Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
24 March 2000
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What do Tax Attorneys and Tax Accountants do; Do you want to take your Home Office Deduction?; We like Movies, so does everyone else; What is a Dot Com Incubator?
1. In 1976 to 1986 we had the tax shelter decade
In 1969 Congress was concerned with five [5] years prepaid interest realestate programs, in 1976 they were concerned with tax shelter schemes, including upfront deductions; and in 1986 they killed them, or did they? For those who would like to see the discussion of the history of tax shelter schemes in living color by one of the country's leading TaxGurus we suggest the following:
More importantly is the current discussion by Congress, the ABA Tax Section, and others about purported Corporate Tax Shelter Schemes.
2. To take or not to take the Home Office Deduction if you are a homeowner?
In Gary W Carter, CPA, Ph.D, MT's Taxes Made Easy for Your Home- Based Business he devotes two whole chapters and pages 91-155 in the 2nd Edition to take his readers through the home office deduction drill, and his 3rd Edition is the same.
Paul and Sarah Edwards, the home- based business Gurus do the same, as to do many others. What they are saying is that beginning January 1, 1999 IRC Section 280A was changed and now it is easier to take home office deductions, after the Supreme Court had earlier made it more difficult in 1997.
Now comes the L.A. Times Personal Financial Columist to tell us not to do it, and how not to do it.
What's the problem or the opportunity if you will? Two things she says: one is the Tax Audit Risk, and two the loss of a portion of the homeowners' $250,000 gain exclusion, $500,000 if married, and recapture of the depreciation taken. What if you are trading up from $400,000 home to $800,000 home that you purchased for $125,000 and have $500,000 gain What if it is a trade up to $1,200,000? The gains exlusion may or may not work well. But if you have a home that you paid $135,000 and it is now worth $1,000,000 and want to tradeup, then what? The taxman may have won the war!
What is interesting is whether Kathy M. Kristop is an employee of the L.A. Times or an e-lancer, and if she may have other income from speeches, lectures or books, a web site, and what her children do to help her work. More on that later.
3. The Oscars are coming, the Oscars are coming, and so is the Final Four, WOW!
If you want to see the Oscars on Sunday it is on ABC but the real action, according to the LA Times, is on the web!
More importantly it is no longer just for the big guys, says Brian Grazer, one of the partners of Pop.com. (These CalendarLive.com links, here and here, have the details.
The little guys are making noises with their desk top 'movie studios' and the big guys are listening. And the home-based business world will never be the same, notwithstanding whether the home office deduction could, would, or should be taken.
4. Dot-Com Incubators and Venture Capital used to be a business story now it is Page 1
Today's L.A. Times Front Page Column One, says it all , Venture Capital--the New Gold Rush. Forbes Magazine [April 5, 2000] says it again. That issue also covers the interesting topic of the $100M CEO!
What we find interesting is the lack of any discussion on the tax aspects of all this excitement. From our point of view it suggests that the New Economy is growing and will continue to grow, with many of those Dot-Com Startups beginning on the desk top computers and high speed internet. So let the games begin.
Jim Schneider, LL.M.
Taxman86
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