Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
10 July 2000
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The Death Tax Repeal is in play; When is a home-based business not a business; What is Nexus for tax purposes; It is the New Economy--Hollywood style; Tech Coast where art thou?
1. The learned ones go to work this week.
"...Senator Roth says Republicans, too, think there is enough money for a sizable tax cut, a prescription drug benefit and a steady reduction of the national debt. He said that as he traveled through his home state, he found considerable support among voters for acting now to repeal the estate tax and to cut taxes on couples..."
2. "Bill on Sharing State Tax Data...Home Business."
The Writers Guild of America and their 5500 members are fighting a pending bill to share state income tax data on 260,000 Los Angeles businesses to City of Los Angeles which only reports 200,000 [the missing 60,000 appear to be home-based businesses] says the L.A. Times, unless they are treated as employees working at home.
"...The bottom line is that the home-based screenwriters want to declare to state and federal authorities that they are a business...but they want the local authorities to treat them as employees..."
If this article is correct then someone is giving the screenwriters bad tax advice, as may be the case for those who follow or participate in the Guru.com Program or other web sites dealing with home-based consultants. IRC Section 280A, the home office deduction provision clearly requires "an exclusive location," which may not be the case if you are using your wireless laptop in the living room, poolside, or kitchen, as seen in many ads.
We suggest that the home-based business be incorporated, file its business license properly, and lease it facilities from the key employee and off you go into a proper taxpaying situation, from the City of Los Angeles or any other jurisdiction for that matter. [As we have said before, the issue under IRC Section 119 is where the business premises are, which gets complicated when telecommuting gets involved. See: "Telecommuting as a workplace carrot," in the N.Y. Times, July 9, 2000; housing as a perk is not far behind.]
3. Nexus is important for e-commerce taxation.
The Internet has allowed local businesses to go national and international with their Web Sites and the tax issues are very important. Tax Analysts, Inc., a not for profit corporation has made their e-commerce report available for free. We suggest you sign up and type in the word "Nexus" into the Search Engine and check some of their reports including #5 on May 18 , 2000 dealing with setting up separate corporations in non taxing jurisdications such as Delaware or Nevada, to name a few. Is it possible to have all internet sales be handled in a separate corporation with the profits from such sales allocated to the jusrisdiction where the Internet Sales Corporation is located, we think so, and so do many major corporations.
4. Some people are always working, including at home.
We suggest that Jay Leno's schedule is more typical then one wants to know, it is just that his employer, Jay Leno Productions, Inc. provides better amenities. If your schedule sounds like his, form your own business corporation and go for it. [Why does he do his principal work at home-based office?]
5. Something is happening to Edge Cities, Mr Kolkin.
Irvine is cold, and Marina del Ray is hot, we do not believe it. Orange County California is high tech, the problem is that it is too spread out and the traffic stinks. Is it possible that San Jose, California is the center of the real world vs. Irvine/ Tustin, California, not for long, see below.
Marina del Ray, has anyone tried I-405 recently, from Burbank/ Glendale to Southbay, to downtown or Pasadena? The best part of this article are the stats on employment with the entertainment industry exploding in Southern California as it goes high tech or politics, if you will.
[Is it true that Disney, Apple and PIXAR are merging? The Drudge Report(R), in a world exclusive, suggests they are talking. My, my, Apple's QuickTime 4.1.2 technology (50M computers) have it, and Streaming Webcasts may be coming sooner than later. If you do not have it, get it free.]
What will happen when someone realizes that Tech Coast Venture Network is only one-half mile from the Santa Ana Empowerment Zone at 195 South C Street, Tustin 92780 near the Hyway 55/I-5 interchange which links Irvine, Newport Beach, South Orange County, Santa Ana/Anaheim and Los Angeles [the boundary is north side of Hyway 55, from I-5 to I-405 at the John Wayne Airport, which is also within one-half miles], the real sleeper in Southern California.
Will a ZERO Capital Gains Zone in the City of Santa Ana bring out the VCs and high tech, we think so, and if the lead story in the July issue of FSB about CEO's & capital on the web at Vcapital.com $45B from 205 VCs at one location, or at meVC.com they will be moving into the area sooner then later, coffee houses or not. In short Highway 55 between I-5 to I-405, and all the major cross streets betweeen Santa Ana, Tustin and Irvine, will become the equivalent of I-128 for the West Coast, with a major Airport 10 minutes away; you heard that here first.
Jim Schneider, LL.M.
Taxman86
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