January 29, 1997
[Letterhead of LaPorte Sehrt Romig & Hand]
Board of Directors
GS Financial Corp.
Guaranty Savings and Homestead Association
3798 Veterans Memorial Boulevard
Metairie, Louisiana 70002
Gentlemen:
You have requested our opinion regarding certain Louisiana state income tax
consequences of the conversion of Guaranty Savings and Homestead Association
(the "Association"), a Louisiana-chartered savings and loan association, from
mutual to stock form (the "Conversion"). In the Conversion, all of the
Association's to-be-issued capital stock will be acquired by GS Financial
Corp. (the "Company"), a newly-formed Louisiana-chartered corporation.
We have not reviewed all of the legal documents necessary to effectuate the
Conversion or the acquisition of the Association's capital stock by the
Company. An inherent assumption of this opinion is that all steps required by
federal and state law and regulatory authorities will be effectuated
consistent with the information submitted to us.
BACKGROUND
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We have reviewed the federal income tax opinion (the "Opinion") prepared by
the firm of Elias, Matz, Tiernan & Herrick L.L.P. dated January 29, 1997
which was addressed and furnished to you. We have also reviewed the
representations of the managements of the Company and the Association dated
January 29, 1997 (the "Representations") and supplied to the aforementioned
authors of the Opinion. We have relied on the facts and representations
stated in the Opinion and Representations as to the manner in which the
proposed transactions will be accomplished and the federal income tax aspects
of the transactions as detailed in the Opinion. By this reference, such
federal tax opinion and its related references are incorporated herein.
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 2
LOUISIANA LAW AND ANALYSIS
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Louisiana income tax statutes are included in Title 47, Sub-Title II, Chapter
1,of the Louisiana Revised Statutes of 1950. Corporation income tax laws are
contained within Part II A. therein. Individual income tax statutes are
contained within Part III therein.
Pursuant to Louisiana Revised Statutes (La. R. S.) 47:287.501(B)(1), building
and loan associations (among others) are exempted from imposition of any and
all Louisiana income taxes.
Louisiana corporate gross income and allowable deductions are defined as
federal gross income and deductions, subject to certain modifications. La.
R. S. 287.61-.63. Modifications to federal taxable income are contained in
La. R. S. 287.71-.86 and 287.701-.785. Absent any specific modifications
contained within these sections, Louisiana corporate taxable income is
equivalent to federal taxable income. Since gains and losses realized by
parties to a reorganization, as defined by federal statutes, are not
specifically identified as modifications to federal gross income or
deductions, the State of Louisiana has effectively incorporated the corporate
reorganization provisions of the Internal Revenue Code of 1986, as amended
(the "Code") with respect to parties to a reorganization. Since gains and
losses realized by corporate shareholders in a reorganization are not
specifically identified as modifications to federal gross income or
deductions, nor are there any modifications with respect to the determination
of basis or the holding period of stock received in a reorganization, the
State of Louisiana has effectively incorporated the corporate reorganization
provisions of the Code with respect to corporate depositors and shareholders.
La. R. S. 47:290 provides that such part (Part III) is intended to conform
the Louisiana individual income tax law with the Code, except as otherwise
expressly provided. La. R. S. 47:293(1) defines Louisiana adjusted gross
income as adjusted gross income as reported for federal purposes. La. R. S.
47:293(6) defines Louisiana taxable income as Louisiana adjusted gross income
with specific modifications listed therein. None of the modifications listed
therein relate to the Louisiana taxation of realized gains or losses in
connection with corporate reorganizations, nor the determination of basis or
the holding period of stock received in a reorganization. The State of
Louisiana has, therefore, effectively adopted the corporate reorganization
provisions of the Code to the extent these provisions affect individual
depositors and shareholders.
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 3
La. R. S. 47:300.10. states that such part (Part VI) is intended to conform
the Louisiana fiduciary income tax law with the Code, except as otherwise
expressly provided. La R. S. 47:300.1.F. and H. define Louisiana taxable
income of resident and non resident fiduciaries, respectively, as taxable
income determined in accordance with federal law, with specific modifications
listed therein. None of the modifications listed therein relate to the
Louisiana taxation of realized gains or losses in connection with corporate
reorganizations, nor the determination of basis or the holding period of
stock received in a reorganization. The State of Louisiana has, therefore,
effectively adopted the corporate reorganization provisions of the Code to
the extent these provisions affect fiduciary depositors and shareholders.
