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SEC Filings

AVALON CABLE OF MICHIGAN INC/ filed this Form S-4 on 04/01/1999
Entire Document
  . a corporation or partnership created or organized in or under the laws of
    the United States or any political subdivision thereof,
  . an estate the income of which is subject to United States federal income
    taxation regardless of its source or
  . a trust which is subject to the supervision of a court within the United
    States and the control of one or more United States persons as described
    in section 7701(a)(30) of the Code.
   A "Non-United States Holder" is a holder that is not a United States Holder.
Original Issue Discount
   The New Notes will bear original issue discount ("OID") in an amount equal
to the difference between their stated redemption price at maturity (the sum of
all payments to be made on the New Note) and their "issue price." United States
Holders should be aware that they generally must include OID in gross income as
it accrues; regardless of their regular method of accounting for federal income
tax purposes, and in advance of the receipt of cash attributable to that
income. However, United States Holders of such New Notes generally will not be
required to include separately in income cash payments received on the New
Notes, even if denominated as interest.
   This summary is based upon final Treasury regulations addressing debt
instruments issued with OID (the "OID Regulations").
   The "issue price" of a New Note will be the first price at which a
substantial amount of the particular offering of Old Notes to which such New
Note relates was sold (other than to an underwriter, placement agent or
   The amount of OID includible in income by the initial United States Holder
is the sum of the "daily portions" of OID with respect to the New Note for each
day during the taxable year or portion of the taxable year in which such United
States Holder held such New Note (including, in the case of the taxable year in
which such holder exchanged Old Notes for New Notes, each day during such
taxable year in which such holder held such Old Notes) ("accrued OID"). The
daily portion is determined by allocating to each day in any "accrual period" a
pro rata portion of the OID allocable to that accrual period. The "accrual
period" may be of any length and may vary in length over the terms of the New
Note, provided that each accrual period is no longer than one year and each
scheduled payment of principal or interest occurs on the first day or the final
day of an accrual period. The amount of OID allocable to any accrual period is
an amount equal to the product of the New Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period). OID allocable to a final accrual period
is the difference between the amount payable at maturity and the adjusted issue
price at the beginning of the final accrual period. The "adjusted issue price"
of a New Note at the beginning of any accrual period is equal to its issue
price increased by the accrued OID for each prior accrual period and reduced by
any payments made on such New Note on or before the first day of the accrual
period. Under these rules, a United States Holder will have to include in
income increasingly greater amounts of OID in successive accrual periods. The
Issuers are required to provide information returns stating the amount of OID
accrued on New Notes held of record by persons other than corporations and
other exempt holders.
   United States Holders may be able to elect to treat all interest on any New
Note as OID and calculate the amount includible in gross income under the
constant yield method described above. For the purposes of this election,
interest includes stated interest, acquisition discount, OID, de minimis OID
and unstated interest. The election is to be made for the taxable year in which
the United States Holder acquired the Old Note to which a New Note relates, and
may not be revoked without the consent of the IRS. United States Holders should
consult with their own tax advisors about this election and its availability.
Sale, Exchange, Redemption and Retirement of New Notes
   A United States Holder's tax basis in a New Note will, in general, be the
United States Holder's cost therefor, increased by the amount of OID previously
included in income with respect to such New Note and