EFTA02451712

From: jeffrey E. <[email protected]> Sent: Friday, September 16, 2016 8:11 PM To: William Blum Subject: Re: FW: Capital Gain provision/PR Act 22 equivalent you are right. let me think? <=iv class="gmail_extra"> On Fri, Sep 16, 20=6 at 4:04 PM, William Blue wrote: OK. From a federal perspective any property that you owned when =ou arrived could be made free of capital gains taxes by the VI once ten ye=rs has passed. Do you have unrealized gains in such property? =ow long have you owned it? What about other property?<=span> We need to come up with a method that could =ttract new residents but does not overly benefit existing residents or it =ill be attacked as harming revenues instead of enhancing them. So we=have to come up with a way to narrow benefits for existing residents.</=> Bill William Blum I=Partner SOLOMON BLUM HEYMANN LLP =AO =C2 =A0 New York, NY 10005 Tel =td style="padding:0in 0in 0in 0in"> Email =C2 =A0 From: =span style="font-size:10.0pt;font-family:"Tahoma","sans-s=rif""> jeffrey E. [mailto:[email protected] <mailto:[email protected]> j Sent: Friday, Septemb=r 16, 2016 4:00 PM To: William Blum 1 EFTA_R1_01551368 EFTA02451712 Subject: Re: FW: C=pital Gain provision/PR Act 22 equivalent im a res=dent for 18 years. maybe its how the proerty becomes territory prope=ty after 10 years? , ill think about it over the weekend =p class="MsoNormal">On Fri, Sep 16, 2016 at 3:05 PM, William Blum wrote: SOLOMON BLUM HEYMANN LLP =C2 =A0 New York, N= 10005 Tel Email From: Sent: Wednesday, September 14, 2016 2:53 PM jeffrey E. ([email protected] <[email protected]> ) Cc: Erika Kellerhals Subjec=: Capital Gain provision/PR Act 22 equivalent =idly> Dear Jeff — In thinking about how to draft these=provisions, I note that the PR Act 22 only applies to individuals who relo=ate to Puerto Rico who have not resided there during the 6 years preceding=relocation. Clearly, this is designed to be consistent with the stat=d purpose of Act 22 to encourage individuals to relocate to Puerto Rico, w=o would then presumably pay tax there and stimulate the local economy, whi=e preventing current residents from getting a "windfall".<=> 2 EFTA_R1_01551369 EFTA02451713 I am assuming that you would want to benefit from this law pers=nally and that you may have some unrealized capital gains. So I need=to find a way to draft around this issue — i.e., to figure out a w=y that you (and perhaps limited others) could benefit from this without op=ning the floodgates and actually costing the VI revenue. =p class="MsoNormal"> In th=s regard, please give me some facts that might distinguish you from others=that might benefit from this but that would accommodate the fact that you =ave been a USVI resident. In that regard, when did your USVI residen=t' start? <= class="MsoNormal">A couple of ideas I had in this regard would be to pe=haps allow a partial capital gains exemption (say a rate of 10% instead of=20%) for an individual who is currently a resident but who sells securitie= with unrealized appreciation during a limited period, say a year, from th= date of enactment, regardless of when they took up residency. This =an be sold on the basis of an immediate one time cash infusion to help bal=nce the budget now. <=> Another idea is a flat across the board re=uction in the capital gains rate without "date of residency acquis=tion" restrictions. We couldn't realistically go to zero, =ut how about 15% for short term and 7.5% for long term — something=like that? Another idea is that this be restricted to individuals wh= otherwise pay, or will pay, very substantial taxes to the USVI — =ay at least $500,000 annually for each of the last x number of years. =AO Just brainstorming. <1=> Please note that there are federal rest=ictions on this benefit which the Puerto Rico law meets and that we will n=ed to be mindful of. These are designed to prevent gains that have a=crued while a person was a resident of the U.S. from not being taxed by a =erritory to which the person relocated. The main rule here is that t=ere are no restrictions on elimination of tax on gains for any person who =as already lived in a territory for 10 years. To the extent that the=period of territorial residency is shorter, then an exemption is still all=wed for part of the gain, and the amount depends on whether the gain is on=publically traded securities or other property. In the case of publi=ally traded securities, an exemption is allowed for the exact portion of t=e taxpayer's gain that accrued during the "possessions hol=ing period". That term is defined as the part of the taxpaye='s holding period that occurs while he is a territorial resident.=C2 For other property, the limitation on gain exclusion test is similar=but since there is no market to which to mark the value of the property at=the commencement of the possessions holding period, the gain is treated as=having accrued ratably over the entire holding period with the result that=the exemption applies based on the ratio of the number of days in the taxp=yer's possession holding period to the entire number of days in th= holding period. <=LI> Let me know your thoughts.</=> William Blum I Partner SOLOMON BLUM HEYMANN LLP =C2 =AO =C2 3 EFTA_R1_01551370 EFTA02451714 New York, NY 10005 Tel please note<=> The information contained in t=is communication is confidential, may be attorney-client privileged, ma= constitute inside information, and is intended only for the use of =he addressee. It is the property of TEE Unauthorized use, disclosure=or copying of this communication or any part thereof is strictly prohib=ted and may be unlawful. If you have received this communication in =rror, please notify us immediately by return e-mail or by e-mail to [email protected]=m, and destroy this communication and all copies thereof, includ=ng all attachments. copyright -all rights reserved =/div> please note The information contained in this communication is confidential, may =e attorney-client privileged, may constitute inside information, and is=intended only for the use of the addressee. It is the property of JE= Unauthorized use, disclosure or copying of this communication or an= part thereof is strictly prohibited and may be unlawful. If you have r=ceived this communication in error, please notify us immediately by =eturn e-mail or by e-mail to [email protected] <mailto:[email protected]> , and destroy this communication =nd all copies thereof, including all attachments. copyright -all rights=reserved 4 EFTA_R1_01551371 EFTA02451715