Message-ID: <970928143334_271637518@emout09.mail.aol.com> Date: Sun, 28 Sep 1997 14:36:24 -0400 From: Giannina Lodato <mailto:GianninaLR@AOL.COM> Subject: Tax free reinvestment in devel stage companies To: mailto:DEVEL-L@AMERICAN.EDU
Contact: Laszlo L Rakoczi, Director mailto:rakoczi@hudsonsierra.com or by phone Cynthia Copsey (415) 389-6797 for Direct Stock Market http://www.dsm.comLittle Noticed Tax Change Will Energize Small Business Investors, Spur Internet Trading, Predicts Internet Investment Authority Clay Womack
A new tax law investment rollover provision, coupled with capital gains cuts, will fuel interest in small, emerging companies and stimulate Internet stock trading, predicts Clay Womack, CEO and founder of Direct Stock Market.
"Congress and the President have given taxpayers an extremely important gift with the Taxpayer Relief Act of 1997, but the long-range impact for small businesses and investors just now is being realized," says Womack, a recognized authority on Internet-based securities offerings.
Womack refers to a little-noticed key tax law change that allows investors to roll out of one qualified small business investment into another, deferring taxes on any gains to a future sale, while preserving a low tax rate on the gains.
The change is important, he adds, because under the old law an investor in a qualified small business had to hold their investment for a minimum of five years before being able to take advantage of a special 14 percent tax rate. A sale before the minimum five-year period pushed the tax rate on gains to 28 percent.
With the new rollover provision, an investor only needs to hold his or her position for six months, then they can re-invest proceeds from a sale into another qualifying small business investment. If re-investment is made within 60 days of the sale, the 14 percent favorable tax rate is preserved for the investor's overall investment.
Womack believes investors now have a major incentive to invest capital in a small business, take a profit and then reinvest proceeds into original issuance stock in another qualified emerging company without taxable event concerns.
"Linked with capital gains cuts, this rollover provision also will stimulate investment at an earlier point in a company's growth cycle, and should spur interest in small business investment opportunities available through Internet-based direct public offerings and smaller regional investment banker underwritten offerings," he says. "The impact for the individual will be tremendous."
Direct Stock Market is an Internet-based marketplace for both public offerings and private placements. Direct Stock Market's mission is to be the most efficient Internet equity market that connects small cap companies to capital and facilitates investors to trade their stocks. Direct Stock Market's goal is to become the secondary trading market on the Internet for small cap securities, upon receipt of SEC approval. Direct Stock Market's Website can be found at http://www.dsm.com
Laszlo L Rakoczi Director www.dsm.com mailto:GianninaLR@aol.com (WebMistress for Laszlo)