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SEC Filings

S-4/A
AVALON CABLE OF MICHIGAN INC/ filed this Form S-4/A on 05/28/1999
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  . 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 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 original issue
discount 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 original issue discount.

   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
wholesaler).

   The amount of original issue discount includible in income by the initial
United States Holder is the sum of the "daily portions" of original issue
discount 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 original issue discount"). The daily portion is
determined by allocating to each day in any "accrual period" a pro rata portion
of the original issue discount 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 original issue discount 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). Original issue
discount 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
original issue discount 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 original issue discount in successive
accrual periods. The issuers are required to provide information returns
stating the amount of original issue discount 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 original issue discount 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,
original issue discount, de minimis original issue discount 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 Internal Revenue Service. United States
Holders should consult with their own tax advisors about this election and its
availability.

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