than clearly as a sale. Accordingly, the
<PAGE>
Green Tree Financial Corporation
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Page 4
characterization of the sale of the Offered Certificates should be governed by
the substance of the transaction which should be viewed as most similar to the
issuance of debt by the Transferor.
A. Economic Substance of the Transaction. If the economic substance
of a transaction differs from the form in which it is cast, except in certain
limited circumstances (see discussion below), the substance, rather than the
form, governs the federal income tax consequences of the transaction. Gregory
v. Helvering, 293 U.S. 465 (1935); Helvering v. F. & R. Lazarus & Co., 308 U.S.
252, aff'g, 101 F.2d 728 (6th Cir. 1939); Gatlin v. Commissioner, 34 B.T.A. 50
(1936).
Whether the Offered Certificates are in substance debt or ownership
interests in the Receivables is based on a determination of which party to the
transaction holds the "substantial incidents of ownership." The courts have
identified a variety of factors that must be considered in making that
determination. See Town & Country Food Co. v. Commissioner, 51 T.C. 1049
(1969), acq., 1969-2 C.B. xxv; United Surgical Steel Co. v. Commissioner, 54
T.C. 1215 (1970), acq., 1971-2 C.B. 3; G.C.M. 39584 (December 3, 1986); Plumb,
The Federal Income Tax Significance of Corporate Debt: A Critical Analysis and
a Proposal, 26 Tax L. Rev. 369 (1971). In the context of this transaction, the
most important considerations are: (i) whether the Transferor bears the burdens
of ownership (i.e., the risk of loss from the Receivables) and (ii) whether the
Transferor retains the benefits of ownership (i.e., the potential for gain from
the Receivables). The following discussion considers these as well as other
relevant factors and demonstrates that each factor should be viewed as
supporting characterization of the Certificates as debt.
1. The Transferor Bears the Burdens of Ownership. The principal
burden of ownership with respect to the Receivables is risk of loss arising from
defaulted payments. The risk of loss arising from defaults, under most
reasonable default scenarios, is borne by the Transferor.
The principal amount of all Defaulted Receivables for any Business Day
will be allocated between the Transferor Interest and the Certificateholders
according to the Floating Allocation Percentage applicable for such day. Before
any such allocation of Defaulted Receivables has the effect of reducing the
Invested Amount of any class of Certificates, certain excess interest
collections will be applied to make up for any deficiency caused by such
Defaulted Receivables. If the amount of Defaulted Receivables exceeds the
amount of such excess interest collections so
<PAGE>
Green Tree Financial Corporation
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Page 5
applied, the amount of any such Defaulted Receivables that are allocable to the
Certificateholders will first be allocated to reduce the Class D Invested
Amount. If the Class D Invested Amount is reduced to zero by such allocation,
Defaulted Receivables then will be allocated to reduce the Class C Invested
Amount.
The Transferor is ultimately entitled to receive the excess interest
collections from the Receivables which are not applied to payments on the
Certificates. Since payments made to fund shortfalls due to Certificateholders
will ultimately be funded out of such excess interest collections, the
Transferor ultimately bears the risk of default losses realized on the
Receivables. In addition, under the Pooling and Servicing Agreement, the
Transferor is required to retain the Class D Certificates. Thus, the Transferor
is entitled to receive the principal payments thereon, which are subordinated to
the Class A, Class B and Class C Certificates. To the extent that defaults on
the Receivables reduce the amount paid on the Class D Certificates, the
Transferor bears the risk of losses caused by such defaults. Furthermore, the
Class C Certificates initially will be issued to the Transferor, although the
Transferor may later sell the Class C Certificates in a private placement. As
long as the Transferor holds the Class C Certificates, the Transferor also will
bear the risk of losses caused by defaults which reduce the amount paid on the
Class C Certificates.
The Pooling and Servicing Agreement provides that the Offered
Certificateholders are entitled to receive a fixed principal amount and a rate
of return (i.e., a floating rate based on a spread over LIBOR which is set at
the time of the issuance of the Certificates or, if less, the Net Receivables
Rate). Thus, the economic return to the Offered Certificateholders is not
affected by any change in the value of the Receivables, and the Offered
Certificateholders do not bear the burden of any decrease in the value of the
Receivables. We note that the interest rates on the Offered Certificates are
subject to a maximum rate equal to the Net Receivables Rate. It is anticipated
that factors which cause changes in LIBOR will, under most reasonable scenarios,
cause similar changes to the rates on the Receivables and, thus, that the Net
Receivables Rate generally will experience changes similar to those of LIBOR.
Therefore, it is anticipated that the Net Receivables Rate will not be used as
the interest rate on the Offered Certificates.
