K&LGATESLLP
STATESTREETFINANCIAL CENTER ONELINCOLNSTREET
BOSTON,MA02111
T+16172613100F+16172613175klgates.com
Exhibit 12
January23,2015
FederatedGNMATrust
4000EricssonDrive
Warrendale,PA15086-7400
FederatedGovernmentIncomeTrust
4000EricssonDrive
Warrendale,PA15086-7400
Re:ReorganizationtoCombineSeriesofMassachusettsBusinessTrusts
LadiesandGentleman:
FederatedGovernmentIncomeTrust,aMassachusettsbusinesstrust(the"Acquiring Fund"),andFederatedGNMATrust,aMassachusettsbusinesstrust("AcquiredFund"), have requested our opinion as to certain federal income tax consequences of transactions (the "Reorganization") in which the Acquiring Fundwill acquiresubstantially allof theassets and assume all of theliabilities of the Acquired Fund in exchange solely forshares ofbeneficial interest (Service Sharesand InstitutionalShares) inthe Acquiring Fund ("Acquiring Fund Shares") pursuant to anAgreement and Plan of Reorganization ("Agreement") entered intoby the Acquiring Fund Trust, onbehalfofthe AcquirinFund, and theAcquired Fund Trust, on behalfofthe AcquiredFund, on November19, 2014. Specifically, the Funds have requested our opinion that theconsummationof the Reorganization will qualify as a "reorganization" (as defined in section
368(a)).2
Inrenderingthisop1n1on,wehaveexamined(1)theAgreement,(2)theProxy Statement/Prospectus datedNovember7,2014,regardingtheReorganization("Proxy Statement")thatwas furnishedin connection withthe solicitation, by themembers of the Acquired Fund Trust's Board of Trustees ( "Board"), of proxiesfor use ata special meeting of the Acquired Fund's shareholdersthat washeld on January6, 2015, and (3) other documents we havedeemed necessary or appropriate for the purposeshereof (collectively, "Documents"). We have assumed,forpurposes hereof, the accuracy andcompleteness ofthe information contained in all the Documents. Asto various matters of fact material to this opinion, we have relied, exclusively and without independent verification (with your permission), on the
1Eachofthe AcquiredFund and AcquiringFundissometimesreferredtohereinasa"Fund."
| 2 | All"section"referencesaretotheInternalRevenueCodeof1986,asamended("Code"), unlessotherwisenoted,and all "Treas.Reg.§"references are to theregulationsunderthe Code ("Regulations"). |
representationsandVJarrantiessetforthintheAgreementandonthestatementsand representationsofofficersandother representatives of the Acquiring Fund and theAcquired Fund (collectively, "Representations"). We have assumed that any Representationmade "to the knowledge and belief'(or similarqualification) of any person or party is, and at the Closing Date (as defined in the Agreement)will be, correct without suchqualification. We have also assumed that as to all matters forwhicha person or entity has represented that such person or entity is not a party to, does not have, or is not aware of any plan, intention, understanding,or agreement, there is no such plan, intention, understanding, or agreement. Finally, we have assumedthat theDocuments and the Representations present allthe materialand relevant facts relating to the Reorganization.
OPINION
Basedsolelyonthefactsandrepresentations setforthintheDocumentsand Representations,andconditionedon(i)thoseRepresentations'beingtrueon the closing date of the Reorganizationand(ii) theReorganization's beingconsummated inaccordancewith the Agreement (without the waiver ormodification ofanytermsorconditions thereof),ouropinion with respect to the federal income tax consequences of the Reorganization is as follows.
1.Thetransferofall orsubstantiallyalloftheAcquiredFund'sassetstotheAcquiring FundsolelyinexchangeforAcquiringFundShares (followed by thedistributionofAquiringFund Shares tothe Acquired Fund Shareholders indissolution and liquidationof the AcquiredFund)will constitutea "reorganization" within the meaning of section 368(a) of the Code, andtheAcquiring Fund and the Acquired Fund will each be a "party to a reorganization" within the meaning of section 368(b) of the Code.
2.NogainorlosswillberecognizedbytheAcquiringFunduponthereceiptofthe assetsoftheAcquiredFundsolelyinexchange for Acquiring FundShares.
3.NogainorlosswillberecognizedbytheAcquiredFunduponthetransferofthe AcquiredFund'sassetstothe AcquiringFundinexchange solelyfor Acquiring FundShares or upon the distribution (whether actual or constructive) ofAcquiring FundSharesto Acquired Fund Shareholders in exchangefor their Acquired Fund Shares.
4.NogainorlosswillberecognizedbyanyAcquiredFundShareholdersuponthe exchangeofitsAcquired Fund Shares for Acquiring Fund Shares.
5.TheaggregatetaxbasisoftheAcquiringFundSharesreceivedbyeachAcquired FundShareholderpursuanttotheReorganizationwillbe the sameasthe aggregate basisof the Acquired Fund Shares heldbysuch AcquiredFund Shareholder immediately prior to the Reorganization. The holdingperiod of theAcquiring Fund Shares receivedbyeachAcquired Fund Shareholder will include the holding period during which the Acquired Fund Shares exchanged therefor wereheld by such shareholder, provided those Acquired Fund Shares were held as capital assets at the time of the Reorganization.
6.ThetaxbasisoftheAcquiredFund'sassetsacquiredbytheAcquiringFundwiiibe thesameasthetaxbasis ofsuchassetstotheAcquiredFundimmediately prior tothe Reorganization. Theholdingperiod or the assets of the Acquired Fund in the hands of the Acquiring Fund will includetheperiodduringwhich those assetswere held by the Acquired Fund.
Ouropinionisbasedon,andisconditionedonthecontinuedapplicabilityof,the provisionsoftheCodeandtheRegulations, judicial decisions, and rulingsand other pronouncements ofthe Internal RevenueService ("Service") in existence on the date hereof. Allthe foregoing authorities are subject tochange ormodification that can beapplied retroactivelyand thus also could affectthe conclusions expressed herein; we assume no responsibility to update our opinion after the date hereof with respect to any such change or modification. Ouropinionrepresents our bestjudgment regarding howacourtwould decidethe issuesaddressed herein andis notbindingon the Service orany court. Moreover, ouropinion does not provide any assurance that aposition taken in reliance thereon will not bechallenged by the Service, and althoughwe believethatour opinionwould be sustained by a court if challenged, there canbe noassurancesto that effect.
Ouropinionaddressesonlythespecificfederalincometaxconsequencesof the Reorganizationsetforthaboveanddoesnotaddress anyotherfederal, or any state, local,or foreign tax consequences of the Reorganization or any other action(including any taken in connection therewith). Our opinion also applies only if each Fund issolvent,andwe express no opinion about the tax treatment ofthe transactions described herein ifany Fund isinsolvent. Finally,ouropinion issolelyfor the information of the addressees andtheir shareholders, and may notbe relied on forany purpose by any other person without ourexpress written consent.
Verytrulyyours,
