04/30/1994 11:45 AM Senate JUD

 SENATOR TAYLOR brought  CSSSHB 420(STA)(efd am)  (LIMITED LIABILITY           
 COMPANIES) before the committee as the next order of business.                
                                                                               
 BOB MANLEY, testifying from Anchorage via the teleconference                  
 network, stated his support for HB 420.  He noted he is chairman of           
 the Working Group on Limited Liabilities Companies, made up of                
 members of the tax and business law section of the Alaska Bar                 
 Association and members of the Alaska Society of CPA's.                       
                                                                               
 Mr. Manley said limited liability companies is a new business form            
 that provides operational and federal income tax and estate tax               
 advantages to Alaska businesses.  He pointed out that 38 states               
 have passed limited liability company legislation, and it is                  
 anticipated that all 50 states will have such legislation within              
 the next two years.                                                           
                                                                               
 Mr. Manley urged passage of the legislation this session because he           
 believes it is important for attracting capital for investments               
 from outside to Alaska.                                                       
                                                                               
 Number 191                                                                    
                                                                               
 SENATOR LITTLE said it was her understanding that limited liability           
 companies can have some additional tax advantages that are more               
 advantageous than S corporations.  MR. MANLEY said the only                   
 difference between an S corporation and a C corporation is for                
 income tax purposes.  Basically, the investors in a C corporation             
 are subject to double taxation.  A limited liability company gives            
 true partnership tax treatment which gives a lot more tax                     
 flexibility and a lot more operational flexibility.                           
                                                                               
 Number 230                                                                    
                                                                               
 SENATOR JACKO asked how this form of business structure fits within           
 the international marketplace, and would it be available as a joint           
 venture form to go together with an offshore fishing company from             
 a foreign country.  MR. MANLEY answered that it would be available            
 so that an offshore company could form a joint venture with an                
 Alaskan corporation, and they would act as a limited liability                
 company.  He said offshore companies are obligated right now to pay           
 taxes, so it shouldn't make any difference in terms of Alaska                 
 corporate income tax.                                                         
                                                                               
 Number 270                                                                    
                                                                               
 There being no further questions on HB 420, SENATOR TAYLOR asked              
 for the pleasure of the committee.                                            
                                                                               
 SENATOR JACKO moved that CSSSHB 420(STA)(efd am) be passed out of             
 committee with individual recommendations.  Hearing no objection,             
 it was so ordered.