[LOGO] RSM McGladrey
RSM MCGLADREY, INC.
3880 Lemon Street, Suite 100
Riverside, California 92501
O 909.248.1805 F 909.680.1729
December 5, 2003
Board of Directors
K-Fed Bancorp
Kaiser Federal Bank
1359 N. Grand Avenue
Covina, California 91724
RE: TAX OPINION CONCERNING CONSEQUENCES OF THE INITIAL PUBLIC STOCK OFFERING
OF K-FED BANCORP UNDER THE CALIFORNIA CORPORATE TAX LAW
Ladies and Gentlemen:
You have requested our opinion as to certain California Franchise Tax
consequences under the California Corporate Tax Law ("CTL") in connection with
the proposed initial public stock offering by K-Fed Bancorp, Covina, California
(the "Company"). The initial public stock offering is pursuant to a Plan of
Stock Issuance (the "Plan") of the Company.
In connection with your request, you have provided us with the Plan adopted by
the Board of Directors of the Company on November 22, 2003. You have also
furnished us with the Tax Opinion (the "Federal Tax Opinion") of the Law Firm of
Jenkens & Gilchrist, a Professional Corporation, dated December 4, 2003,
relative to the Federal Income Tax consequences of the Plan.
It is our understanding that although you have the ability to obtain a legal
ruling from the California Franchise Tax Board in relation to the California
Franchise Tax treatment of the transactions described in the Plan, you have
decided not to seek such a ruling.
In accordance with the terms of our engagement, we have fully relied on the
Statement of Facts, the Assumptions, and the Opinion contained in the Federal
Tax Opinion and did not independently verify any of the facts, interpretations,
and opinions contained therein. Capitalized terms used in this opinion that are
not otherwise defined shall have the same meaning ascribed to them in the
federal opinion.
Note that for purposes of our opinion, the term "California's Corporate Tax Law"
(formerly the "California Revenue and Taxation Code") refers only to the
Franchise Tax portion of the California's CTL.
OPINION
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The CTL expressly incorporates the Internal Revenue Code with respect to
corporate distributions and adjustments. Section 24451 states that "Subchapter C
of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to corporate
distributions and adjustments, shall apply except as otherwise provided."
Section 23051.5(a)(1) provides that the terms "Internal Revenue Code", "Internal
Revenue Code of 1954", or "Internal Revenue Code of 1986" for California
purposes mean "Title 26 of the United States Code, including all amendments
thereto, as enacted on the specified date for the applicable taxable year as
defined in paragraph (1) of subdivision (a) of Section 17024.5." Section
17024.5(a)(1) outlines the versions of the Internal Revenue Code that are
adopted for California purposes for specific years.
RSM McGladrey, Inc. is an independent member firm of
RSM International, an affiliation of independent accounting
and consulting firms.
Board of Directors
K-Fed Bancorp
Kaiser Federal Bank
December 5, 2003
Page 2
Based on our review of the relevant sections of the CTL, as amended, the
regulations promulgated thereunder, cases, rulings and other authorities as well
as the facts, assumptions, and opinion provided in the Federal Tax Opinion, it
is our opinion that the treatment for the CTL purposes of the transactions
described below will conform to the Federal Income Tax treatment as determined
in the following CTL provisions:
1. The Company will recognize no gain or loss upon its receipt of money in
exchange for the issuance of shares of Company Stock (CTL Section 24942).
2. If the fair market value of the subscription rights to purchase Company Stock
is zero, no gain or loss will be recognized by Eligible Account Holders and
Supplemental Eligible Account Holders upon the distribution to them of the
nontransferable subscription rights to purchase share of Company Stock. Gain
realized, if any, by such persons on the distribution to them of nontransferable
subscription rights to purchase shares of Company Stock will be recognized but
only in an amount not in excess of the fair market value of such subscription
rights. (CLT Section 24451). Such persons will not realize any taxable income as
a result of the exercise by them of the nontransferable subscription rights.
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 the Company and/or
the Bank may be taxable on the distribution of the subscription rights.
The preceding summary is not intended to be a complete statement of all the tax
consequences under the CTL pertaining to the transactions and is limited to the
specific statements of consequences under the CTL enumerated in items 1 and 2
above. Our opinion does not address any implications of the transactions for any
California tax purposes other than the Franchise Tax. In addition, we do not
express an opinion on any Federal, other state, local, or foreign tax
consequences, if any, of the transactions.
Our opinion is based upon existing law, the regulations, as well as the
administrative and judicial interpretations of the CTL. Administrative positions
of the California Franchise Tax Board as well as judicial decisions are subject
to change either prospectively or retroactively. This opinion is not binding on
the California Franchise Tax Board or the California courts.
We undertake no obligation to update this opinion for changes in facts or law
occurring subsequent to the date of this opinion. This opinion is effective upon
the issuance of the additional shares of stock.
This opinion letter is issued solely for the benefit of the parties to the Plan,
the Eligible Account Holders and Supplemental Eligible Account Holders and those
who purchase Company Stock pursuant to the Plan, and no other person or entity
may rely hereon without our express written consent. This opinion letter may be
filed as an exhibit to the Application for Approval of a Minority Stock Issuance
on Form MHC-2 of the Company filed with the OTS, and the Registration Statement
on Form S-1 of the Company filed under the Securities Act of 1933, as amended.
Board of Directors
K-Fed Bancorp
Kaiser Federal Bank
December 5, 2003
Page 3
Furthermore, we consent to the reference to RSM McGladrey, Inc., under the
captions "Legal and Tax Opinions" and "Tax Effects of the Stock Offering." In
giving this consent, we do not thereby admit that we are within the category of
persons whose consent is required under section 7 of the Securities Act of 1933,
as amended, or the rules and regulations of the Commission promulgated
thereunder.
/s/ RSM McGladrey, Inc.