Miller, Canfield, Paddock and Stone, p.l.c.
1400 North Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48304
September 29, 1999
The First Trust Combined Series 272
Michigan Municipal Tax-Free Value Portfolio,
In care of
Nike Securities L.P.
1001 Warrenville Road
Lisle, Illinois 60532
The Chase Manhattan Bank
as Trustee of The First Trust Combined
Series 272, Michigan Municipal Tax-Free Value Portfolio
4 New York Plaza, 6th Floor
New York, New York 10004-2413
Re: The First Trust Combined Series 272
Michigan Municipal Tax-Free Value
Portfolio,
Investment Grade Series 34
Gentlemen:
We have acted as special Michigan counsel to you as sponsors
and trustees of The First Trust Combined Series 272, Michigan
Municipal Tax-Free Value Portfolio, Investment Grade Series 34,
referred to above (the "Fund"). You have asked that we, acting
in such capacity, render an opinion to you with respect to
certain matters relating to the issuance of the units of
fractional undivided interest in the Fund (the "Units") pursuant
to a Registration Statement on Form S-6 filed with the Securities
and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Registration Statement").
You have requested our opinion as to the applicability to
the Michigan Municipal Tax-Free Value Portfolio (the "Michigan
Trust") and the holders of Units (the "Holders"), each of which
Units represents the ownership of a specified fractional
undivided interest in the assets of the Michigan Trust, of the
Michigan Income Tax Act (M.C.L.A. Sections 206.1 et seq.; M.S.A.
Sections 7.557 (101) et seq.) (the "Michigan Income Tax"), the
City Income Tax Act (M.C.L.A. Sections 141.501 et seq.; M.S.A.
Sections 5.3194 (1) et seq.), which incorporates the "Uniform
City Income Tax Ordinance," the First Class School District
excise tax upon income (M.C.L.A. Section 380.451; M.S.A.
S15.4451) (collectively, the "income tax laws"), the Michigan
Single Business Tax Act (M.C.L.A. Sections 208.1 et seq.; M.S.A.
Sections 7.558 (1) et seq.) (the "Single Business Tax") and the
Michigan Tax on Ownership of Intangible Personal Property
(M.C.L.A. Sections 205.131 et seq.; M.S.A. Sections 7.556 (1) et
seq.) (the "Intangibles Tax"). The total repeal of the
Intangibles Tax was effective January 1, 1998 (1995 PA 4 and 5).
The Michigan Income Tax rate will be reduced, from the present
4.4 percent to 4.3 percent for year 2000; 4.2 percent for year
2001; 4.1 percent for year 2002; 4.0 percent for year 2003; and
3.9 percent for year 2004 and after (1999 PA 1-6). The Single
Business Tax will be phased-out over a twenty-three year period,
assuming specified Budget Stabilization Fund levels are
maintained, at a rate of one-tenth of one percent per year,
beginning in 1999 (1999 PA 115). The City income Tax Act was
amended, for cities with a population of 750,000 or more, such as
Detroit, to require, over a ten-year period, a gradual total
reduction of their respective city income tax rates of one
percent for residents and one-half of one percent for non-
residents. This gradual rate reduction is effective for tax
years beginning on or after July 1, 1999, and each July 1
thereafter, unless a city requests a suspension of a reduction
under specified economic conditions (1998 PA 500). You have also
requested our opinion regarding the tax status of proceeds
payable from an insurance policy to be obtained by either the
Fund or by the issuer of the Bonds involved, guaranteeing prompt
payment of principal and interest on all Bonds in the portfolio
of the Fund.
The Michigan Trust, its formation, its proposed method of
operation, the rights of owners of Certificates representing
Units, the nature of such ownership and the portfolio of
investments of the Michigan Trust are described and set forth in
the Prospectus dated September 29, 1999, filed with the
Securities and Exchange commission in Registration No. 333-22615.
In giving our opinion set forth hereunder, we have relied upon
the facts contained in such Registration Statement, including the
fact that, at the respective dates of issuance of the underlying
Debt Obligations, opinions of bond counsel to the respective
Michigan authorities issuing such Debt Obligations were given
with respect to the validity of the Debt Obligations and the
exemption of the same, and of the interest thereon, from Michigan
taxation.
Based on the above, it is our opinion that:
The Michigan Trust and the owners of Units will, in our
opinion, be treated for purposes of the Michigan income tax laws
and the Single Business Tax in substantially the same manner as
they are for purposes of the Federal income tax laws, as
currently enacted. Accordingly, we have relied upon the opinion
of Messrs. Chapman and Cutler as to the applicability of Federal
income tax under the Internal Revenue Code of 1986, as currently
amended, to the Michigan Trust and the Holders of Units.
