Exhibit 8.1
DRAFT
_____________, 2003
Jefferson Bancshares, Inc.
Jefferson Bancshares, M.H.C.
Jefferson Federal Savings and Loan Association
of Morristown
120 Evans Avenue
Morristown, Tennessee 37814
Ladies and Gentlemen:
You have asked our opinion regarding certain federal income tax
consequences of the proposed conversion of Jefferson Bancshares, M.H.C. to stock
form pursuant to the Plan of Conversion of Jefferson Bancshares, M.H.C. We are
rendering this opinion pursuant to Section 23 of the Plan of Conversion. All
capitalized terms used but not defined in this letter shall have the meanings
assigned to them in the Plan of Conversion.
In connection with the opinions expressed below, we have examined and
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of the Plan of Conversion and of such corporate records of the
parties to the Conversion and Reorganization as we have deemed appropriate. We
have also relied upon, without independent verification, the representations of
the Primary Parties contained in their letter to us dated ____________, 2003. We
have assumed that such representations are true and that the parties to the
Conversion and Reorganization will act in accordance with the Plan of
Conversion. In addition, we have made such investigations of law as we have
deemed appropriate to form a basis for the opinions expressed below.
We have assumed that the Conversion and Reorganization contemplated by
the Plan of Conversion will be consummated in accordance therewith and as
described in the prospectus included as part of the registration statement on
Form S-1 filed by Jefferson Bancshares, Inc.
In issuing the opinions set forth below, we have referred solely to
existing provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations and similar guidance issued by the
Internal Revenue Service ("IRS") thereunder. Changes in the tax laws could
affect the continued validity of the opinions expressed herein. Furthermore,
there can be no assurance that the opinions expressed herein would be adopted by
the IRS or a court of
Jefferson Bancshares, Inc.
Jefferson Bancshares, M.H.C.
Jefferson Federal Savings and
Loan Association of Morristown
______________, 2003
Page 2
law. We assume no obligation to revise or supplement this opinion should the
present federal income tax laws be changed by any legislation, judicial
decisions or otherwise.
Based on and subject to the foregoing, it is our opinion that for
federal income tax purposes, under current law:
(1) the conversion of Jefferson Bancshares, M.H.C. from mutual form to a
federal interim stock savings institution will qualify as a
reorganization within the meaning of Section 368(a)(1)(F) of the
Code, and no gain or loss will be recognized by Jefferson Bancshares,
M.H.C. by reason of such conversion;
(2) the merger of Jefferson Bancshares, M.H.C. into Jefferson Federal
Savings and Loan Association of Morristown ("Jefferson Federal") will
qualify as a reorganization within the meaning of Section
368(a)(1)(A) of the Code, and no gain or loss will be recognized by
Jefferson Bancshares, M.H.C. or Jefferson Federal by reason of such
merger;
(3) the merger of Jefferson Interim Savings Association with and into
Jefferson Federal ("Bank Merger") will qualify either as a
reorganization within the meaning of Section 368(a)(2)(E) of the Code
or as an exchange under Section 351 of the Code, and no gain or loss
will be recognized by Jefferson Interim Savings Association,
Jefferson Federal or Jefferson Bancshares, Inc. by reason of the Bank
Merger;
(4) no gain or loss will be recognized by the current stockholders of
Jefferson Federal upon the receipt of shares of common stock of
Jefferson Bancshares, Inc. pursuant to the Bank Merger, except to the
extent of any cash received in lieu of a fractional share interest in
Jefferson Bancshares, Inc.;
(5) the aggregate tax basis of the shares of Jefferson Bancshares, Inc.
common stock to be received by the current stockholders of Jefferson
Federal will be the same as the aggregate tax basis of the Jefferson
Federal common stock surrendered in exchange therefore reduced by any
amount allocable to a fractional share interest in Jefferson Federal
for which cash is received;
(6) the holding period of the shares of Jefferson Bancshares, Inc. common
stock to be received by the current stockholders of Jefferson Federal
will include the holding
Jefferson Bancshares, Inc.
