Harris & Harris Group Declares Deemed Dividend
Harris & Harris Group, Inc. announced today that its Board of Directors, in accordance with rules governing a Regulated Investment Company ("RIC") under Sub-Chapter M of the Internal Revenue Code, has declared a designated undistributed capital gain dividend (also known as a deemed dividend) for 2001. The Company intends to qualify as a RIC for 2001, but there can be no assurance that the Company will so qualify as a RIC for 2001.
This deemed dividend will be an amount equal to $775,620 or $0.0875 per share. It is payable to shareholders of record as of December 31, 2001. Shareholders of record on the record date will be provided with the exact amount of the deemed dividend attributable to their shares by their stock broker if their shares are held in electronic format or by the Bank of New York if their shares are held directly. This information will be reported on IRS Form 2439.
The following simplified example illustrates the tax treatment under Sub-Chapter M of the Internal Revenue Code for the Company and its individual shareholders with regard to the $775,620 or $0.0875 per share net long-term capital gain retained by the Company and designated as an undistributed capital gain or deemed dividend:
1. The Company will pay a corporate-level federal income tax of 35 percent or $271,467 on the undistributed capital gain, or approximately $0.030625 per share.
2. Individual shareholders who are taxable at the highest marginal rate will increase their cost basis in their stock by approximately $0.056875 per share. They will pay a 20 percent federal capital gains tax on 100 percent of the undistributed capital gain of $0.0875 per share or approximately $0.0175 per share in tax. Offsetting this tax, shareholders will receive a federal tax credit equal to 35 percent of the undistributed capital gain, or $0.030625 per share.
3. The above information will be reported on IRS Form 2439.
For more complete information about the Company's tax status and the implications for the Company's shareholders, please see the Company's 2000 Annual Report on Form 10-K.
Harris & Harris Group is a publicly traded venture capital company organized as a Business Development Company. Harris & Harris Group has 8,864,231 common shares issued and outstanding.
Detailed information about Harris & Harris Group and its holdings can also be found on its website at www.hhgp.com.
This press release may contain statements of a forward-looking nature relating to future events. Statements contained in this press release that are forward looking statements are intended to be made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. These statements reflect the Company's current beliefs, and a number of important factors could cause actual results to differ materially from those expressed in this press release. Please see the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission for a more detailed discussion of the risks and uncertainties associated with the Company's business, including but not limited to the risks and uncertainties associated with venture capital investing and other significant factors that could affect the Company's actual results. Except as otherwise required by Federal securities laws, Harris & Harris Group, Inc. undertakes no obligation to update or revise these forward looking statements to reflect new events or uncertainties.