Exhibit 8.1
April
15th
1 9 9 7
(000) 000-0000 53,682-025
779594.V1
Xxxxxxx Medical Management
Holdings Corporation
0000 Xxxxxx Xxx
Xxxxx Xxxx, XX 00000-0000
Re: Transferable Rights to Subscribe to Shares
of Xxxxxxx Medical Management Holdings Corporation
--------------------------------------------------
Ladies and Gentlemen:
This opinion is delivered to you in connection with the Registration
Statement on Form S-1 (No. 333-17679, the "Registration Statement") filed
with the Securities and Exchange Commission by Xxxxxxx Medical Management
Holdings Corporation, a Delaware corporation ("TMMHC"), in connection with
the delivery (the "Delivery") to shareholders of FHP International
Corporation ("FHP") of transferable rights (the "Rights") to subscribe to
shares of TMMHC, as part of the consideration payable in the merger (the
"Merger") of FHP and PacifiCare Health Systems, Inc.
We have reviewed the Registration Statement and have conducted such
additional legal and factual investigation as we have deemed necessary or
appropriate for purposes of our opinion. Based on that review and
investigation, we are of the opinion that the material federal income tax
consequences pertaining to the Rights are as follows:
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April __, 1997
1. The initial holders of the Rights will have a tax basis in the
Rights equal to their fair market value as of the date of Delivery, and the
holding period (for determination of short-term or long-term gains and
losses) of the Rights will commence as of such date.
2. Upon a sale of the Rights, the selling holder will recognize
short-term gain or loss equal to the difference between the selling price and
the basis, and that gain or loss will be capital in nature if the Rights are
(and the Common Stock obtainable on exercise of the Rights would be) a
capital asset in the hands of the seller.
3. If the Rights are not exercised or sold, the holder will have a
short-term loss equal to the basis in the Rights.
4. No gain or loss will be recognized on exercise of the Rights.
5. The tax basis of the Common Stock obtained on exercise of the Rights
will equal (i) the exercise price under the Rights plus (ii) the basis of the
Rights in the hands of the exercising holder (either the fair market value as
of the Delivery date or the amount paid to purchase the Rights after such
date). The holding period of the Common Stock will commence on the exercise
of the Rights.
6. Upon a subsequent sale of the Common Stock, the seller will
recognize gain or loss equal to the difference between the selling price and
the basis of the Common Stock. The gain or loss will be capital in nature if
the Common Stock represents a capital asset in the hands of the holder, and
will be long-term if the sale occurs more than one year after exercise of the
Rights.
This opinion is based on current authorities and upon facts and
assumptions as of this date. It is subject to change in the event of a
change in the applicable law or a change in the interpretation of such law by
the courts or by the Internal
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April __, 1997
Revenue Service. There can be no assurance that legislative or
administrative changes or court decisions will not be forthcoming that would
significantly modify this opinion. Any such changes may or may not be
retroactive with respect to transactions prior to the date of such changes.
This opinion has no binding effect or official status, and accordingly, no
assurance can be given that the position set forth herein will be sustained
by a court, if contested. No ruling will be obtained from the Internal
Revenue Service with respect to the Merger or the Delivery of the Rights.
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April 15, 1997
This letter is furnished by us as counsel for TMMHC. We consent to the
filing of this opinion as an exhibit to the Registration Statement and to the
use of our name under the caption "THE OFFERING - Certain Federal Income Tax
Consequences" in the Prospectus which is included in the Registration
Statement.
Respectfully submitted,
O'Melveny & Xxxxx LLP
