Exhibit 8.1
August 8, 1997
UP Sedona, Inc.
5745 North Scottsdale Road
Suite B-101
Scottsdale, Arizona 85020
Gentlemen:
You have requested our opinion as to certain federal income tax
consequences in connection with the issuance of Resort Hotel Investment Units
(the "Units") by UP Sedona, Inc.
The facts, as we understand them, are set forth in amended Registration
Statement No. 333-22643, and exhibits thereto, filed with the Securities and
Exchange Commission (the "Registration Statement"). All terms capitalized
herein, and not specifically defined herein, shall have the same meaning as set
forth in the Registration Statement. We have reviewed the summary of federal
income tax consequences to the Unit Owners set forth in the Registration
Statement and the Prospectus under the heading "Federal Income Tax
Considerations." Based upon the facts set forth in the Registration Statement,
(i) Counsel's opinions with respect to classification of the Rental Pool for
federal income tax purposes are set forth in "Entity Classification of Rental
Pool and Taxation of Ownership of Units" and "Classification as a Partnership"
under the heading "Certain Federal and State Income Tax Aspects" in the
Prospectus and Registration Statement, and (ii) Counsel is of the opinion that
the remaining statements of law contained under the heading "Federal Income Tax
Considerations" in the Prospectus and Registration Statement address all other
material federal income tax consequences expected to result from the issuance of
the Units and that such statements of law are more likely than not correct under
the Internal Revenue Code of 1986 (the "Code"), as amended, the Treasury
Regulations promulgated thereunder and existing interpretations thereof.
As noted in the Prospectus, Counsel has specifically not opined on
certain federal income tax issues because the relevant facts are presently
unascertainable and, in certain cases, there is a clear lack of legal authority.
Specifically, Counsel expresses no opinion with respect to (a) whether a
particular owner will be able to establish a profit motive under Code Section
183; (b) whether a particular owner will be subject to the gross income
limitation under Code Section 280A; or (c) whether a particular owner will be
able to deduct interest payments on any debt used to acquire a unit.
UP Sedona, Inc.
August 8, 1997
Page 2
The opinions and statements of law in "Federal Income Tax
Considerations" are expressly made subject to the several conditions stated
therein and, should any condition not be met, those opinions or statements of
law may not be relied upon. Counsel's opinions are not binding on the Internal
Revenue Service nor on the courts and represent only our best judgment based on
evaluation of the legal authorities reasonably available to us on the date of
the Prospectus. We assume no responsibility for changes in applicable law
occurring after that date. You should be aware that, as stated in the
Prospectus, judicial opinions generally have a retroactive effect and
legislative enactments and administrative determinations sometimes have such an
effect. Accordingly, you should be aware that future legislation, administrative
or judicial authority could change the weight of authority on issues discussed
in the Prospectus. Also, any variation or difference in the facts as set forth
in the Registration Statement might affect the opinions and conclusions stated
therein.
We render this opinion and the opinions in the Prospectus in our
capacity as attorneys admitted to the practice of law in the State of Arizona.
We do not opine or purport to opine on any matter to the extent that it involves
laws of any jurisdiction other than the State of Arizona and the United States
of America.
We consent to the use of this letter as an exhibit to the Registration
Statement and to the references to the name of our firm contained therein.
Very truly yours,
O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears,
A Professional Association