Exhibit 8.2
Opinion of Crowe, Chizek and Company LLP
with Respect to
Illinois Income Tax Consequences of the Conversion
[LOGO]
CROWE CHIZEK
August 27, 1996
Board of Directors
Preferred Savings Bank
4800 S. Pulaski
Chicago, IL 60632
RE: Illinois Income Tax Opinion relating to the conversion of Preferred
Savings Bank from a Federally Chartered Mutual Savings Bank to a
Federally Chartered Stock Savings Bank under Section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended.
Ladies and Gentlemen:
In accordance with your request, we render our opinion relating to the Illinois
income tax consequences of the proposed conversion of Preferred Savings Bank.
Statement of Facts
The facts and circumstances surrounding the proposed charter conversion are
quite detailed and are described at length in the Plan of Conversion and the
Federal Tax Opinion issued by Silver, Freedman, & Taff, L.L.P. However, a brief
summary of the proposed Plan of Conversion is as follows:
Preferred Savings Bank ("Mutual") is a federally chartered mutual savings bank.
As a mutual savings bank, Mutual has no authorized stock. For what are stated to
be valid business reasons, Mutual wishes to amend its charter to permit it to
continue operations in the form of a federally chartered stock savings bank
("Stock Bank"). The fair market value of Stock Bank deposit accounts received by
Mutual deposit account holders will be equal to the fair market value of Mutual
deposit accounts surrendered as a result of the conversion process.
Opinion
You have provided us with a copy of the federal income tax opinion of the
proposed transaction prepared by Silver, Freedman, & Taff, L.L.P., dated June
13, 1996, in which they have opined that the transaction will be a transaction
described in Section 368(a)(1)(F) of the Internal Revenue Code of 1986, as
amended.
Our opinion regarding the Illinois tax consequences is based on the facts and
incorporates the capitalized terms contained in the Silver, Freedman, & Taff,
L.L.P. federal tax opinion. Our opinion on the Illinois tax consequences assumes
that the final federal income tax consequences of the proposed transaction will
be those outlined in the Silver, Freedman, & Taff, L.L.P. federal tax opinion.
Should it finally be determined that the facts and the federal income tax
consequences are not as outlined in the Silver, Freedman, & Taff, L.L.P. federal
opinion, the Illinois tax consequences and our Illinois tax opinion will differ
from what is contained herein. Our opinion is based on the current Illinois tax
law which is subject to change.
Our opinion adopts and relies upon the facts, assumptions, and conclusions as
set forth in the Silver, Freedman, & Taff, L.L.P. federal income tax opinion
letter. Based upon that information, we render the following opinion with
respect to the Illinois income tax consequences of the proposed transaction.
(1) No gain or loss shall be recognized by Mutual or Stock Bank as a result
of the conversion. ITA Sec. 403(a)(35 ILCS 5/403(a))
(2) Stock Bank will recognize no gain or loss upon the receipt of money and
other property, if any, in the conversion, in exchange for Bank
Conversion Stock. ITA Sec. 403(a)(35 ILCS 5/403(a))
(3) No gain or loss will be recognized by the Holding Company upon the
receipt of money for Holding Company Conversion Stock. ITA Sec.
403(a)(35 ILCS 5/403(a)).
(4) The basis of Mutual's assets in the hands of Stock Bank will be the
same as the basis of those assets in the hands of Mutual immediately
prior to the transaction. ITA Sec. 403(a)(35 ILCS 5/403(a))
(5) Stock Bank's holding period of the assets of Mutual will include the
period during which such assets were held by Mutual prior to the
conversion. ITA Sec. 403(a)(35 ILCS 5/403(a))
(6) The tax attributes of Mutual will be taken into account by Stock Bank
as if there had been no reorganization. Accordingly, the tax year of
Mutual will not end on the effective date of the conversion. The part
of the tax year of Mutual before the conversion will be includable in
the tax year of Stock Bank after the conversion. Therefore, Mutual will
not have to file a federal income tax return for the portion of the tax
year prior to the conversion. ITA Sec. 401(a)(35 ILCS 5/401(a))
(7) Depositors will realize gain, if any, upon the constructive issuance to
them of withdrawable deposit accounts of Stock Bank, Subscription
Rights and/or interests in the liquidation account of Stock Bank. Any
gain resulting therefrom will be recognized, but only in an amount not
in excess of the fair market value of the liquidation accounts and/or
Subscription Rights received. The liquidation accounts will have
nominal, if any, fair market value. Based solely on the accuracy of the
conclusion reached in the Appraiser's Opinion, and our reliance on such
opinion, that the Subscription Rights have no value at the time of
distribution or exercise, no gain or loss will be required to be
recognized by depositors upon receipt or distribution of Subscription
Rights. Likewise, based solely on the accuracy of the aforesaid
conclusion reached in the Appraiser's Opinion, and our reliance
thereon, we give the following opinions: (a) no taxable income will be
recognized by the borrowers, directors, officers, and employees of
Mutual upon the distribution to them of Subscription Rights or upon the
exercise or lapse of the Subscription Rights to acquire Bank Conversion
Stock at fair market value; (b) no taxable income will be realized by
the depositors of Mutual as a result of the exercise or lapse of the
Subscription Rights to purchase Bank Conversion Stock at fair market
value; and (c) no taxable income will be realized by Mutual or Stock
Bank on the issuance or distribution of Subscription Rights to
depositors of Mutual to purchase shares of Bank Conversion Stock at
fair market value. ITA Sec. 203(a)(1)(35 ILCS 5/203(a)(1))
Notwithstanding the Appraiser's Opinion, if the Subscription Rights are
subsequently found to have a fair market value, income may be
recognized by various recipients of the Subscription Rights (in certain
cases, whether or not the rights are exercised) and Stock Bank may be
taxable on the distribution of the Subscription Rights.
