Jim Schneider's Home-based and Small Business Tax and Investment Resouce site is no longer active at Bigstep.com!

Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
05 July 2000
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As the New Economy Turns; Equity Kickers are important; Where are we going; Wealth Taxes/Death Taxes, the end is coming.

1. What will they think of next?

We are a fan of the New York Times, and one of their sponsors, the J&R Music Company. Suddenly we got an ad on our screen when reading the On-line version of the Times, and checked it out; what a surprise, we could become an affiliate of J&R Music Company if we had a Web site.

Then we found the Linkshare Network and a whole new world opened. Check out their press coverage to see their growth pattern over the last two years.

As a tax lawyer who has watched the home-based business industry mature from a questionable hobby, Amway or Tupperware, notwithstanding, if you believe the IRS, to something where the highspeed computer, highspeed internet, and a web site are common place in multimillion dollar home-based businesses, the Linkshare Program is something to behold.

Your Web site becomes an instant 'distributor' for hundreds of products; your favorite charity or school football team, with a Web site, becomes an instant fundraiser for whatever product you can imagine, including our favorite Martha Stewart.

More importantly, you suddenly get a substantial discount, if you get the commissions on your own sales [that may be taxable by the way?], save the sales tax, and even get free shipping in many cases. The Master Seller, if you will, may even be shifting significant income to low tax jurisdictions, such as Nevada, Texas or Deleware. We suggest you read the J&R Music Company's Affiliate Contract to see how that is being done.

[Just as we did with Bigstep.com on web sites, which we think is key to starting a home-based business (Bigstep has jumped into the "Incorporation Business" through their Business Resource Center), we decided to see how the Linkshare Network works, and joined in with the owners of Ralphs, if you cannot fight them join them we are told, and have added a Checkout.com banner to have some fun].

2. Equity Kickers Are Important.

Incentive Stock Options [ISO], Non qualified Stock Options [NQSO], Stock Plans, Restrictive Stock are in many compensation packages today and we have laid it all out for you to see in Equity Kickers in the New Economy.

If you do not think Equity Kickers are important check out the hot list of executive compensation in today's L.A. Times, and try to guess what the Aternative Minimum Tax [AMT] may be or in many cases ordinary income.

3. The lawyers always win out.

If you want to see where the real profit is going to be in the New Economy, check out this front page article in the Business Section of the L.A. Times, it is a must reading. Or, if you want it from the Silicon Valley's point of view, look here.

Yesterday there was a follow up on: Internet Swap Shakes Music Industry, in the L.A. Times Cutting Edge On-line.

Then check out the rush into Class B and C Buildings in downtown Los Angeles Historic Core. Internet/Dot-Com Companies are coming to downtown Los Angeles.

Then check out the next 'New Economy', as seen by some real thinkers and from "The Guru" of guru.com, Dan Pink "...Exclusively for Free Agent Nation eNewsletter subscribers I'm making available a draft of Chapter Three --- "How Did it Happen?: The Four Ingredients of Free Agency". This chapter briskly examines the causes of the free agent revolution. ...You can find it here until July 25." His FREE AGENT NATION eNEWSLETTER Independence Day 2000," is something special, check it out.

If you read the above and believe in urban living, then something major is happening, and it is all coming together with the Distressed Communities legislation, Death Tax Repeal, and Retirement Planning Reform, to wit, bigger retirement plan contributions for the self-employed crowd, who may be coming downtown in their home-based "entertainment/content" business to enjoy all the good things in a tax favored environment.

4. Wealth Taxes or Death Taxes, changes are coming.

The House Ways and Means Committee passed H.R. 8 "Death Tax Elimination Act of 2000," on May 25, 2000 with bipartisan support which caused a small ripple, then it passed the House on June 6, 2000 with more bipartisan support, and the ripple became a big wave. Now "The Perfect Storm," from a tax lawyer point of view has arrived, that is: S 1128 IS "To amend the Internal Revenue Code of 1986 to repeal the Federal estate and gift taxes and the tax on generation-skipping transfers, to provide for a carryover basis at death, and to establish a partial capital gains exclusion for inherited assets. IN THE SENATE OF THE UNITED STATES May 26, 1999. " It is similiar to H.R. 8 and has 30 co-sponsors including 7 Democrats and will be on the Senate Floor on July 11, 2000 for all to see on C-Span. This along with the Marriage Penalty Relief Act of 2000 will be very interesting to see, and it's all free. The spin in Washington, D.C., is that something big is happening in the month of July, 2000.

Jim Schneider, LL.M.

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