Exhibit "D"
COUNSEL'S OPINION RE TAX MATTERS
JOHN W. CONES
Attorney at Law
794 Via Colinas
Westlake Village, California 91362
310/477-6842
jwc6774@adelphia.net
Mars Callahan, Owner
Big Sky Motion Pictures, LLC (Manager)
Spring Break '83 Production, LLC
650 North Bronson Avenue, Suite B-128
Los Angeles, California 90004
Re: Counsel's Tax Opinion
Dear Mr. Callahan:
You have requested my opinion and views as to the material
federal income tax consequences related to the ownership of limited
liability company interests ("Units") in the Spring Break '83
Production, LLC (the "LLC"), of which you one of the owners of the
Manager.
My opinion in this matter is guided by Treasury Department
Circular 230 (31 CFR Part 10) and the American Bar Association's
Formal Opinion 346 (Revised), "Tax Law Opinions in Tax Shelter
Investment Offerings". In accordance with the requirements of
Circular 230 and Opinion 346, in rendering this opinion, I have
examined the certificate and agreement of organization of the Spring
Break '83 Production, LLC (the "Operating Agreement") attached as
Exhibit "A" to the Spring Break '83 Production, LLC Prospectus, (the
"Prospectus"), and such other documents and instruments as I have
considered necessary for purposes of the opinion hereinafter set
forth. You have advised me that the Prospectus and certain other
representations and information provided to me give an accurate and
complete description of the facts and circumstances concerning the
proposed activities of the LLC. This opinion is based on such
Prospectus, representations and information, and I have not
attempted to verify independently each of such representations and
statements.
The section of the Prospectus entitled "FEDERAL TAX
DISCUSSION" was prepared by my office and the discussions of federal
tax issues contained therein are incorporated in this opinion.
Capitalized terms used in this opinion and not otherwise defined
have the same meanings given them in the Operating Agreement and in
the Prospectus.
My opinions regarding the material federal income tax issues
raised by an investment in the LLC are stated below:
1. The LLC should not be a publicly traded partnership per
Section 7704(b) of the Code;
2. Provided that the LLC is not a publicly traded
partnership, the LLC will be treated as a partnership and not as an
association taxable as a corporation;
3. If the LLC actually produces the Film, a Unit Holder's
distributive share of LLC taxable income (other than portfolio
income) will constitute passive income that could be offset by a
Unit Holder's passive activity losses from other sources;
4. Subject to the possibility that the requirements of
Section 706(d) of the Code are not satisfied by the LLC's convention
as to the time at which it will recognize transferees as owners of
Units, the recognized Unit Holders (including Unit Holders holding
Units through nominees) will be treated as Unit Holders of the LLC
from the date they become recognized holders of Units, even though
not admitted as Members;
5. Provided that the advertising expenses paid by the LLC,
if any, constitute reasonable compensation for services rendered or
expenses incurred during the taxable year, such expenses will be
deductible by the LLC for federal income tax purposes;
6. The LLC will be entitled to treat deductions claimed in
connection with the Film as expenses incurred in the LLC's overall
trade or business of producing and exploiting films;
7. Otherwise deductible items incurred in connection with
the Film will be treated as ordinary and necessary business expenses
under Code Section 162(a);
8. The LLC should be entitled to recover some or all of its
investment in the Film through depreciation deductions using the
income forecast method;
9. An investment in the LLC constitutes an activity engaged
in for profit within the meaning of Code Section 182;
10. Subject to the possibility that the allocations do not
comply with the requirements of Section 706(d) of the Code, the
allocation of profits and losses and other income tax items in
accordance with the LLC's Operating Agreement will have substantial
economic effect or will be in accordance with the Unit Holders'
interests in the LLC; and
11. It is also my opinion that the material federal income
tax issues described above, in the aggregate, are more likely than
not to be realized by a Unit Holder if litigated on the merits, for
the reasons described in the "FEDERAL TAX DISCUSSION" of the
Prospectus.
These opinions represent the best judgment of Tax Counsel
under existing statutes, judicial decisions, administrative
regulations, and IRS interpretations and practice. However, the
opinions of Tax Counsel have no binding effect on the IRS or the
courts, and the IRS may challenge positions taken by the LLC that
are based on these opinions. Final disallowance of the LLC's
position with respect to these or other issues could reduce the
anticipated federal income tax benefits of an investment in the LLC
and result in an increase in a Unit Holder's tax liability. In
addition, no assurance can be given that future legislative,
judicial, administrative or regulatory changes, some of which may be
applied retroactively, will not have a significant adverse effect on
the opinions of Tax Counsel or the discussion found in the Prospectus.
This opinion is qualified in that it calls attention to
certain limitations inherent in the opinion itself. The views
expressed herein and concerning essentially factual issues are based
on assumptions concerning future events and transactions. If these
events and transactions do not occur, or if other events or
transactions do not occur, or if other events or transactions not
now contemplated do occur, the federal income tax consequences of an
investment in the LLC may be adversely affected. I can provide no
assurance that the facts, circumstances and assumptions necessary
for favorable federal income tax consequences from investing in the
LLC will indeed occur. Moreover, even if the assumed facts do
occur, I cannot assure that the IRS or the courts, which may analyze
the same facts differently, will draw the same conclusions as I
have. Thus, I can provide no assurance that the conclusions reached
here and in the Prospectus, if challenged by the IRS, will be
sustained by a court.
Please note that I am rendering opinions only as to the
matters expressly set forth herein, and no opinions should be
inferred as to any other matters or as to the tax treatment of the
transactions discussed in this opinion under the provisions of any
section of the Code or Regulations not specifically covered in this
opinion that may also be applicable. Except as provided herein, I am
not expressing any opinion with respect to the deductibility, timing
or treatment of any particular item, the amount of income, if any,
that may be generated by the LLC or the amount of each Unit Holder's
share of the LLC income. No opinion is expressed as to the state or
local tax consequences of an investment in the LLC. Prospective
investors are urged to consult their own tax advisors with respect
to such issues.
I consent to the filing of this opinion as an exhibit to the
aforesaid Prospectus and further consent to the reference made to me
and my law firm under the caption "Legal Opinions" and elsewhere in
the Prospectus.
Law Offices of
John W. Cones
JC/pc