EXHIBIT 12
SIDLEY AUSTIN LLP |BEIJING GENEVA SAN FRANCISCO
787 SEVENTH AVENUE |BRUSSELS HONG KONG SHANGHAI
SIDLEY AUSTIN LLP NEW YORK, NY 10019 |CHICAGO LONDON SINGAPORE
- ----------------| 212 839 5300 |DALLAS LOS ANGELES TOKYO
SIDLEY | 212 839 5599 FAX |FRANKFURT NEW YORK WASHINGTON, DC
|
|
|FOUNDED 1866
May 1, 2006
Merrill Lynch New Jersey Municipal Bond Fund,
a series of
Merrill Lynch Multi-State Municipal Series Trust
800 Scudders Mill Road
Plainsboro, NJ 08536
Lebenthal New Jersey Municipal Bond Fund,
a series of
Lebenthal Funds, Inc.
P.O. Box 9011
Princeton, NJ 08543-9011
Re: Reorganization of Merrill Lynch New Jersey Municipal Bond
Fund and Lebenthal New Jersey
Municipal Bond Fund
---------------------------------------------------------
Ladies and Gentlemen:
You have requested our opinion as to certain Federal income tax
consequences of the acquisition by Merrill Lynch New Jersey Municipal Bond
Fund ("ML New Jersey Fund") of all of the assets of, and the assumption by ML
New Jersey Fund of all of the liabilities of, Lebenthal New Jersey Municipal
Bond Fund ("Lebenthal New Jersey Fund") and the simultaneous distribution of
newly-issued shares of beneficial interest, par value $.10 per share, of ML
New Jersey Fund (the "Shares") to Lebenthal New Jersey Fund stockholders
("Reorganization"). After the Reorganization, Lebenthal New Jersey Fund will
cease to operate, will have no assets remaining, will have final Federal and
state (if any) tax returns filed on its behalf and will have all of its shares
cancelled under Maryland law.
This opinion is furnished pursuant to (i) the sections entitled "The
Agreement and Plan of Reorganization --Terms of the Agreement and
Plan--Amendments and Conditions" in the Joint Proxy Statement and Prospectus,
dated February 3, 2006, contained in the Registration Statement on Form N-14
(File No. 333-130530) of Merrill Lynch Multi-State Municipal Series Trust (the
"Trust"), on behalf of its series ML New Jersey Fund, as amended and
supplemented to date (the
SIDLEY AUSTIN LLP
- ----------------|
SIDLEY |
Merrill Lynch New Jersey Municipal Bond Fund
Lebenthal New Jersey Municipal Bond Fund
May 1, 2006
Page 2
"N-14 Registration Statement"), and (ii) Section 8(h) of the Agreement and
Plan of Reorganization dated as of February 1, 2006, by and between the Trust,
on behalf of ML New Jersey Fund and Lebenthal Funds, Inc., on behalf of
Lebenthal New Jersey Fund (the "Plan"), as a condition of closing. All terms
used herein, unless otherwise defined, are used as defined in the Plan.
In rendering our opinion, we have reviewed and relied upon (a) the Plan,
(b) the N-14 Registration Statement and (c) certain representations concerning
the Reorganization made by (i) ML New Jersey Fund in a letter dated May 1,
2006 and (ii) Lebenthal New Jersey Fund in a letter dated May 1, 2006
(together, the "Representations").
Based upon current law, including cases and administrative
interpretations thereof and on the reviewed materials listed above, it is our
opinion that:
1. The acquisition by ML New Jersey Fund of all of the assets of
Lebenthal New Jersey Fund, as described in the Plan, will constitute a
reorganization within the meaning of section 368(a)(1)(C) of the Internal
Revenue Code of 1986, as amended (the "Code"), and each of ML New Jersey Fund
and Lebenthal New Jersey Fund will be a "party" to a reorganization within the
meaning of section 368(b) of the Code.
2. In accordance with section 361(a) of the Code, Lebenthal New Jersey
Fund will not recognize any gain or loss either on the transfer of all of its
assets to ML New Jersey Fund in exchange solely for Shares of ML New Jersey
Fund or on the simultaneous distribution of such Shares to Lebenthal New
Jersey Fund stockholders.
3. Under section 1032 of the Code, ML New Jersey Fund will not recognize
any gain or loss on the receipt of the assets of Lebenthal New Jersey Fund in
exchange for Shares of ML New Jersey Fund.
4. In accordance with section 354(a)(1) of the Code, stockholders of
Lebenthal New Jersey Fund will recognize no gain or loss on the exchange of
their shares of Lebenthal New Jersey Fund common stock solely for
corresponding Shares of ML New Jersey Fund.
5. The basis of the assets of Lebenthal New Jersey Fund received by ML
New Jersey Fund will be the same as the basis of such assets to Lebenthal New
Jersey Fund immediately prior to the consummation of the Reorganization under
section 362(b) of the Code.
6. Under section 358 of the Code, the basis of the Shares of ML New
Jersey Fund, including fractional Shares, received by stockholders of
Lebenthal New Jersey Fund will be the
SIDLEY AUSTIN LLP
- ----------------|
SIDLEY |
Merrill Lynch New Jersey Municipal Bond Fund
Lebenthal New Jersey Municipal Bond Fund
May 1, 2006
Page 3
same as the basis of the shares of common stock of Lebenthal New Jersey Fund
exchanged pursuant to the Reorganization.
7. Under section 1223 of the Code, the holding period of the Shares of
ML New Jersey Fund, including fractional Shares, received in the
Reorganization will include the holding period of the shares of Lebenthal New
Jersey Fund common stock exchanged pursuant to the Reorganization, provided
that such shares of common stock were held as a capital asset on the date of
the Reorganization.
8. The holding period of the assets acquired by ML New Jersey Fund from
Lebenthal New Jersey Fund will include the period during which such assets
were held by Lebenthal New Jersey Fund under section 1223 of the Code.
9. Pursuant to section 381(a) of the Code and section 1.381(a)-1 of the
Income Tax Regulations, ML New Jersey Fund will succeed to and take into
account the items of Lebenthal New Jersey Fund described in section 381(c) of
the Code, subject to the provisions and limitations specified in sections 381,
382, 383 and 384 of the Code and the regulations thereunder. Under section
381(b) of the Code, the tax year of Lebenthal New Jersey Fund will end on the
date of the Reorganization.
Our opinion represents our best legal judgment with respect to the
proper Federal income tax treatment of the Reorganization, based on the facts
contained in the Plan, the N-14 Registration Statement and the
Representations. Our opinion assumes the accuracy of the facts as described in
the Plan, the N-14 Registration Statement and the Representations and could be
affected if any of the facts as so described are inaccurate.
We are furnishing this opinion to the addressees hereof, solely for the
benefit of such addressees in connection with the Reorganization. This opinion
letter is not to be used, circulated, quoted or otherwise referred to for any
other purpose.
Very truly yours,
/s/ Sidley Austin LLP