STAND. COM. REP. NO. 1527

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1649
                                        H.D. 2
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B.
No. 1649, H.D. 2, entitled: 

     "A BILL FOR AN ACT RELATING TO THE CONVEYANCE TAX,"

begs leave to report as follows:

     The purpose of this measure is to provide for certain
exemptions to the conveyance tax.

     Specifically, this measure exempts the transfer of real
property executed in connection with the conversion of:

     (1)  A general partnership or limited partnership to a
          limited liability company or corporation; or

     (2)  A limited liability company or corporation to a general
          partnership or limited partnership.

     Testimony in support of this measure was received from
Outrigger Enterprises, Inc.  The Director of Taxation and the Tax
Foundation of Hawaii commented on the measure.

     Your Committee finds that levying a conveyance tax on
transactions between certain related business entities prevents
businesses from choosing the optimum form of organization in
which to conduct business.  This may create a disincentive for a
business to change to a better, more efficient form of doing
business.

 
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                                   STAND. COM. REP. NO. 1527
                                   Page 2



     Your Committee has amended this measure to clarify that the
conveyances of real property being exempted are: 

     (1)  Mergers or consolidations under chapters 415 to 428,
          Hawaii Revised Statutes; or

     (2)  Dissolutions of limited partnerships to its corporate
          general partnership that owns, directly or indirectly,
          at least a ninety per cent interest in the partnership.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of H.B.
No. 1649, H.D. 2, as amended herein, and recommends that it pass
Second Reading in the form attached hereto as H.B. No. 1649,
H.D. 2, S.D. 1, and be placed on the calendar for Third Reading.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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