ValuePlays

This could be huge given what is happening with it..

HT Reader Nicholas

The News:

President Barack Obama’s proposal to provide immediate deductions for the full cost of new equipment will encourage companies to game the system just to get the tax benefits, tax experts said.

In a speech today in Cleveland, Obama will propose a plan to let companies, through the end of 2011, deduct the full cost of capital investments in the year the expenditures are made, instead of writing off the expenditure over periods of as many as 20 years, White House officials said.

That accelerated write-off, combined with existing deductions for loan interest, would create an opportunity that may prompt companies to borrow money for plants, machinery and equipment just to get the tax benefits, said Ed Kleinbard, a former staff director for Congress’s Joint Committee on Taxation.

“It’s an invitation to arbitrage,” said Kleinbard, who now teaches tax law at the University of Southern California in Los Angeles. “You’re putting businesses in the same economic position as if you were inviting them to borrow money to buy tax-exempt bonds.”

Obama’s proposal, which requires congressional approval, is designed to encourage companies to boost the economy by spending some of the record $1.84 trillion in cash they had on hand at the end of the first quarter, up from $1.43 trillion at the start of 2009.

Who will this help? REXI

Remember this from the 1st write up?

LEAF Financial Corporation

LEAF Financial Corporation is a commercial finance and equipment leasing company headquartered in Philadelphia, PA. LEAF’s business model is to originate small ticket equipment leases by reaching the small to mid-sized business market by forming strategic marketing alliances and other program relationships with equipment vendors, commercial banks and other financial institutions. After origination, LEAF manages the leases for its own account, institutions, and individual investors through investment partnerships and other investment vehicles. As of December 31, 2009, LEAF managed $1.2 billion of assets under management.

LEAF is a commercial finance operation. IF businesses do the above if this tax change is passed (IMO they will) then LEAF, and the value of it will be a HUGE beneficiary. Given the circumstances around REXI now, this is no small matter….