The Boston Celtics LP Friday "announced a proposed
reorganization into public and private partnerships in an
attempt to minimize personal income taxes for shareholders,"
according to Gregg Krupa of the BOSTON GLOBE. Currently,
investors in the publicly traded company receive a
proportionate share of its untaxed income, along with a tax-
free cash distribution. After June 30, though, the Celtics
"will no longer be covered by a grandfather clause that
shielded the company for 10 years from Congress's
elimination of untaxed-income provisions affecting limited
partnerships." Under the proposed reorganization, "a vast
majority of investors -- those holding less than 100 units
of the limited partnership -- would receive units of the
limited partnership plus $20 in subordinated debt."
Officials of the limited partnership "said they anticipate
that the debt will mature in 40 years and pay an annual
rate" of 6%. Shareholders who own more than 100 units can
enter a private partnership. The units of the private
partnership "would be subject to substantial restrictions on
transfers and would not be traded." The investors would not
receive the $20 bonds or other publicly-traded securities.
The private partnership would be treated as a "pass-through"
entity for tax purposes (BOSTON GLOBE, 4/18).
