[Congressional Record Volume 145, Number 113 (Wednesday, August 4, 1999)]
[House]
[Page H6968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      TAX LOOPHOLE TO BE SHUT DOWN

  (Mr. NEAL of Massachusetts asked and was given permission to address 
the House for 1 minute and to revise and extend his remarks.)
  Mr. NEAL of Massachusetts. Mr. Speaker, today I am introducing 
legislation to eliminate a tax avoidance technique available to only 
the very wealthy. This technique involves the use of swap funds.
  Legislation to shut down this particular practice was enacted in 
1967, in 1976, and most recently in the Taxpayer Relief Act of 1997. 
Each time that we have acted to shut this activity down, we have 
failed. We will not fail this time.
  Swap funds are designed to permit individuals with large blocks of 
appreciated stock to diversify their portfolio without recognizing gain 
and paying taxes, like ordinary Americans. This transaction is often 
limited to blocks of stock with a value in excess of $1 million to 
investors with investment holdings exceeding $5 million.
  My bill shuts down the latest avoidance techniques being used, which 
is to retain 21 percent of the assets of the swap fund in certain 
limited partnerships holding real estate.
  The second part of this bill is broader. It states that any transfer 
of marketable stock or securities to any entity would be a taxable 
event under certain specific conditions. Let us be clear. This bill 
will be enacted into law this year.

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