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To: Zeev Hed who wrote (34177)	8/29/1999 10:13:00 AM
From: cicak	Read Replies (1) \| Respond to of 44908

Zeev, thank you for the reply. Regards, Phil

To: Zeev Hed who wrote (34177)	8/29/1999 8:06:00 PM
From: cicak	Read Replies (1) \| Respond to of 44908

Hi Zeev - regarding venture capital investing <<They never make an investment based on the tax consequences.>> I would disagree with you because weighing the tax consequences is a very important consideration when making any investment. Tax consequences are obviously not the only consideration but that is not the point. The point is that incentives that provide favorable tax treatment for venture capital investments can play an important role in the investment decision. Let's put it this way. If you were a venture capital firm and had to make a decision between investing in only one of two competing companies that were equal in every respect - (except for one factor) Company A: Significant tax incentives exist to invest Company B: There are no tax incentives to invest Zeev, would the tax incentives that exist by investing in Company A and that don't exist for Company B play a role in your investment decision ? Would you consider the tax consequences ? Let me give you an example. The following is a website that details the best cities for small business. Three of the top ten cities were in Florida. The article goes on to describe the Certified Capital Company Act, designed to stimulate venture capital investment in small emerging firms by offering incentives to investors. entrepreneurmag.com Okay - just what kind of tax incentive does the Certified Capital Company Act provide to qualified investors? Zeev, this is one heck of an excellent tax incentive should even make you smile. =========================================================== Certified Capital Company Act.-- (excerpt) (6) PREMIUM TAX CREDIT; AMOUNT; LIMITATIONS.-- (a) Any certified investor who makes an investment of certified capital shall earn a vested credit against premium tax liability equal to 100 percent of the certified capital invested by the certified investor. Certified investors shall be entitled to use no more than 10 percentage points of the vested premium tax credit, including any carryforward credits under this act, per year beginning with premium tax filings for calendar year 2000. Any premium tax credits not used by certified investors in any single year may be carried forward and applied against the premium tax liabilities of such investors for subsequent calendar years. The carryforward credit may be applied against subsequent premium tax filings through calendar year 2017. (b) The credit to be applied against premium tax liability in any single year may not exceed the premium tax liability of the certified investor for that taxable year. (c) A certified investor claiming a credit against premium tax liability earned through an investment in a certified capital company shall not be required to pay any additional retaliatory tax levied pursuant to s. 624.5091 as a result of claiming such credit. Because credits under this section are available to a certified investor, s. 624.5091 does not limit such credit in any manner. =========================================================== Here is another example - Britain in this case - of the use of tax incentives as a means to encourage individuals to invest in small start-up companies. =========================================================== brainstorm.co.uk There are four tax reliefs available to investors: 1.Exemptions from income tax on dividends from ordinary shares in VCTs. 2.Subscribers for new ordinary shares in VCTs are also entitled to claim income tax relief at the lower rate of income tax - currently 20% - in the year the shares are issued, provide they are held for at least five years. 3.Exemption from capital gains tax on disposals of ordinary shares in VCTs. 4.Subscribers for new ordinary shares in VCTs are also able to defer a capital gain, up to the amount subscribed, arising from the disposal of any asset on or after 6 April 1995. The shares subscribed for must be issued in a period beginning twelve months before and ending twelve months after the disposal giving rise to the gain to be deferred. =========================================================== Regards, Phil