Under the income tax laws of the State of Michigan, the
Michigan Trust is not an association taxable as a corporation;
the income of the Michigan Trust will be treated as the income of
the Holders of Units of the Michigan Trust and be deemed to have
been received by them when received by the Michigan Trust.
Interest on the Debt Obligations in the Michigan Trust which is
exempt from tax under the Michigan income tax laws when received
by the Michigan Trust will retain its status as tax exempt
interest to the Holders of Units of the Michigan Trust.
For purposes of the Michigan income tax laws, each Holder of
Units of the Michigan Trust will be considered to have received
his pro rata share of interest on each Debt Obligation in the
Michigan Trust when it is received by the Michigan Trust, and
each Holder will have a taxable event when the Michigan Trust
disposes of a Debt Obligation (whether by sale, exchange,
redemption or payment at maturity) or when the Unit Holder
redeems or sells his Unit, to the extent the transaction
constitutes a taxable event for Federal income tax purposes. The
tax cost of each Unit to a Unit Holder will be established and
allocated for purposes of the Michigan income tax laws in the
same manner as such cost is established and allocated for Federal
income tax purposes.
The Michigan Single Business Tax replaced the tax on
corporate and financial institution income under the Michigan
Income Tax, and the intangible tax with respect to those
intangibles of persons subject to the Single Business Tax the
income from which would be considered in computing the Single
Business Tax. Persons are subject to the Single Business Tax
only if they are engaged in "business activity," as defined in
the Act. Under the Single Business Tax, both interest received
by the Michigan Trust on the underlying Debt Obligations and any
amount distributed from the Michigan Trust to a Unit Holder, if
not included in determining taxable income for Federal income tax
purposes, is also not included in the adjusted tax base upon
which the Single Business Tax is computed, of either the Michigan
Trust or the Unit Holders. If the Michigan Trust or the Unit
Holders have a taxable event for Federal income tax purposes when
the Michigan Trust disposes of a Debt Obligation (whether by
sale, exchange, redemption or payment at maturity) or the Holder
redeems or sells his Unit, an amount equal to any gain realized
from such taxable event which was included in the computation of
taxable income for Federal income tax purposes (plus an amount
equal to any capital gain of an individual realized in connection
with such event but excluded in computing that individuals
Federal taxable income) will be included in the tax base against
which, after allocation, apportionment and other adjustments, the
Single Business Tax is computed. The tax base will be reduced by
an amount equal to any capital loss realized from such a taxable
event, whether or not the capital loss was deducted in computing
Federal taxable income in the year the loss occurred. Holders
should consult their tax advisor as to their status under
Michigan law.
Any proceeds paid under an insurance policy issued to the
Trustee of the Fund, or paid under individual policies obtained
by issuers of Bonds, which, when received by the Unit Holders,
represent maturing interest on defaulted obligations held by the
Trustee, will be excludable from the Michigan income tax laws and
the Single Business Tax if, and to the same extent as, such
interest would have been so excludable if paid by the issuer of
the defaulted obligations. While treatment under the Michigan
Intangibles Tax is not premised upon the characterization of such
proceeds under the Internal Revenue Code, the Michigan Department
of Treasury should adopt the same approach as under the Michigan
income tax laws and the Single Business tax.
Chapman and Cutler of 111 West Monroe Street, Chicago,
Illinois 60603, are entitled to rely on this opinion as though it
were addressed to them.
We also advise you that, as the Tax Reform Act of 1986
eliminated the capital gain deduction for tax years beginning
after December 31, 1986, the federal adjusted gross income, the
computation base for the Michigan Income Tax, of a Unit Holder
will be increased accordingly to the extent such capital gains
are realized when the Michigan Trust disposes of a Debt
Obligation or when the Unit Holder redeems or sells a Unit, to
the extent such transaction constitutes a taxable event for
Federal income tax purposes.
We hereby consent to the reference to Miller, Canfield,
Paddock and Stone under the heading "Michigan Tax Status" in the
Prospectus relating to the Michigan Trust which is part of the
Registration Statement in Registration No. 333-22615 filed with
the Securities and Exchange Commission under the Securities Act
of 1933, as amended, and to the filing of this opinion as an
exhibit to said registration statement.
Yours very truly,
Miller, Canfield, Paddock And
Stone, p.l.c.