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Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
22 March 2000
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The Newsletter is alive and well; They have come a long way; Incubators are the 'in' thing; and Urban Universities are growing with the New Economy

1. Our Customer List and Newsletters are current?

It has taken a couple of weeks but we believe that our Customer List and Newsletters are on schedule, and want to thank those that offered help to keep the presses/e-mails running.

We have been asked several times why we do a daily Newsletter, and the answer is real simple: the tax laws, and their application to the New Economy is changing daily, if not hourly sometimes, and we have to keep ourselves current. We suggest that a daily review of Red Herring, Business2.0 and Fast Company gives you the flavor of the times. The interesting thing is the lack of tax advice in these magazines, but we suggest that where there are investment transactions the taxman is not far behind.

2. Red Herring has come a long way

We have watched Red Herring since the fall of 1995/Spring of 1996 and they have told many interesting stories about the VC industry. How did it all begin? In a garage in a small town in the Silicon Valley. Fortunately the small town has the most famous breakfast spot in the valley, and the rest is history.

We like movies, and the history of Hollywood [The Motion Picture Industry was founded on the east coast but moved west in the early 1900's to downtown Los Angeles, Spring Street between Second to Sixth to be exact and then left the City of Los Angeles to the then County of Los Angeles (now known as Hollywood) because the City Fathers passed a tax on Motion Picture Companies] which is full of dreamers and schemers, as the case may be. The Las Vegas Strip was founded by a Dreamer and a Schemer, a.k.a. Bugsey Siegel, and the rest is history.

3. Incubators are in today

History has a way of repeating itself, and the Dot-Com Incubators are nothing more than the 21st Century of the American Dream with lots more zeros attached. Unfortunately the tax system is progressive, including estate and gift taxes, and thus when you add the zeros the taxman is not far behind.

What do you do when you have a privately held company that is valued at $8B? How are the shareholder buy sell agreements done when death taxes are in the Billions? What do you do to spin off the startup businesses that suddenly are worth more then the original line of business?

We suggest that the legal, accounting, banking, and insurance industries have never seen work as with the New Economy, with real estate not far behind [Have you heard of 'Bandwidth Bay,' downtown San Diego's answer to San Francisco's South of Market Area ('SoMa') and New York's Silicon Alley; purchased at current fair market values as industrial space, and soon to be 2M Sq. Ft. of Dot-Com Incubators at values of $$$$$$$?]. Check out this Red Herring article on IdeaLab for additional perspective.

As an aside, our Web Site at www.taxsavings.bigstep.com is covering all the action of Bandwidth Bay and our Gaslamp Quarter Map Page shows where the San Diego Enterprise Community Zone is for all to see, and guess what, 'Bandwidth Bay' will be in a proposed ZERO CAPITAL GAINS ZONE. You heard that first here.

4. NYU, a place we called home in 1967/68

What a pleasent surprise to open the L.A. Times this morning and see in their front page Column One an article on NYU, and it current status in today's New Economy; which is being located in the middle of New York's Silicon Alley. Things have changed in 30 years but one thing is clear NYU and the surrounding Urban Neighborhoods are in boom times with the New Economy, and creating $$$$$$$$$, high paying jobs, and revitalized historic buildings, block by block. Guess what the L.A. Times maybe telling USC, come downtown and start filling up 30M Sq. Ft. of empty historic buildings!

Jim Schneider, LL.M.

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