2. The Transferor Retains the Benefits of Ownership. If market
interest rates for comparable receivables decrease in relation to the yield on
the Receivables, the Receivables will increase in value. If interest rates
remain constant, but customers take a longer period of time to pay their
principal balances, the value of the Receivables will also increase because the
Transferor will continue to receive the yield on the Receivables over a longer
period of time. Regardless of interest rates, a change in customer payment
patterns resulting in fewer defaults than expected based on historical
experience will also increase the value of the
<PAGE>
Green Tree Financial Corporation
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Page 6
Receivables. Any increase (to the extent permitted by applicable law and the
terms of the applicable agreement) in the rate at which interest is payable on
the Accounts will also increase the value of the Receivables.
The Pooling and Servicing Agreement provides that the Offered
Certificateholders are entitled to receive a fixed principal amount and a rate
of return (i.e., a floating rate based on a spread over LIBOR which is set at
the time of the issuance of the Offered Certificates or, if less, the Net
Receivables Rate). Thus, the economic return to the Offered Certificateholders
is not affected by any change in the value of the Receivables, and the Offered
Certificateholders do not receive any benefit from any increase in the value of
the Receivables.
The Transferor has retained the sole opportunity to realize gain on
the Receivables by retaining the Transferor Interest, which represents the
interest in all of the assets of the Trust in excess of the required payments to
Certificateholders. Thus, the Transferor receives the benefit from any increase
in the value of the Receivables. When the Invested Amount of the Certificates
is reduced to less than 10% of the initial Invested Amount, the Transferor has
the option to repurchase the Certificates for an amount equal to the Invested
Amount plus accrued and unpaid interest on the Certificates.
Therefore, the Transferor retains the benefits and burdens associated
with owning the Receivables.
3. Subordination and Ratings. As mentioned above, the principal
amount of all Defaulted Receivables for any Business Day will be allocated
between the Transferor Interest and the Certificateholders according to the
Floating Allocation Percentage applicable for such day. Before any such
allocation of Defaulted Receivables has the effect of reducing the Invested
Amount of any class of Certificates, certain excess interest collections will be
applied to make up for any deficiency caused by such Defaulted Receivables. If
the amount of Defaulted Receivables exceeds the amount of such excess interest
collections so applied, the amount of any such Defaulted Receivables that are
allocable to the Certificateholders will first be allocated to reduce the Class
D Invested Amount; if the Class D Invested Amount is reduced to zero by such
allocation, then Defaulted Receivables will be allocated to reduce the Class C
Invested Amount; if the Class C Invested Amount is
<PAGE>
Green Tree Financial Corporation
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Page 7
reduced to zero by such allocation, then Defaulted Receivables will be allocated
to reduce the Class B Invested Amount; if the Class B Invested Amount is reduced
to zero by such allocation, then Defaulted Receivables will be allocated to
reduce the Class A Invested Amount. Thus, the Class B Invested Amount will be
affected by Defaulted Receivables only if the Class D Invested Amount and Class
C Invested Amount are reduced to zero, and the Class A Invested Amount will be
affected by Defaulted Receivables only if the Class D Invested Amount, Class C
Invested Amount and Class B Invested Amount are reduced to zero. In addition,
even if the Class B Invested Amount or Class A Invested Amount is so reduced by
allocations of Defaulted Receivables, such Invested Amounts may be subsequently
increased by certain excess interest collections available for that purpose.
All of these factors increase the likelihood that the principal payments made to
the Offered Certificateholders ultimately will equal the initial Class A and
Class B Invested Amount.
In addition, the likelihood of the Offered Certificateholders bearing
any actual loss is considered to be relatively remote, reflected by the fact
that the Class A Certificates have an initial rating of "AAA" or its equivalent
from at least one nationally recognized rating agency, and the Class B
Certificates have an initial rating of "A" or its equivalent from at least one
nationally recognized rating agency. These ratings are based, in part, on the
fact that such losses would occur only if the excess interest collections which
are used to offset any defaults on the Receivables, as well as other
distributions due with respect to the classes of certificates which are
subordinated to the Offered Certificates, were all exhausted. These ratings are
investment grade ratings, and such ratings indicate that it is likely that all
interest and principal will be paid. Accordingly, one would reasonably expect
that the Offered Certificateholders would not bear the risk of loss associated
with ownership of the Receivables.
4. Other Factors. A number of other factors support the conclusion
that the Offered Certificates are in substance debt. The terms of the
Receivables differ materially from the terms of the Offered Certificates with
regard to their respective interest rates and maturity dates. During the
Revolving Period, the obligors on the Receivables will make payments of
principal and interest on the Receivables. During the Revolving Period, the
Offered Certificateholders will receive interest payments, but collections of
principal on the Receivables otherwise allocable to the Offered
Certificateholders will be paid to the Transferor. Payments of principal on the
Offered Certificates are scheduled to commence on the January
<PAGE>
Green Tree Financial Corporation
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1998 Distribution Date, and this date will be automatically extended until the
Class A Scheduled Payment Date unless the Servicer elects not to so extend.
