Reorganization

[kjgoo <kjgoo@worldnet.att.net>]

Jeremy Warren wrote:

<<Can someone shed some light on this for me?  It sounds like they are
reorganizing in order to be taxed.  What would happen if they didn't
reorganize?  (Kim, Theresa, anyone with some business sense)>>

<<* BOSTON CELTICS INC, the general partner of Boston Celtics LP,
  said late Friday that it has approved a plan to reorganize into a
  partnership taxable as a corporation and private partnership,
  prior to the expiration of the partnership's exemption from
  corporate income tax. The primary objective of the reorganization
  is to address taxation issues, while permitting existing public
  shareholders of Boston Celtics L.P. unites to maintain a
  proportionate investment in the basketball team and the
  partnership's other assets in either a public or private entity.
  (Reuters 05:13 PM ET 04/17/98) >>

Unless Caleb's beaten me to it, let me answer that one. Corporations pay 
corporate income tax to the IRS.  Partnerships generally do not; 
however, partnerships that are "publicly traded" (as is Boston Celtics, 
L.P.) have been taxed like corporations for the last 10 years or so.  
Boston Celtics, L.P. was "grandfathered" under the old laws for 10 
years, so that it could be publicly traded and still avoid the corporate 
income tax.  That exemption is ending on June 30, so the existing 
limited partnership is splitting up into (i) a public corporation that 
will issue stock and bonds (interest payments on which are deductible 
to the corporation) to most of the existing unitholders and  (ii) a 
private partnership that will still be treated like a partnership for 
tax purposes.  If they didn't reorganize, the whole enchilada would be 
subject to corporate income tax.  What I don't know is how the entities 
will divide ownership of the Celtics -- for example, whether each will 
take a piece of the team via a sub-partnership.

Hope that makes everything crystal clear.  Perhaps this little tax 
nugget will make everyone want to start posting about religion again.... 
;-)

Michael Gooen