(8) The creation of the liquidation account on the records of Stock Bank
will have no effect on Mutual's or Stock Bank's taxable income,
deductions, or additions to the reserve for bad debts or distributions
to shareholders. ITA Sec. 403(a)(35 ILCS 5/403(a))
(9) Stock Bank will succeed to and take into account, immediately after the
reorganization, the dollar amounts of those accounts of Mutual which
represent bad debt reserves in respect of which Mutual has taken a bad
debt deduction of taxable years ending on or before the date of the
reorganization. The bad debt reserves will not be required to be
restored to the gross income of either Mutual or Stock Bank as a
consequence of the conversion for the taxable year of the
reorganization, and such bad debt reserves will have the same character
in the hands of Stock Bank as they would have had in the hands of
Mutual if no reorganization had occurred. ITA Sec. 402(a)(35 ILCS
5/402(a))
(10) A depositor's basis in the savings deposits of Stock Bank will be the
same as the basis of his savings deposits in Mutual. Based upon the
Appraiser's Opinion, the basis of the Subscription Rights will be zero.
The basis of the interest in the liquidation account of Stock Bank
received by Eligible Account Holders and Supplemental Eligible Account
Holders will be equal to the cost of such property; i.e., the fair
market value of the propriety interest in Mutual, which in this
transaction we assume to be zero. ITA Sec. 203(a)(1)(35 ILCS
5/203(a)(1))
(11) The basis of Bank Conversion Stock to its shareholders will be the
purchase price thereof. ITA Sec. 203(a)(1)(35 ILCS 5/203(a)(1))
(12) A shareholder's holding period for Bank Conversion Stock acquired
through the exercise of the Subscription Rights shall begin on the date
on which the Subscription Rights are exercised. The holding period for
the Bank Conversion Stock purchased pursuant to the Direct Community
Offering, public offering, or under other purchase arrangements will
commence on the date following the date on which such stock is
purchased. . ITA Sec. 203(a)(1)(35 ILCS 5/203(a)(1))
(13) Regardless of any book entries that are made for the establishment of a
liquidation account, the reorganization will not diminish the
accumulated earnings and profits of Mutual available for the subsequent
distribution of dividends. Stock Bank will succeed to and take into
account the earnings and profits, or deficit in earnings and profits,
of Mutual as of the date of conversion. ITA Sec. 403(a)(35 ILCS
5/403(a))
The above opinions are effective to the extent that Mutual is solvent. No
opinion is expressed about the tax treatment of the transaction if Mutual is
insolvent. Whether or not Mutual is solvent will be determined at the end of the
taxable year in which the transaction is consummated.
Our opinion is based upon legal authorities currently in effect, which
authorities are subject to modification or challenge at any time and perhaps
with retroactive effect. Further, no opinion is expressed under the provisions
of any of the other sections of the Illinois Code and Income Tax Regulations
which may also be applicable thereto, or to the tax treatments of any conditions
existing at the time of, or effects resulting from, the transaction which are
not specifically covered by the opinions set forth above.
If any fact contained in this opinion letter or the Silver, Freedman, & Taff,
L.L.P. federal income tax opinion letter changes to alter the federal tax
treatment, it is imperative we be notified to determine the affect on the
Illinois income tax consequences, if any.
Very truly yours,
/s/ Crowe, Chizek and Company LLP
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Crowe, Chizek and Company LLP