The Transferor will retain control and possession of the Receivables.
The Servicer is responsible for servicing, management, collection and
administration of the Receivables and will bear all costs and expenses incurred
in connection with such activities, although the Servicer will be entitled to
receive the Servicing Fee. In addition, the Transferor will agree to indemnify
the Certificateholders for the entire amount of losses, claims, damages or
liabilities arising out of the activities of the Servicer. The Trustee, on
behalf of the Certificateholders, has the right to inspect the Servicer's
documentation on the Receivables, a right which is common in loan transactions.
In addition, the Servicer, an affiliate of the Transferor and the entity from
whom the Transferor purchases the Receivables, collects the Receivables without
significant supervision by the Trustee or Certificateholders. The foregoing
additional factors support the conclusion that the transaction described in the
Agreement with respect to the Offered Certificates constitutes an issuance of
debt by the Transferor.
B. Form versus Substance. As mentioned above, a basic premise of
federal income taxation is that the economic substance of a transaction, and not
its form, determines the tax consequences. In appropriate cases, the courts
have allowed taxpayers, as well as the IRS, to treat a transaction in accordance
with its economic substance even though they have cast it in a different form
for non-tax purposes. For example, in Helvering v. F. & R. Lazarus & Co., 308
U.S. 252, aff'g, 101 F.2d 728 (6th Cir. 1939), the taxpayer sold property to a
bank as trustee for $3.25 million and concurrently leased the property back for
99 years. The rental payments on the lease were equal to 5% of $3.25 million,
and the taxpayer was required to make payments to a fund that would be
sufficient to repay $3.25 million within 48.5 years. The IRS denied the
taxpayer's claim of depreciation deductions on the property on the ground that
the taxpayer had transferred ownership of the property. The Supreme Court,
however, upheld the taxpayer's right to show that, for tax purposes, the
transaction was in substance a loan secured by the transferred property.
There is a series of cases holding that, in certain circumstances, the
taxpayer is bound by the form of the transaction selected notwithstanding that
the characterization of the economic substance of the transaction would be
different from the form of the transaction. For example, in Commissioner v.
Danielson, 378 F.2d 771 (3rd Cir.), cert. denied, 389 U.S. 858 (1967), a
purchase agreement expressly
<PAGE>
Green Tree Financial Corporation
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allocated consideration to a covenant not to compete, while the taxpayer
reported the entire amount as proceeds from the sale of capital assets. The
court held that the taxpayer could not contradict the form of the agreement and
attack the allocation to the covenant not to compete except in cases of fraud,
duress or undue influence. See also Spector v. U.S., 641 F.2d 376 (5th Cir.
1981)(pursuant to a written agreement, a partnership deducted Section 736
guaranteed payments to a withdrawing partner; the partner, contrary to the terms
of the agreement, treated such payments as Section 741 capital gain payments
realized upon the sale of the partnership interest; the court held that the
taxpayer was bound by the terms of the agreement unless he could show mistake,
fraud or undue influence); Sullivan v. U.S., 618 F.2d 1001 (3d Cir.
1980)(taxpayer disavowed original allocation of purchase price between land and
agreements to lease space in a shopping mall to be built on the land when, upon
audit, the gain on the sale of the leases was held to be short-term capital
gain; the court held that the contract allocations must be respected). In
general, the Danielson line of cases involve taxpayers who, contrary to the
written documents, later adopt inconsistent positions regarding the allocation
of purchase price, the valuation of assets or the character of income or gain to
the detriment of the Treasury.
Under the standards in Lazarus and similar cases, the Offered
Certificates should be treated as debt and the Transferor should be treated as
the owner of the Receivables. The Offered Certificateholders do not have
possession of the Receivables or the authority to dispose of them. Like the
bank in Lazarus, the Offered Certificateholders are entitled to receive only a
specified return and do not enjoy the benefit of any increase in the value of
the Receivables.
Neither Danielson nor any similar decision would, in our opinion,
prevent the Transferor and the Certificateholders from treating the Offered
Certificates as debt for federal income tax purposes. The rules from Danielson
and such cases are not intended to require consistent treatment of a transaction
for tax and non-tax purposes. Rather, they are intended to prevent a taxpayer
from renouncing intentions previously expressed in a document governing the
transaction. In this case, treating the Offered Certificates as debt does not
contravene any statement of intent in a governing document, and the form of the
transaction is not necessarily inconsistent with characterization of the Offered
Certificates as debt. The Prospectus, the Pooling and Servicing Agreement and
the Offered Certificates will state that the Offered Certificateholders and the
Transferor will treat the transaction as a financing for federal, state, and
local tax purposes. The language in the Agreement whereby the Transferor agrees
to "transfer" all "right, title and interest" in the Receivables to the Trust is
consistent with language of transfer in
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other security arrangements where debtors pledge assets to secure debt. The
Offered Certificates will state that they represent an "undivided interest" in
the Trust. However, the only rights of an Offered Certificateholder are to
receive payments of interest on the outstanding amount of the Offered
Certificates and repayment of the Invested Amount of the Offered Certificates on
or prior to their maturity dates. The Offered Certificates will not provide the
Offered Certificateholders with any specific rights in any Receivable, but
rather will provide only for rights to receive a specified amount of payments
out of the cash flow from the Receivables pool.
