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Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
02 April 2000
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Where is San Francisco's Pacific Bell Park?; Should I file a Gift Tax Return; Should I move to Nevada with my Silicon Valley Stock Option; Everyone has a Web Site, including Tracey Ullman and Jennifer Aniston.

1. Downtown San Francisco is alive and well with Baseball.

Today in the front page of the San Diego Union Tribune is the article, The house the Giants built a Privately financed park eluded lawsuits, delays, public rancor, by Phillip J. LaVelle and if anyone cares, it is close but not quiet within the San Francisco Enterprise Community.

Meanwhile, in San Diego, the City is financing the new San Diego Padres Baseball Park and Entertainment Project, which will include 26 blocks of retail, office, residential and hotel space all within the San Diego Enterprise Community.

Who has got the better deal, the ballclub, the city or the fans?

2. Wealth is being created like never before and taxman wants his share.

On the front page of the New York Times is a must read article on the issue of passing wealth, while alive, by way of gifts.

Chapters could be written on the issues raised by this article but some points are very clear:

  • 1) Always make gifts so that Gift Tax Returns are required, and file them so that the 3 year statute of limitations starts running on valuation issues [$10,010 or $20,020, minimums, as the case maybe]; do not make gifts over $1M if you do not want an audit [Proposed Adjustments, on average are 33 1/3%, plus interest], and if possible make them below $300,000;

  • 2) Get Appraisals on gifts that will stand up; and 3) Make gifts early before the values have gone through the roof. That means watch out for proposed legislation that makes things more valuable.

Creating a C Corporation, in a Community Property State, with the transfer of a small percentage to children is the wise move, thus leaving each spouse, as the case may be, with less than 50%. Transferring additional shares of a minority interest, with values of $10,010 to $290,000 can then be the smart move, with appraisals, from an audit point of view.

3. I want to exercise my $3M Stock Option and retire, can I go to Nevada and retire?

This is a very interesting issue, especially as to the Alternative Minimum Tax on the exercise of the option but before the sale of the acquired stock. We suspect many new millionairs do not have the ready cash to pay the state or federal income tax on exercise, and thus must sell the stock immediately if possible, which then triggers ordinary income. How quickly can they move to Nevada?

If that does not excite you, maybe income stripping will. This is stuff that makes creative tax advisors stay up at night.

4. Vanity Fair's Hollywood 2000 Issue is all about Dot-Coms.

If you have not seen the April 2000 Hollywood 2000 issue of Vanity Fair, especially as to "The Heavenly Body'--Jennifer Aniston...Gently transitioning into film..., in addition to continuing on Friends, she'll produce and star in her own series on Voxxy a fledgling Internet Channel for girls..." you have missed something special. More importantly the Southern California fashion industry is not far behind, with persons like Tracey Ullman and partners with their Purple Skirt just the beginning. Next we will see the stars, their fashions, and their Web Sites at all the key functions, live, by Internet, for all to see. The New Economy is alive and well.

Jim Schneider, LL.M.

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