Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
15 December 2000
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We Finally Have A Tax Bill We Are Told.
Today marks the end of a very long trip for blighted neighborhoods, if you will. Yesterday Chairman Archer introduced H.R.---- "Community Renewal Tax Relief Act of 2000" [the "Act"] which follows pretty much the House Passed H.R. 5542 "Taxpayers Relief Act of 2000" Title VI Community Revitalization Provisions. In particular the Act will contain provisions for Capital Gains Rollover for Empowerment Zone Investments made after enactment and an increase in the IRC Section 1202 exclusion from 50% to 60% for investments in Qualified Small Business Stock after enactment. Most other provisions take place in the later part of 2001 or January 2002, as the case may be.
The following letter was sent out yesterday to follow up an effort that began in early March of this year, to wit, why exclude the Enterprise Communities from these benefits. The answer is may be yes and may be no, only the Shadow knows. To those that supported our efforts, we want to thank you for your efforts, and we look forward to bringing you up dates on these most interesting provisions.
LAW OFFICES JAMES E. SCHNEIDER, LL.M., INCORPORATED
PRACTICE LIMITED TO URBAN EMPOWERMENT/ENTERPRISE COMMUNITY ZONES TAX AND FINANCIAL PLANNING
COLUMBIA PLACE, SUITE 222
620 STATE STREET
SAN DIEGO, CALIFORNIA 92101
TELEPHONE (619) 696-9422 FAX (619) 696-9422
E-Mail (taxman86@pacbell.net)
HTTP://WWW.TAXSAVINGS.BIGSTEP.COM.
FAXED TO 202-622-0605
December 14, 2000
To: Jon Talisman, Acting Asst. Secretary for Tax policy
Department of the Treasury
Washington, D.C.
From:Jim Schneider, LL.M., President
James E. Schneider, LL.M., Incorporated
San Diego, California
Re: Community Revitalization Provisions, Title VI of H.R. 5542, Sections 615, 616 and 617.At the request of Senator Max Baucus, Congressmen William Jefferson and Xavier Becerra, and others I have been ask to submit the attached Position Paper.
If you have any questions give me a call.
Cc: Senator Max Baucus
Congressman William Jefferson
Congressman Xavier Becerra
Gene Gaines
Gene Sperling, White House
LAW OFFICES JAMES E. SCHNEIDER, LL.M., INCORPORATED
PRACTICE LIMITED TO URBAN EMPOWERMENT/ENTERPRISE COMMUNITY ZONES TAX AND FINANCIAL PLANNING
COLUMBIA PLACE, SUITE 222
620 STATE STREET
SAN DIEGO, CALIFORNIA 92101
TELEPHONE (619) 696-9422 FAX (619) 696-9422
E-Mail (taxman86@pacbell.net)
HTTP://WWW.TAXSAVINGS.BIGSTEP.COM.
WHAT ARE THE BENEFITS AND COSTS OF ADDING ENTERPRISE COMMUNITIES TO SECTIONS 615, 616 AND 617?
1. THERE ARE 95 ENTERPRISE COMMUNITIES INCLUDING:
- BUFFALO, N.Y
- ROCHESTER, N.Y.
- Albany/Schenectady/Troy, N.Y.
- Newburgh/Kingston, N.Y.
- ALONG WITH 91 OTHER CITIES INCLUDING WACO TX, DALLAS TX, HOUSTON TX, SAN ANTONIO TX, AND EL PASO TX
2. SECTIONS 615, 616 & 617 HAVE BEEN SCORED AT $102M FOR FIRST FIVE YEARS & $738M FOR FULL TEN YEARS BY JTC FOR 40 EMPOWERMENT ZONES. THIS IS MISLEADING BECAUSE THE TAX COST ARISES ONLY AFTER AN INVESTMENT IS MADE:
- [1] INTO AN ENTERPRISE ZONE BUSINESS, AS DEFINED;
- [2] IS MADE AFTER THE ENACTMENT DATE;
- [3] HELD FOR ONE-YEAR OR MORE;
- [4] IS THEN SOLD FOR A CAPITAL GAINS PROFIT, AND
- [5] REINVESTED INTO ANOTHER ENTERPRISE ZONE BUSINESS WITHIN 60 DAYS THEREAFTER. ENTERPRISE COMMUNITIES [95] HAVE ALSO BEEN SCORED THE SAME.
3. THE ENTERPRISE COMMUNITIES WERE GIVEN THE RIGHT TO ISSUE TAX EXEMPT FACILITIES BONDS ALONG WITH EMPOWERMENT ZONES IN 1993, AT THE RATE OF $3M PER ENTERPRISE ZONE BUSINESS [THESE BONDS ARE SUBJECT TO EACH STATE'S PRIVATE ACTIVITY BOND CAP] RAISING THIS TO $15M FROM $3M, AS WAS DONE FOR WASHINGTON, D.C. ENTERPRISE COMMUNITY IN 1997 IS A NO COST ITEM BECAUSE THEY ARE STILL SUBJECT TO EACH STATE'S PRIVATE ACTIVITY CAP.
IN CONCLUSION IT IS SUBMITTED THAT BY ADDING ENTERPRISE COMMUNITIES [95] TO THESE SECTIONS IS A NO TAX COST ITEM UNLESS, AND ONLY UNLESS THERE ARE CAPITAL GAINS PROFITS REINVESTED BACK INTO THE ENTERPRISE COMMUNITIES. SINCE THE EFFECTIVE DATES FOR THESE SECTIONS IS UPON ENACTMENT IT CAUSES AN INSTANT SURGE OF INVESTMENT CAPITAL AND HIRING [TO QUALIFY AS AN ENTERPRISE ZONE BUSINESS REQUIRES AT LEAST 35% OF THE FULL OR PART TIME EMPLOYEES TO BE RESIDENTS OF THE ENTERPRISE COMMUNITY].
Jim Schneider, LL.M.
Taxman86
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