Moreover, even if certain aspects of the transaction should be
determined to be inconsistent with treatment of the Offered Certificates as debt
and the form of the transaction is therefore considered ambiguous, numerous
cases hold that the economic substance of the transaction controls the
transaction's characterization. Elrod v. Commissioner, 87 T.C. 1046, 1066
(1986); Smith v. Commissioner, 82 T.C. 705, 713 (1984); Morrison v.
Commissioner, 59 T.C. 248, 256 (1972), acq., 1973-2 C.B. 3; Kreider v.
Commissioner 762 F.2d 580, 588 (7th Cir. 1985); Comdisco, Inc. v. United States,
756 F.2d 569, 578 (7th Cir. 1985). In such circumstances, it would be
inappropriate to restrict taxpayers to the "four corners" of their document,
since the written instrument by its own terms is unclear. "The Danielson rule
. . . [is not] applicable to exclude parole evidence offered with respect to an
ambiguous document." Elrod, supra, at 1066. Accordingly, it is our view that
the Danielson line of authorities is not applicable to the transaction and will
not cause the transaction to be treated as a sale of an interest in the
Receivables to the holders of the Offered Certificates. Even if the form of the
transaction is deemed to be ambiguous, the transaction's economic substance will
determine its character.
C. Accounting Treatment. In Notice 94-47, 1994-19 I.R.B. 1 (April
18, 1994), the Internal Revenue Service has taken the position, without apparent
support from existing legal authority, that the fact that an instrument is
intended to be treated differently for tax purposes than for other purposes,
including regulatory accounting purposes, is a factor to be considered in
determining whether the instrument should be characterized as debt or equity for
federal income tax purposes. That factor, however, should not by itself control
the classification of the instrument for tax purposes. Accordingly, the fact
that the Transferor intends to report the transaction as a sale to
Certificateholders for certain regulatory and financial accounting purposes
should not by itself control the result for tax purposes, and such fact is not
necessarily inconsistent with characterizing the form of the transaction as a
financing for tax purposes.
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Indeed, the Supreme Court has frequently rejected the proposition that
the financial accounting treatment of a transaction controls its tax treatment.
For example, in Cottage Savings Ass'n v. Commissioner, 499 U.S. 554 (1991),
rev'g 890 F.2d 848 (6th Cir. 1989), rev'g 90 T.C. 372 (1988), reciprocal "sales"
of mortgage loans were respected as sales for federal income tax purposes
(permitting thrifts to realize losses that produced loss carrybacks and tax
refunds) even though such transactions were not treated as sales for regulatory
accounting purposes. Thus, thrifts were able to generate tax losses without
such losses being reflected on their financial statements for regulatory
accounting purposes. (It should be noted that in Cottage Savings the legal form
of the transaction was respected. Thus, the taxpayer was not asserting a tax
position inconsistent with the form of the transaction.)
Several other Supreme Court cases demonstrate that divergence between
tax and financial accounting is not uncommon. See Thor Power Tool Co. v.
Commissioner, 439 U.S. 552, 538-44 (1979)(company's inventory deductions for
financial accounting purposes were disallowed for federal income tax purposes--
"any presumptive equivalency between tax and financial accounting would be
unacceptable"); Commissioner v. Hansen, 360 U.S. 446 (1959)(reserve to cover
contingent liability in event of nonperformance of guaranty); Lucas v. American
Code Co., 280 U.S. 445 (1930)(reserve to cover expected liability on contested
lawsuit). (These cases, however, involved taxpayer reliance on accounting
treatment rather than IRS reliance thereon.) See also Frank Lyon Co. v. United
States, supra, at 577 (financial accounting treatment of a mortgage reflected
the taxpayer's proper tax treatment of a sale leaseback transaction although tax
and accounting treatment "need not necessarily be the same").
In our opinion, although the matter is not free from doubt, the
substance and form of the transaction are more consistent with the
characterization of the Offered Certificates as debt than with the
characterization of the Offered Certificates as a form of equity interest in the
Receivables. To the extent that the form of the transaction were determined to
include some features of a sale in addition to the features indicative of a debt
financing, the form is at worst ambiguous. Accordingly, in our opinion,
pursuant to the aforementioned authorities, the Offered Certificates will be
treated as debt for federal income tax purposes.
