We are general counsel to Color Art Inc. and acted as special tax counsel to the company in the transactions discussed in "A Perfect Pass" (June). I am writing to clarify the tax implications, some of which were blurred, in the description of the transaction in your article.

Bob Reim and Gil Lorenz were able to have their redemptions qualify for long-term capital gains treatment, because much of the stock owned by each of their children was owned by both the child and that child's spouse, not because of Bob and Gil's joint ownership of their stock with their wives, as you seemed to indicate. In fact, that was irrelevant. Because there was little guidance on how the Internal Revenue Code's so-called attribution rules would be applied to stock held jointly by a child and a child's spouse, Color Art, Bob Reim, and Gil Lorenz, represented by us, requested a private-letter ruling from the Internal Revenue Service. After lengthy scrutiny and correspondence, the IRS ultimately granted the ruling. It was this ruling -- applicable to no one other than the parties to whom it was issued, and to them only in the case of the specific transaction at hand -- that permitted the transaction to be consummated without Bob and Gil having to agree to cease active involvement for 10 years.