Proposed “Carried Interest” Tax Purports to Soak Wall Street But Hits Family Businesses
For the time being, the Senate has again abandoned efforts to impose a “carried interest tax” on venture capitalists, investors, and managers of family businesses. The tax would have increased the 15% capital gains tax rate on certain investors’ profits to the top income tax rate, which is scheduled to hit 39.6% on January 1st (H.R. 4213). The share of investors’ profits is called “carried interest.” It might appear at first glance that it’s perfectly fine for investment managers to be taxed at higher rates on their “carried interest.” But venture capitalists and investors don’t reside exclusively on Wall Street. The law was written so broadly that it could have hit approximately 6.5 million people invested in real estate partnerships that own anything from a single dwelling to sizable commercial properties.
The proposed legislation attempts to sway middle America by couching the carried interest tax as imposing a higher rate on “investment management services” and “investment managers” who work for Wall Street houses. In reality, the proposed legislation could have imposed a higher tax rate on any partnerships invested in particular assets. The higher rates would apply to investment gains and also to gains from the sale of the partnership, and therefore, a sale of the family business would not qualify as a capital gains transaction. Family operations are commonly formed as partnerships and managed by a family member. Under the proposed legislation, the managing family member could be subject to the “carried interest tax.” For a family partnership to gain liability protection and also not be subject to the higher taxes, an outsider – not a family member — would have to manage the partnership. The House version of the legislation exempted family farms and ranches held in partnerships. Other family partnerships would have had to wait for the Treasury Department to exempt them through regulations.
Oil and Gas Leases: What Northern Michigan Landowners Should Know
Recently, many of my firm’s clients who own multiple acres of land in northern Michigan have been contacted by petroleum company representatives and offered oil and gas rights leases for their land. While many of these companies are reputable and offer fairly standard terms in their leases, they are generally trying to secure leases that are most favorable to them. The landowner should be aware of provisions that can be included to protect their investment and maximize the owner’s financial return.
Know What Your Oil and Gas Rights are Worth
I’m pleased to announce that one of Michigan’s premier business journals, DBUSINESS, recently announced its 2010 “Top Lawyers” in metropolitan Detroit – and three of the principals with Wright Penning & Beamer made the list.
DBUSINESS compiles its list as a resource and reference guide for its readers. Selection criteria include: Read the rest of this entry »
“…proper planning in most instances can navigate around any estate tax liability…”
There is a long history of debate regarding the federal estate tax. The implementation of the tax originally was to prevent the build-up of wealth that could lead to a creation of large estates and a permanent class of idle rich that would attempt to impose a monarchy.
By KATHY BARKS HOFFMAN Read the rest of this entry »
Michigan Governor Jennifer M. Granholm recently signed the last of two bills of a three-bill package paving the way for growth of a previous market for home-grown food products that was unexplainably subject to stricter state limitations than those limitations dictated by federal law. Previous state regulation on bidding to buy Michigan food products limited school districts to only $20,000 per year. Under the new law, that limit was increased to $100,000 per year which is the federal limit.
The aforementioned action exhibits that the legislature and governor can provide leadership in creating positive business opportunities. Unfortunately, our lawmakers and governor are inconsistent when it comes to enhancing and expanding the business environment for certain growing industries within the state. One such example was the passage of Bill 6644 in December, 2008 substantially restricting the shipment of wine by Michigan retailers directly to Michigan customers. The passage of that law will only stifle the expansion of the distribution and sale of Michigan wines and related businesses supporting the wine-making industry. The farm-to-school bill gives some hope for our state and its governmental leaders that the right decision to support business in Michigan can be made. We now need to work to make this behavior more consistent to grow Michigan’s economy.
PROPOSED LAW BANNING DIRECT SHIPMENTS BY IN AND OUT-OF-STATE WINE RETAILERS IS BAD LAW AND BAD FOR MICHIGAN
Prior to the holidays, the Michigan Legislature hustled a poorly crafted piece of legislation through the system to allegedly protect the public’s best interest by making it almost impossible for in and out-of-state wine retailers to ship directly to customers. The senate modified Bill 6644 previously passed by the House of Representatives by allowing wine deliveries by retailers to consumers but only if the product is delivered by employees of the retailer.
The Bill supporters will cite factors such as loss of state tax revenue from diminished sales by Michigan liquor distributors and without the new law, alcohol sales to minors would sky rocket out of control.
A recent article about Michigan’s House Bill 6644 as it appeared in Crain’s Business News
Alcohol bill uncorks biz concern
By Amy Lane and Nathan Skid
LANSING – When Ronnie Jamil looks at House Bill 6644, he sees some of his business in jeopardy.
From a recent email from Lois Bahle of The Suttons Bay Area Chamber of Commerce concerning how House Bill 6644 could affect two Chamber members:
As we all know, doing business in today’s economic climate is difficult at best. That’s why I’m asking you to support two of our retail members by contacting your state representative, state senator and future state representative on behalf of two of our retail members.
Congratulations to Leelanau Peninsula Winery LMawby Vineyards and Old Mission Peninsula Winery Peninsula Cellars on winning the Jefferson Cup!
“winners represent some of the most compelling wines made in America”
From an article which recently appeared in The Detroit News:
Thursday, December 4, 2008
Michigan wineries win two Jefferson Cups
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