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II. Characterization of the Trust.
-----------------------------
In many respects, the Trust is similar to trusts established to hold
collateral pledged as security in connection with lending transactions. If all
classes of Certificates issued by the Trust were debt for federal income tax
purposes, the Trust would be disregarded for federal income tax purposes and
would be characterized as a mere security arrangement. Treas. Reg. (S) 1.61-
13(b); Rev. Rul. 76-265, 1976-2 C.B. 448; see also Rev. Rul. 73-100, 1973-1 C.B.
613 (domestic corporations's transfer of securities to Canadian security holder,
to secure liabilities to policyholders in Canada, does not create a trust where
discretionary powers retained by corporation); Rev. Rul. 71-119, 1971 C.B. 163
(settlement fund administered by "trustee" not a trust). The Trust intends,
however, to issue classes of Series 1995-1 Certificates that may not clearly be
classified as debt for federal income tax purposes.
If any class of the Series 1995-1 Certificates were in fact viewed as
an equity interest in the Trust, the Trust could be viewed, pursuant to Treasury
Regulation Section 301.7701-4(c), as an entity whose characterization would be
determined under Section 7701 and Treasury Regulation Section 301.7701-2. In
two significant cases regarding the classification of limited partnerships for
tax purposes, the opinions of the Court of Claims and the United States Tax
Court closely followed the tests set forth in these regulations. See Zuckman v.
United States, 524 F.2d 79 (Ct. Cl. 1975); Larson v. Commissioner, 66 T.C. 159
(1976), acq., 1979-1 C.B. 1; see also Rev. Rul. 79-106, 1979-1 C.B. 448, Rev.
Rul. 95-9, 1995-3 I.R.B. 17, and Rev. Proc. 89-12, 1989-1 C.B. 798.
Furthermore, in Revenue Ruling 88-79, 1988-2 C.B. 361, the Service ruled that
the tests set forth in these regulations to distinguish a partnership from an
association should also be applied to determine the tax characterization of a
business trust.
Section 301.7701-2(a)(1) of the Treasury Regulations lists six major
characteristics ordinarily found in a corporation which distinguish a
corporation from other forms of organizations. Section 301.7701-2(a)(2) of the
Treasury Regulations provides that since two of these factors (associates and an
objective to carry on business and divide the gains therefrom) are generally
common to both corporations and partnerships, the determination of whether an
organization that has such characteristics is to be treated for tax purposes as
a partnership or as an association taxable as a corporation depends upon an
analysis of the remaining factors: continuity of life, free transferability of
interests, centralization of management and limited liability.
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Section 301.7701-2(a)(3) of the Treasury Regulations specifies that an
unincorporated organization shall not be classified as an association taxable as
a corporation unless such organization has more corporate characteristics than
non-corporate characteristics, excluding characteristics common to both types of
organizations. Under Section 301.7701-2(a)(3) of the Treasury Regulations, each
of the four above-described characteristics is assigned equal weight in
determining whether an organization has more corporate characteristics than non-
corporate characteristics. See Larson and Rev. Rul. 95-9, 1995-3 I.R.B. 17,
each of which applied equal weight to each of the four characteristics.
We conclude that under the Treasury Regulations' tests and relevant
judicial authorities, the Trust lacks continuity of life and limited liability
and that the Trust therefore will not be treated as an association taxable as a
corporation for federal income tax purposes. The basis for this conclusion is
discussed in more detail below.
A. Continuity of Life
------------------
Under Section 301.7701-2(b)(1) of the Treasury Regulations, an
organization is deemed to lack the corporate characteristic of continuity of
life if the death, insanity, bankruptcy, retirement, resignation or expulsion of
any member will cause a dissolution of the organization. Section 301.7701-
2(b)(1) of the Treasury Regulations further provides that a limited partnership
will not have continuity of life if such an event of withdrawal of a general
partner causes a dissolution of the partnership, notwithstanding the fact that a
dissolution upon such an event may be avoided by the remaining general partners
or at least a majority in interest of all remaining partners agreeing to
continue the partnership.
Section 9.2(a) of the Pooling and Servicing Agreement provides that on
the day of an Insolvency Event, (i) the Transferor shall immediately cease to
transfer Receivables to the Trust and (ii) the Trust shall be deemed to have
terminated, and shall begin the liquidation, winding-up and dissolution
procedures provided in the Pooling and Servicing Agreement. The dissolution
procedures provided in the Pooling and Servicing Agreement include the Trustee
selling, disposing of or otherwise liquidating the Receivables "in a
commercially reasonable manner and on commercially reasonable terms, which shall
include the solicitation of competitive bids" (a "Disposition") unless, within
no more than 90 days after the date of publication of notice of the Insolvency
Event, Holders of Certificates
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representing undivided interests aggregating in excess of 50% of the related
Invested Amount of each Series (or, in the case of a Series having more than one
Class, each Class of such Series) and the holders of any Supplemental
Certificates or any other interest in the Exchangeable Transferor Certificate
other than the Transferor instruct the Trustee not to effectuate a Disposition.
