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Thread: was [EE] Small-Production PCB Manufacturer Experiences.
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face BY : Russell McMahon email (remove spam text)



>> There are businesses whose express purpose is to make a loss (to
>> provide
>> other businesses with a possibility to use this loss).
>
> I don't understand, please explain.

See Russell's answer. AFAIK there are also other mechanisms (funds
where
companies can "buy" losses; seems to be useful tax-wise in certain
situations).

___

In my country we have a recognised category of company specially set
up to allow losses to be transferred to other areas. It's called a
LAQC (?Loss acquiring qualifying company?) and it has certain rules
about who can run one etc. I think It's mainly to allow small numbers
of investors to transfer tax losses across ventures.

I had it recommended literally yesterday that I set one up for a
specific purpose. I can buy a house for no $ down, rent it to the
government (NZ Housing Corporation for rental to State sponsored
tenants) at 0.1% of value per week, get a 10 year contract with 5 year
optional right of renewal on top of that and have all maintenance and
repairs paid during that time. I'd need to put a modest amount of
money in over time but the *PROJECTED* return over 15 years is 10% to
15% per annum compound. A significant part of the structuring is to
provide a net tax loss which is then offset against other income.
Without the tax losses it wouldn't work. The LAQC structure is
specifically set up by the government and tax department to allow this
sort of thing to be done. Fascinating :-).

What this does is to leverage ones savings by using the equity value
in ones own existing home as security for the loan allowing no $ down
and an interest free loan. That way the return on the money one puts
in *SHOULD* be much higher than one can otherwise usually get with a
capital guaranteed investment. There are certain assumptions about the
behaviour of the housing market and inflation which are historically
good but MAY prove to be long term bad. One can get out early by
selling the house with contract to another investor at a discount.
They get the same deal but a shorter term which may suit them better.

FWIW, for various reasons I'm probably not going to do this.



       Russell



<01b901c76c7b$1e355f60$d201a8c0@y2k> 7bit

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