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Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
20 July 2000
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Boulder Colorado is High Tech and Open Space; The Compromises are coming; The Garage Band is here to stay, and it is cheap.

1. San Diego vs. Boulder.

The University of Colorado and downtown Boulder are just several miles a part and the two are alive and well. The City has Open Space. San Diego has Balboa Park and many canyons, and lots of open space. Boulder's High Tech is near downtown, San Diego's is not. San Diego has an Enterprise Community, Boulder does not. San Diego is all Freeways, Boulder is surface streets, and the Pearl Street Mall, which is one of the most beautiful street [the urban parks on this street are something to see, and the new buildings added to the historic ones are quite outstanding] we have seen in many a day. Bookstores are all over the place, and kids galore playing in urban parks with their parents, all on one street.

2. Speaker J. Dennis Hastert is the politician.

The Marriage Penalty Reform will be passed tomorrow in the House and Senate, and will be effective this year. It will phase in the two single wage earners vs. a married couple at the 15% Bracket. The 28% Bracket, as passed by the Senate, was dropped. Pension Reform passed the House with very strong bipartisan support [401- 25]. The Repeal of the Social Security 85% inclusion Bracket for incomes over $44,000 [married] and $34,000 [single] at a cost of $42B over five years [that is a biggie] will be passed by the House Ways and Means committee today.

Based on the above it looks like the compromises may be forthcoming, with earlier effective dates, with House Speaker J. Dennis Hastert leading the way. The Pension bill is big time for those over 50 and for those who have Home-based businesses. They will have the ability to borrow from their retirement plans.

3. The Home-based Business Industry will never be the same.

A graduate from UCSD's Computer Science Department stated MP3.Com two years ago and the music industry has never been the same, with garage bands coming on line all over.

Today it is Napster and the ones to follow, that are being called P to P companies. "...The genie is not only out of the bottle, but the bottle has been dropped and broken," said Michael Robertson, President of MP3.Com. [It is the cost that is causing all these changes with Apple raising the bar with an 8' CUBE high power computer for under $1800 that will be on everyone's desk, with M/S Office 2001, and a 22' wide screen for DVDs this fall, you heard that here first.]

Just like the fight over internet sales taxes, on-line gaming, and now entertainment, the world has changed, and the international taxing authorities, let alone the state and local taxing authorities are totally at a loss to keep up.

Just as in the Entertainment Industry, the VCs are feeling the effects of the Web, and the need to move things along faster.

Is it possible to start a home-based C Corp. and raise your first equity capital, from family and friends plus your annual personal tax savings [$12,000 to $50,000], and then seek outside investors, a.k.a. angels, all on-line with a do it yourself kit that meets federal and state securities private offering standards, and thus avoid the incubators? It is coming, all on the WEB, sooner than later.

Moreover, it is also clear that more angels have IRC Section 1202 Qualifed Small Business Stock [QSBS] and are looking for IRC Section 1045 Capital Gains Free Roll Over possibilities, to wit, small C Corp. home-based business startups.

Jim Schneider, LL.M.

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