Under Section 301.7701-2(b) of the Treasury Regulations, where the
entity in question is not a limited partnership formed under RULPA, one must
determine if the legal relationship between the parties has changed under state
law. Here, upon the occurrence of an Insolvency Event, the legal relationships
between the parties do change and therefore bring about a change in the identity
of the organization. In the case of an Insolvency Event, the Transferor must
immediately cease to transfer Principal Receivables to the Trust, and the
Trustee must, unless explicitly instructed otherwise by a Holders' Majority,
begin the dissolution process. This does alter the parties' obligations and
relationships and, in effect, changes the Trust from an active enterprise into a
mere "liquidating trust" that must effect a Disposition of all the Receivables.
Therefore, the Trust would lack continuity of life.
B. Limited Liability
-----------------
Section 301.7701-2(d)(1) of the Treasury Regulations provides that an
organization has the corporate characteristic of limited liability if there is
no member who is personally liable for the debts of the organization. Section
301.7701-2(d)(1) of the Treasury Regulations further provides that in the case
of a corporate general partner of a limited partnership, personal liability
exists with respect to such general partner if the general partner has
"substantial assets" (in addition to its interest in the partnership) which
could be reached by a creditor of the partnership or if the general partner is
not merely a "dummy" acting as the agent for the limited partners. For advance
ruling purposes, a limited partnership generally will be deemed to lack limited
liability where the net worth of its corporate general partners at the time of
the ruling request equals at least 10% of the total contributions to the
partnership, and such net worth is expected to continue to equal at least 10% of
the total contributions throughout the life of the partnership. Rev. Proc. 89-
12 at (S) 4.07. In Larson, the Tax Court held that, in the case of corporate
general partners, if (1) the persons controlling the general partners are
independent from, and unrelated to, the limited partners, and (2) the general
partners are not being used by the limited partners "as a screen to conceal
their own active involvement in the conduct of the business" of the partnership,
then the general partner or partners will not be considered as agents of the
limited partners.
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Section 7.4 of the Pooling and Servicing Agreement provides that the
Transferor shall be liable for any losses, claims, damages, penalties or
liabilities (other than those incurred by a Certificateholder in the capacity of
an investor in the Investor Certificates as a result of the performance of the
Receivables, market fluctuations, a shortfall or failure by the Enhancement
Provider to make payment under any Enhancement or other similar market or
investment risks associated with ownership of the Investor Certificates) arising
out of or based on the arrangement created by the Pooling and Servicing
Agreement and the actions of the Servicer taken pursuant thereto as though the
Pooling and Servicing Agreement created a partnership under the Minnesota
Uniform Partnership Act in which the Transferor is a general partner.
Although the Transferor has represented that it will have a net worth
at least equal to the Minimum Net Worth, we have not determined if the
Transferor has "substantial assets" within the meaning of the Treasury
Regulations and therefore do not rely upon the "substantial assets" test with
respect to the limited liability issue.
The Transferor has represented, however, that the Certificateholders
will not control the Transferor or otherwise cause the Transferor to act as
their agent, and that the Certificateholders will not use the Transferor to
conceal their own active involvement in the conduct of the business of the
Trust. Thus, even if the Certificates were recharacterized as equity interests
in the Trust, the Transferor would not be a "dummy" acting as the agent of the
Certificateholders. Therefore, based on the foregoing authorities and the
representations of the Transferor, we conclude that the Trust lacks the
corporate characteristic of limited liability.
Thus, we conclude that under the tests of the applicable Treasury
Regulations, the Trust lacks the corporate characteristics of continuity of life
and limited liability. Under the Treasury Regulations, the absence of any two
of the four principal characteristics which distinguish a partnership from an
association is sufficient to establish that the Trust will not be treated as an
association for federal income tax purposes. Therefore, it is our opinion that
pursuant to Section 7701 of the Code, the Trust will not be treated as an
association taxable as a corporation for federal income tax purposes. It is not
necessary to determine and we do not express any opinion regarding whether the
Trust will possess the characteristics of free transferability or centralized
management. Accordingly, the Trust would, in the
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circumstances described above, be characterized as a partnership for federal
income tax purposes.
C. Publicly Traded Partnership. Section 7704 of the Code provides
that, subject to certain exceptions, a partnership the interests in which are
(i) traded on an established securities market or (ii) readily tradable on a
secondary market (or the substantial equivalent thereof) will be treated as a
corporation for federal income tax purposes.