La. R. S. 47:203 states that partnerships shall compute taxable income in the
same manner as in the case of individuals, with certain listed modifications.
As none of the modifications relate to reorganization provisions of the Code,
and based upon the above analysis of individuals, the same conclusions would
apply with respect to depositors and shareholders which are partnerships.
Title 12, Chapter 22, Part X, Section 1368 of the Louisiana Revised Statutes
of 1950 states that, for Louisiana income tax purposes, limited liability
companies shall be treated and taxed in the same manner as treated and taxed
for federal purposes. Therefore, regardless of corporate or partnership
federal income tax treatment, based upon the above analysis of each, the same
conclusion would apply with respect to depositors and shareholders that are
limited liability companies.
OPINIONS
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In rendering our opinion herein, we have relied upon the Opinion prepared by
Elias, Matz, Tiernan & Herrick L.L.P.
Because savings and loans are not subject to Louisiana income taxes, no
income will be recognized for Louisiana income tax purposes by Guaranty
Savings and Homestead Association as a result of the Conversion and the sale
of its capital stock to the Company.
Because the Association's change in form from a mutual to stock ownership
will constitute a reorganization under Section 368(a)(1)(F) of the Code, and
neither the Association nor the Company will recognize any gain or loss as a
result of the
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 4
Conversion pursuant to Section 361 of the Code and Revenue Ruling 80-105, it
is also our opinion that for Louisiana income tax purposes: (1) no gain or
loss will be recognized by the Association or the Company upon the purchase
of the Association's capital stock by the Company; (2) no gain or loss will
be recognized by Eligible Account Holders and Supplemental Eligible Account
Holders upon the issuance to them of deposit accounts in the Association (in
its stock form) plus their interest in the liquidation account in exchange
for the deposit accounts in the mutual Association; (3) assuming the
non-transferable subscription rights to purchase Company Common Stock have no
value, the tax bases of the depositors' deposit accounts in the Association
immediately after the Conversion will be the same as the bases of their
accounts immediately prior to the Conversion; (4) assuming the
non-transferable subscription rights to purchase Company Common Stock have no
value, the tax basis of each Eligible Account Holder's and Supplemental
Eligible Account Holder's interest in the liquidation account will be zero;
and (5) the tax basis to the holders of the Common Stock of the Company
purchased in the Conversion will be the amount paid therefor, and the holding
period of such shares will begin on the date of consummation of the
Conversion if purchased through the exercise of subscription rights and on
the day after the date of purchase if purchased through the Community
Offering.
It is further our opinion that the Eligible Account Holders and Supplemental
Eligible Account Holders will recognize gain, if any, upon the issuance to
them of withdrawable savings accounts in the Association following the
Conversion, interests in the liquidation account and non-transferable
subscription rights to purchase Company Common Stock in exchange for their
savings accounts and proprietary interests in the Association, but only to
the extent of the value, if any, of the subscription rights.
CONCLUSIONS
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This opinion sets forth our views based upon the completeness and accuracy of
the information made available to us and any assumptions of fact that were
included. Our opinion relies upon the relevant provisions of the Internal
Revenue Code, the Louisiana Revised Statutes, the regulations thereunder, and
judicial and administrative interpretations thereof, which are subject to
change or modifications by subsequent legislative, regulatory, administrative
or judicial decisions. Any such changes could be retroactive in effect and,
therefore, could affect the validity of our opinions. We undertake no
responsibility to update our opinions in the event of any such change or
modifications.
Board of Directors Board of Directors
GS Financial Corp. Guaranty Savings and
Homestead Association
January 29, 1997
Page 5
We hereby consent to the filing of this opinion as an exhibit to the
Company's Registration Statement on Form SB-2 and the Association's
Application for Conversion, and we also consent to the references to us under
the headings "The Conversion - Tax Aspects" and "Legal and Tax Opinions" in
the Prospectus contained in such filings.
Sincerely,
LaPORTE, SEHRT, ROMIG & HAND
/s/ William T. Mason, III, CPA
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William T. Mason, III, CPA
Director
WTMiii/smw