Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
13 October 2000
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Let The Games Begin in 31 Empowerment Zones!
1. Jack Kemp has finally arrived.
Twenty years ago then Congressman Jack Kemp suggested that tax free zones, also known as Enteprise Zones was the way to encourage economic development in distressed communities. Today his dream is about to become reality in 31 Empowerment Zones by the end of the month, and all of Washington, D.C., and in an additional 30 Renewal Communities beginning January 1, 2002. That is the good news, the bad is that Wilmington, DE., San Diego, CA., and all the other Enterprise Communities will not enjoy this incentive. More importantly the New York Times has missed this story.
We suggest you read carefully proposed IRC Section 1397B since it will become the most interesting provision for estate planning, and income tax planning we have ever seen, to wit, how to pass millions without income or estate tax. Jack Kemp never had it so good, but his Buffalo, N.Y. will not be able to participate.
"...Community Renewal and New Markets Act of 2000 (Introduced in
the Senate)
SEC. 115. EMPOWERMENT ZONE CAPITAL GAIN.
'Subpart C--Empowerment Zone Capital Gain
`Sec. 1397B. Empowerment zone capital gain.
[`SEC. 1397B. EMPOWERMENT ZONE CAPITAL GAIN.
[WHERE IS WILMINGTON DE.?]
- `(1) IN GENERAL- The amount of eligible gain which may be taken into account under subsection (a) for the taxable year with respect to any taxpayer shall not exceed $25,000,000, reduced by the aggregate amount of eligible gain taken into account under subsection (a) for prior taxable years with respect to such taxpayer. [WHERE IS WILMINGTON, DE.?]
- `(2) ELIGIBLE GAIN- For purposes of this subsection, `eligible gain' means any gain from the sale or exchange of a qualified empowerment zone asset held for more than 5 years. [Where is Wilmington, DE.?]
- `(3) TREATMENT OF MARRIED INDIVIDUALS-
- `(A) SEPARATE RETURNS- In the case of a separate return by a married individual, paragraph (1) shall be applied by substituting `$12,500,000' for `$25,000,000'.
- `(B) ALLOCATION OF EXCLUSION- In
the case of a joint return, the amount of gain taken into account
under subsection
- (a) shall be allocated equally between the spouses for purposes of applying this subsection to subsequent taxable years.
- `(C) MARITAL STATUS- For purposes of this subsection, marital status shall be determined under section 7703.
- `(4) TREATMENT OF CORPORATE TAXPAYERS- For purposes of this subsection--
- `(A) all corporations which are members of the same controlled group of corporations (within the meaning of section 52(a)) shall be treated as 1 taxpayer, and
- `(B) any gain excluded under subsection (a) by a predecessor of any C corporation shall be treated as having been excluded by such C corporation.]..."
This provision and many others will be adopted in the upcoming $300B Tax Package being negotiated this weekend.
Although the 115 Enterprise Communities, their many thousands of Enterprise Zone Businesses, and tens of thousands of employees, may not make it because they may add $200M to the $39B Community Renewal Package, a new benefit for Corning Glass at $2B may.
"...AP Washington Co. Seeks [$3B ]Tax Breaks; Offset Suits
by CURT ANDERSON
AP Tax Writer
WASHINGTON (AP) -- Former asbestos producers Owens Corning, W.R. Grace, U.S. Gypsum and others struggling to resolve tens of thousands of health-related lawsuits would get $2 billion in tax breaks under legislation being circulated on Capitol Hill in the frenzied final days of the congressional session..."
Jim Schneider, LL.M.
Taxman86
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