Treasury Regulations Section 1.7704-1, issued on November 29, 1995
(the "PTP Regs"), provide further explanation of the rules governing publicly
traded partnerships. The PTP Regs provide that an "established securities
market" includes a national, foreign, regional or local exchange, as well as an
interdealer quotation system which regularly disseminates firm buy or sell
quotations by identified brokers or dealers, by electronic means or
otherwise. The PTP Regs also provide that interests in a partnership are readily
tradable on a secondary market or the substantial equivalent thereof if the
partners are readily able to buy, sell or exchange their partnership interests
in a manner that is economically comparable to trading on an established
securities market.
The PTP Regs provide a safe harbor pursuant to which interests in a
partnership will not be considered readily tradable on a secondary market or the
substantial equivalent thereof if (i) all interests in such partnership were
issued in a transaction (or transactions) that was not required to be registered
under the Securities Act of 1933 and (ii) the partnership does not have more
than 100 partners at any time during the taxable year of the partnership.
As discussed above, it is our opinion that the Offered Certificates
will be treated as debt for federal income tax purposes. The Class D
Certificates will be issued to the Transferor and the Transferor will be
required to retain the Class D Certificates. The Class C Certificates initially
will be issued to the Transferor, but may be sold in a private placement and
thus will be exempt from registration under the Securities Act of 1933 pursuant
to Section 4(a) of that Act. Moreover, if the Class C Certificates are sold by
the Transferor, each purchaser of Class C Certificates (and purchasers of
certain other interests which would be treated as a direct or indirect nondebt
interest in the Trust) will, in effect, make certain representations for the
benefit of the Transferor and the other purchasers (with the express
acknowledgement that this Firm will be relying on such representation for
purposes of rendering this opinion) that would be breached if any such purchaser
were to buy or sell any such interest on an "established securities
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market." In addition, Section 6.3 of the Agreement permits the Transferor to
prevent a transfer, participation or other disposition of any interest in any
Certificate with respect to which an Opinion of Counsel was not received stating
that such certificate would be treated as debt for federal income tax purposes
if the Transferor, in its sole and absolute discretion, determines that such
transfer, participation or other disposition, if effected, would cause the Trust
to be treated as a publicly traded partnership under the PTP Regs. Accordingly,
under current law, if the Trust were considered to be a partnership for federal
income tax purposes, it would not be a publicly traded partnership for purposes
of Section 7704.
We note that an entity that meets the definition of a "publicly traded
partnership" may nevertheless not be taxable as a corporation if 90% of its
income consists of interest income. Because it is not clear whether the Trust,
if viewed as an entity separate from the Transferor, would be viewed as engaged
in a "financial
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business," and thus ineligible for the exception, we have not relied on the
exception. See Code (S) 7704(d)(2).
D. Taxable Mortgage Pool. Section 7701(i) of the Code provides that
a "taxable mortgage pool" shall be treated as a corporation for federal income
tax purposes. Section 7701(i) defines taxable mortgage pool to include any
entity (other than a real estate mortgage investment conduit) which meets the
following requirements:
(i) substantially all of the assets of such entity consists of
debt obligations (or interests therein) and more than 50% of such debt
obligations (or interests) consists of real estate mortgages (or
interests therein),
(ii) such entity is the obligor under debt obligations with two or
more maturities, and
(iii) under the terms of the debt obligations referred to in clause
(ii) (or underlying arrangement), payments on such debt obligations
bear a relationship to payments on the debt obligations (or interests)
referred to in clause (i).
Proposed Treasury Regulations (S) 301.7701(i) (the "Proposed TMP
Regs") provide further explanation of the rules governing taxable mortgage
pools. The Proposed TMP Regs provide that "the purpose of Section 7701(i) is to
prevent income generated by a pool of real estate mortgages from escaping
federal income taxation when the pool is used to issue multiple class mortgage-
backed securities." The Proposed TMP Regs define real estate mortgages to
include all obligations that are principally secured by an interest in real
property. For this purpose, real property includes manufactured housing that
qualifies as a single family residence under Section 25(e)(10) of the Code.
Under a literal reading of Section 7701(i) of the Code and the
Proposed TMP Regs, one might argue that the Trust should be treated as a taxable
mortgage pool. In our opinion, however, the Trust will not be treated as a
taxable mortgage pool.
