Part 2 of 2 -- see part 1
State Representative Jason Murphey provided a letter he received from a constituent. The letter is offering $2 in tax credit for each $1 invested, and provides additonal verification the investments aren't expected to succeed. Only serve to obtain tax credit.
Date: Tue, May 11, 2010
Subject: OK Tax Credit Program (open through May 31st)
Many of you may have seen this similar email in December, which is the normal time most taxpayers get inspired to participate in tax-related investments. The reason you are seeing an emails about this program now is because the Oklahoma legislature is planning on a 2-year ban on new investments in this type of credit program AFTER MAY 31ST.
---- and I continue to try to find viable ways to effectively reduce your income tax liabilities. One recent way that we have found is through the Oak Hills OK tax credit program (a summary of which is attached). Don Dillingham, CFA, CPA of Avondale Investments, LLC is the principal of this venture. His office phone number is ---- and his cell phone number is ----.
The bullet points are:
It is an investment in an LLC that plans to buy and/or build qualifying industrial real estate that is eligible for Oklahoma tax credits.
This venture plans to invest in an aviation hangar in OKC and in Tulsa for 2 large commercial aviation players via triple net leases. These players have large contracts with the Federal government. If you choose to invest, the plan is that you will be allocated $2 of Oklahoma tax credits for every $1 invested.
At the same time, you will not be paying this much in state income tax. So, that deduction goes away.
If you are normally in AMT, you do not get any Federal tax advantage from the state income tax deduction anyway.
Assuming the venture goes as planned, you would get at least $1.20 of net tax benefits right away for each $1.00 invested. If you are in AMT, then this increases your return by the amount of your AMT.
You would also have future potential tax savings from pass through losses on your K-1's and likely a capital loss upon disposition of your investment. It looks like this might be worth another $0.20 or so over the next several years for each $1 invested.
Upon allocation of the Oklahoma credits to you on your 2009 Schedule K-1, your share of the investment returns is proportionately reduced. After 2010, you will get annual K-1's with a relatively small income or loss.
After a few years, you can decide if you want to continue or sell out.
There is not really any market for this type of investment. So, you should not expect much at this point in the way of a cash return. But selling out would trigger a tax loss of any remaining tax basis in your investment.
You are only obligated for the amount that you subscribe for (if any).
You do not guarantee any notes or have to put in more money in the future.
This venture has obtained a letter ruling from the Oklahoma Tax Commission blessing the structure, meaning that IF the venture accomplishes what it intends to do, the Oklahoma tax credits will be there for the investors.
The primary risk taken is will the credits be available and, if so, will they be recaptured in the future. Don Dillingham represents that in the past 6 years of doing this, he has not had any problems qualifying his ventures for the credits or with recapture. However, there are NO GUARANTEES in the investment world. So, if you cannot stand ANY RISK, this probably isn't the deal for you.
The (unofficial) minimum investment if $10,000.
Ratliff CPA is not selling this investment. We receive no commissions or referral fees. We are just trying to help you be away of legal opportunities to reduce your income taxes.
Don Dillingham is available to answer any of your questions regarding this investment. His contact information is shown above. Ratliff CPA is prepared to answer any questions you might have regarding how this would impact your taxes.
NOTE: If you are interested, it is important that you contact Don Dillingham right away to arrange a time to go over and execute the subscription agreement and remit your capital investment by May 31st.
Ed. Highlights were inserted for ease in finding illustrated points