Standard-Pacific Planning to Switch to Limited Partnership

Standard-Pacific Corp., a Costa Mesa home builder, said Thursday that it plans to reorganize into a limited partnership to avoid the double taxation on corporate profits and company dividends.

If the reorganization is approved by the board later this year, Standard-Pacific would become the nation’s second home builder to seek limited-partnership status. Oil and gas exploration companies have popularized limited partnerships as tax-saving measures and one analyst said Thursday that the strategy could work for other businesses.

However, Timothy Hurckes of Donaldson Lufkin & Jenrette said that interested companies will have to move quickly because Congress has proposed plugging the loophole. The proposed new tax law approved by the House of Representatives would outlaw limited-partnership reorganizations by corporations.

Arthur Svendsen, Standard-Pacific’s chairman, said the final decision will hinge on congressional tax revision action.

Svendsen said Standard-Pacific’s profits now are taxed at the maximum corporate rate of 50% and then are taxed again as personal income when they are distributed to shareholders as dividends. However, in a limited partnership there is no corporation to tax, so distributed profits would be larger and would be taxed only as personal income of the recipients.

Hurckes, who has been advising Standard-Pacific on the strategy, said it is a “major benefit” to shareholders. Investors apparently agree with that assessment, sending Standard-Pacific’s stock up $4 a share Thursday to $29.