It is anticipated that a significant portion of the Receivables will
constitute obligations of dealers of manufactured housing, and that such
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Receivables will be secured by a security interest in the manufactured housing
inventory held by such dealers. Thus, such obligations would be treated as
"real estate mortgages" within the literal meaning of Section 7701(i) of the
Code and the Proposed TMP Regs. We do not believe, however, that Receivables
secured by such dealer inventory are the type of obligations intended to be
covered by the taxable mortgage pool rules. Furthermore, taxable mortgage pool
status is not dependent solely on the type of assets held by an entity. Rather,
both Section 7701(i) of the Code and the Proposed TMP Regs require that in
addition to holding real estate mortgages, in order to be a taxable mortgage
pool an entity must issue debt obligations with two or more maturities the
payments on which "bear a relationship" to payments on the debt obligations held
by the entity. The Proposed TMP Regs provide:
Payments on debt obligations under which an entity is the obligor
(liability obligations) "bear a relationship" to payments ... on debt
obligations an entity holds as assets (asset obligations) if under the
terms of the liability obligations (or underlying arrangement) the
timing and amount of payments on the liability obligations are in
large part determined by the timing and amount of payments or
projected payments on the asset obligations.
We believe that the payments to be made on the Offered Certificates
and the other classes of Certificates issued by the Trust will not bear a
relationship to the Receivables held by the Trust which is sufficient to satisfy
the requirements of Section 7701(i) of the Code and the Proposed TMP Regs.
Green Tree and the Transferor have represented to us that the average period of
time that any Receivable will be outstanding will be approximately three
months. Conversely, none of the Certificates issued by the Trust are scheduled
to receive any payments of principal until the January 1998 Distribution Date,
and this date will be automatically extended until the Class A Scheduled Payment
Date unless the Servicer elects not to so extend. Thus, because the Transferor
receives all collections of principal paid on the Receivables during the
Revolving Period, most, if not all, of the principal collections on the
Receivables which are paid to the holders of any class of Series 1995-1
Certificates issued by the Trust will arise from Receivables which are not in
existence on the date the Trust issues such Certificates. Therefore, it is our
opinion that the Trust will not constitute a taxable mortgage pool under Section
7701(i) of the Code.
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III. Minnesota State Tax Consequences.
--------------------------------
Our opinion with respect to the Minnesota state tax characterization
of the Offered Certificates and the Trust is based upon current statutory
provisions and the regulations promulgated thereunder, and applicable judicial
or ruling authority, all of which are subject to change (which may be
retroactive). No ruling on any of the issues discussed below will be sought
from the Minnesota Department of Revenue.
If the Offered Certificates are treated as debt for federal income tax
purposes, it is our opinion that this treatment will also apply for Minnesota
income tax purposes and that the Trust will not be characterized as an
association, publicly traded partnership or taxable mortgage pool taxable as a
corporation for Minnesota income tax purposes. Certificate Owners not otherwise
subject to Minnesota income or franchise taxation would not become subject to
such a tax solely because of their ownership of the Offered Certificates.
Certificate Owners already subject to income or franchise taxation in Minnesota
could, however, be required to pay such a tax on all or a portion of the income
generated from ownership of the Offered Certificates.
If the Trust is treated as a partnership (not taxable as a
corporation) for federal income tax purposes, it is our opinion that the Trust
would also be treated as such a partnership for Minnesota income tax purposes.
The partnership therefore would not be subject to Minnesota taxation.
Certificate Owners that are not otherwise subject to Minnesota income or
franchise taxation would not become subject to such a tax solely because of
their interests in the constructive partnership. Certificate Owners already
subject to income or franchise taxation in Minnesota could, however, be required
to pay such a tax on all or a portion of the income from the constructive
partnership.
If the Offered Certificates are treated as ownership interests in an
association or publicly traded partnership taxable as a corporation for federal
income tax purposes, it is our opinion that this treatment would also apply for
Minnesota income and franchise tax purposes. Pursuant to this treatment, the
Trust would be subject to the Minnesota franchise tax measured by net income
(which could result in reduced distributions to Certificate Owners). Certificate
Owners that are not otherwise subject to Minnesota income or franchise taxation
would not become subject to such a tax solely because of their interests in the
constructive corporation. Certificate Owners already subject to income or
franchise taxation in Minnesota could, however, be
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required to pay such a tax on all or a portion of the income from the
constructive corporation.
We express no opinion about the tax treatment of any features of the
Trust's activities or an investment therein other than those expressly set forth
above.
Except as provided below, the foregoing opinions are being furnished
to you solely for your benefit and may not be relied upon by, nor may copies be
delivered to, any other person without our prior written consent.
We hereby consent to the inclusion of this opinion as an exhibit to
the Registration Statement and to the use of our name under the heading "Certain
Federal Income Tax Consequences" in the prospectus forming a part of the
Registration Statement, and we hereby confirm that the discussion under such
heading accurately sets forth our advice as to the likely outcome of material
issues under the federal and Minnesota state income tax laws.
Dated: December 14, 1995
Very truly yours,
/s/ Dorsey & Whitney P.L.L.P.
