March 23, 2001
Notice to Members Number:  01-109


TO:
ALL NYMEX AND COMEX DIVISION MEMBERS
ALL NYMEX AND COMEX DIVISION MEMBER FIRMS
ALL NYMEX AND COMEX DIVISION CLEARING MEMBERS

FROM:
Neal Wolkoff, Executive Vice President

SUBJECT:
Inventory Taxes on Aluminum in the State of Kentucky


Recently enacted legislation in the State of Kentucky has amended the 
Kentucky Revised Statutes (KRS) Chapter 132.200, &Property subject to state 
tax only8.  The amendment applies for property assessed on or after January 
1, 2001.

Paragraph 21 of KRS 132.200 exempts for the purpose of taxation in the 
county, city, school or other taxing district in which it has taxable situs:

Any nonferrous metal that conforms to the quality, shape, and weight 
specifications set by the New York Mercantile Exchange,s special contract 
rules for metals, and which is located or stored in a commodity warehouse and 
held on warrant, or for which a written request has been made to a commodity 
warehouse to place it on warrant, according to the rules and regulations of a 
trading facility.

(a) &Commodity warehouse8 means a warehouse, shipping plant, depository, or 
other facility that has been designated or approved by a trading facility as 
a regular delivery point for a commodity on contracts of sale for future 
delivery; and

(b) &Trading facility8 means a facility that is designated by or registered 
with the federal Commodity Futures Trading Commission under 7 U.S.C. secs. 1 
et seq.  &Trading facility8 includes the Board of Trade of the City of 
Chicago, the Chicago Mercantile Exchange, and the New York Mercantile 
Exchange.

Please note that aluminum inventory remains taxable at the state level if the 
aluminum is not deemed to be &in transit8.  Paragraph 10 of KRS 132.020 
&State ad valorem taxes8 states that an ad valorem tax for state purposes of 
five cents ($0.05) upon each one hundred dollars ($100) of value shall be 
paid upon goods held for sale in the regular course of business.  KRS 
132.097, &Exemption from state ad valorem tax of personal property held for 
shipment out of state8, states that  &there shall be exempt from ad valorem 
tax for state purposes, personal property placed in a warehouse or 
distribution center for the purpose of subsequent shipment to an out-of-state 
destination.  Personal property shall be deemed to be held for shipment to an 
out-of-state destination if the owner can reasonable demonstrate that the 
personal property will be shipped out of state within the next six (6) 
months.8

Therefore, aluminum on warrant or for which a written request has been made 
to place aluminum that meets the specification for delivery against the New 
York Mercantile Exchange, Inc.,s Aluminum Futures Contract on warrant is now 
uniformly taxed throughout the State of Kentucky regardless of the local 
jurisdiction in which an Exchange Licensed Warehouse is located.

Companies who own aluminum inventory at Exchange Licensed Warehouses should 
obtain professional advise regarding their particular tax situation.

Should you require any further information please contact Christopher Bowen 
at 212-299-2200 or Albert J. Getz at 212-299-2608.



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