Interesting note here. I'm not Kaiser's greatest fan but its worth noting. It also applies to Millstream where you and I are also shareholders. Guess we both have good judgement :-))
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Kaiser says some Dumont investors get tax benefit
Dumont Nickel Inc DNI
Shares issued 15,245,074 Jun 7 close $0.93
Tue 8 Jun 99 In the News
John Kaiser, writing in the May 26 Bottom-Fishing Report, says Dumont Nickel (then 73 cents) is a model for a new kind of limited partnership financing. It is a tax-driven funding strategy involving limited partnerships managed by the Hunter-Dickinson group. In it, the limited partnership agrees to spend $2-million to earn 30 per cent; in return, the LP gets to write off 92.5 per cent of its investment. Mr. Kaiser explains that unlike flow-through stock, which carries a zero average cost base, the LP investors receive the deemed value of his paper as the cost base. This means that if the LP investor sells his stock at cost, he or she will have captured the tax savings at the marginal tax rate during the year of the writeoff. In other words, the LP investor captures an actual tax benefit, but only if an arm's-length junior lets him swap the property interest for company stock worth 117 per cent of the initial investment. If the property is a dud, however, the junior can leave the LP hanging with a worthless 30
per cent property interest. The strategy has also been applied to
Millstream Mines.
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