October 18, 2019
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EX-99.(12)(a)
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Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telephone 000.000.0000
Fax 000.000.0000
xxx.xxxxxxxx.xxx
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October 18, 2019
Board of Trustees, Franklin U.S. Government Money Fund
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
Board of Trustees, Franklin Xxxxxxxxx Money Fund Trust
Xxx Xxxxxxxx Xxxxxxx
Xxx Xxxxx, XX 00000-0000
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Re:
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Agreement and Plan of Reorganization (“Plan”) made as of October 18, 2019, by and between Franklin U.S. Government Money Fund (the “Acquiring
Fund”), and Franklin Xxxxxxxxx Money Fund Trust (“FTMFT”) on behalf of its series, Franklin Xxxxxxxxx U.S. Government Money Fund (the “Target Fund”)
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Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax consequences of the reorganization (hereinafter referred to as the “Reorganization”), which will consist of: (i) the acquisition by the Acquiring Fund of
substantially all of the property, assets and goodwill of the Target Fund in exchange solely for full and fractional Class A, Class C, and Class R shares of beneficial interest, with no par value, of the Acquiring Fund (the "Acquiring Fund Shares");
(ii) the distribution of Acquiring Fund Shares to the holders of Class A, Class C, and Class R shares of beneficial interest, with no par value, of the Target Fund (the "Target Fund Shares"), respectively, according to their respective interests in
the Target Fund, in complete liquidation of the Target Fund; and (iii) the dissolution of the Target Fund as soon as is practicable after the Closing, all upon and subject to the terms and conditions of the Plan. Capitalized terms not otherwise
defined herein shall have the meanings assigned to them in the Plan.
Philadelphia, PA • Harrisburg, PA • Malvern, PA • Cherry Hill, NJ • Wilmington, DE • Washington, DC • New York, NY • Chicago, IL
A Pennsylvania Limited Liability Partnership
Board of Trustees, Franklin U.S. Government Money Fund
Board of Trustees, Franklin Xxxxxxxxx Money Fund Trust
October 18, 2019
Page 2
In rendering our opinion, we have reviewed and relied upon: (a) a copy of the executed Plan, dated as of October 18, 2019; (b) the Prospectus/Information Statement provided to shareholders of the Target Fund dated August
1, 2019; (c) certain representations concerning the Reorganization made to us by the Acquiring Fund and the Target Fund in a letter dated October 18, 2019 (the “Representation Letter”); (d) all other documents, financial and other reports and
corporate minutes we deemed relevant or appropriate; and (e) such statutes, regulations, rulings and decisions as we deemed material in rendering this opinion.
For purposes of this opinion, we have assumed that the Target Fund on the Closing Date of the Reorganization satisfies, and immediately following the Closing Date of the Reorganization, the Acquiring Fund will continue
to satisfy, the requirements of Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), for qualification as regulated investment companies.
Based on the foregoing, and provided the Reorganization is carried out in accordance with the applicable laws of the State of Delaware, the terms of the Plan and the statements in the Representation Letter for the Target
Fund and the Acquiring Fund, it is our opinion that for federal income tax purposes:
1. The acquisition by the Acquiring Fund of substantially all of the assets of the Target Fund, as provided for in the Plan, in exchange solely for the Acquiring Fund Shares followed by the distribution by the
Target Fund to its shareholders of the Acquiring Fund Shares in complete liquidation of the Target Fund will qualify as a reorganization within the meaning of Section 368(a)(1) of the Code, and the Target Fund and the Acquiring Fund each will be a
“party to the reorganization” within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by the Target Fund upon the transfer of substantially all of its assets to the Acquiring Fund in exchange solely for the Acquiring Fund Shares under Sections 361(a) and 357(a)
of the Code.
3. No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of substantially all of the assets of the Target Fund in exchange solely for the Acquiring Fund Shares under Section 1032(a) of the
Code.
4. No gain or loss will be recognized by the Target Fund upon the distribution of the Acquiring Fund Shares to its shareholders in complete liquidation of the Target Fund (in pursuance of the Plan) under Section
361(c)(1) of the Code.
5. The tax basis of the assets of the Target Fund received by the Acquiring Fund will be the same as the tax basis of these assets in the hands of the Target Fund immediately prior to the Reorganization under
Section 362(b) of the Code.
Board of Trustees, Franklin U.S. Government Money Fund
Board of Trustees, Franklin Xxxxxxxxx Money Fund Trust
October 18, 2019
Page 3
6. The holding periods of the assets of the Target Fund received by the Acquiring Fund will include the periods during which such assets were held by the Target Fund under Section 1223(2) of the Code.
7. No gain or loss will be recognized by the shareholders of the Target Fund upon the exchange of their shares in the Target Fund solely for the Acquiring Fund Shares (including fractional shares to which they may
be entitled) under Section 354(a) of the Code.
8. The tax basis of the Acquiring Fund Shares received by the shareholders of the Target Fund (including fractional shares to which they may be entitled) will be the same as the tax basis of the Target Fund Shares
exchanged therefor under Section 358(a)(1) of the Code.
9. The holding period of the Acquiring Fund Shares received by shareholders of the Target Fund (including fractional shares to which they may be entitled) will include the holding period of the Target Fund Shares
surrendered in exchange therefor, provided that the shareholder held the Target Fund Shares as a capital asset on the effective date of the Reorganization under Section 1223(1) of the Code.
10. The Acquiring Fund will succeed to and take into account as of the date of the transfer (as defined in Section 1.381(b)-1(b) of the regulations issued by the United States Treasury (“Treasury Regulations”)) the
items of the Target Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the Treasury Regulations thereunder.
Notwithstanding anything to the contrary herein, we express no opinion as to the effect of the Reorganization on the Target Fund, the Acquiring Fund or any Target Fund shareholders with respect to any asset (including
without limitation any stock held in a passive foreign investment company as defined in section 1297(a) of the Code or any contract described in Section 1256(b) of the Code) as to which any unrealized gain or loss is required to be recognized for
federal income tax purposes at the end of a taxable year (or on the termination or transfer thereof) regardless of whether such transfer would otherwise be a non-taxable transaction under the Code.
Our opinion is based upon the Code, the applicable Treasury Regulations, the present positions of the Internal Revenue Service (the “Service”) as are set forth in published revenue rulings and revenue procedures, present
administrative positions of the Service, and existing judicial decisions, all of which are subject to change either prospectively or retroactively. We do not undertake to make any continuing analysis of the facts or relevant law following the date
of the Reorganization.
Our opinion is conditioned upon the performance by the Acquiring Fund and the Target Fund of the undertakings in the Plan and the Representation Letter. Except as expressly set forth
Board of Trustees, Franklin U.S. Government Money Fund
Board of Trustees, Franklin Xxxxxxxxx Money Fund Trust
October 18, 2019
Page 4
above, we express no other opinion to any party as to the tax consequences, whether federal, state, local or foreign, with respect to (i) the Reorganization or any transaction related to or contemplated by such Reorganization (or incident thereto)
or (ii) the effect, if any, of the Reorganization on any other transaction and/or the effect, if any, of any such other transaction on the Reorganization.
We hereby consent to the use of this opinion as an exhibit to the registration statement of the Acquiring Fund on Form N-14, and any amendments thereto, covering the registration of Acquiring Fund Shares under the
Securities Act of 1933, as amended, to be issued in the Reorganization.
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Very truly yours,
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/s/ Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
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Xxxxxxxx Ronon Xxxxxxx & Xxxxx, LLP
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