Jefferson Bancshares, M.H.C.
Jefferson Federal Savings and
Loan Association of Morristown
____________, 2003
Page 3
period of the shares of Jefferson Federal common stock, provided that
the Jefferson Federal common stock was held as a capital asset on the
date of the Bank Merger;
(7) a holder of shares of Jefferson Federal who receives cash in lieu of
a fractional share of Jefferson Bancshares, Inc. common stock will
recognize gain or loss equal to the difference between the amount of
cash received and the portion of such holder's tax basis of the
shares of Jefferson Federal allocable to the fractional share; such
gain or loss will be capital gain or loss if such shares were held as
a capital asset of the date of the Bank Merger, and will be long-term
capital gain or loss if such holder's holding period in the shares of
Jefferson Federal common stock is more than one year on the date of
the Bank Merger;
(8) no gain or loss will be recognized by Jefferson Bancshares, Inc. upon
the sale of shares of common stock in the Offerings;
(9) no gain or loss will be recognized by members of Jefferson
Bancshares, M.H.C. upon the issuance to them of interests in the
liquidation account in Jefferson Federal pursuant to the merger of
Jefferson Bancshares, M.H.C. into Jefferson Federal;
(10) it is more likely than not that the fair market value of the
nontransferable subscription rights to purchase shares of common
stock of Jefferson Bancshares to be issued to Eligible Account
Holders, Supplemental Eligible Account Holders and Other Members (the
"Subscription Rights") is zero and, accordingly, that no income will
be recognized by Eligible Account Holders, Supplemental Eligible
Account Holders and Other Members upon the issuance to them of the
Subscription Rights or upon the exercise of the Subscription Rights;
(11) it is more likely than not that the tax basis to the holders of
shares of common stock purchased in the Offerings pursuant to the
exercise of the Subscription Rights will be the amount paid therefor,
and that the holding period for such shares of common stock will
begin on the date of completion of the offerings; and
(12) the holding period for shares of common stock purchased in the
Community Offering or Syndicated Community Offering will begin on the
day after the date of purchase.
Jefferson Bancshares, Inc.
Jefferson Bancshares, M.H.C.
Jefferson Federal Savings and
Loan Association of Morristown
_____________, 2003
Page 4
The opinions set forth in (10) and (11), above, are based on the
position that the Subscription Rights do not have any market value. Although the
IRS will not issue rulings on whether subscription rights have a market value,
we are unaware of any instance in which the IRS has taken the position that
nontransferable subscription rights issued by a converting financial institution
have a market value. We understand that the Subscription Rights will be granted
at no cost to the recipients, will be nontransferable and of short duration, and
will afford the recipients the right only to purchase shares of common stock of
Jefferson Bancshares, Inc. at a price equal to its estimated fair market value,
which will be the same price as the purchase price for the unsubscribed shares
of such common stock. Based on the foregoing, we believe that it is more likely
than not (i.e., that there is a more than a 50% likelihood) that the
Subscription Rights have no market value for federal income tax purposes.
Except as set forth above, we express no opinion to any party as to the
tax consequences, whether federal, state, local or foreign, of the Conversion
and Reorganization or of any transaction related thereto or contemplated by the
Plan of Conversion. This opinion is given solely for the benefit of the Primary
Parties and Eligible Account Holders, Supplemental Eligible Account Holders and
Other Members who receive Subscription Rights, and may not be relied upon by any
other party or entity or otherwise referred to in any document without our
express written consent. We consent to the filing of this opinion as an exhibit
to the Forms AC and H-(e)1-S filed with the Office of Thrift Supervision, and as
an exhibit to the registration statement on Form S-1 filed by Jefferson
Bancshares, Inc. with the Securities and Exchange Commission in connection with
the Conversion and Reorganization, and to the reference thereto in the
prospectus included in the registration statement on Form S-1 under the headings
"The Conversion- Tax Aspects" and "Legal and Tax Opinions." In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of 1933, as amended.
Very truly yours,
DRAFT
MULDOON MURPHY & FAUCETTE LLP