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Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
28 July 2000
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The Kids Will Rule; What Is An Intangible; How Do We Develop Affordable Housing.

1. The Fall Out From the Napster Decision Is Clear.

Millions of kids are on the war path and web sites to swap music, film and other things are being put up by the hour. It is clear that what was started by a few college students has gone mainstream. See: New York Times Technology and The Industry Standard for the latest on this dispute.

What is interesting is that this week also brings the concept of Webcasts into mainstream with the upcoming Republican Convention with many websites covering full time with various camera options. See: C-Span.

If we are correct the world has changed within days, and the day of real Internet Commerce has just begun. Where that Internet Commerce is located is one of the hottest topics amongst the taxmen, and the creative ones. We suggest that Congress and the White House is giving us the answer. See the discussion of where a foreign sale takes place under legislation adopted yesterday by the House Ways and Means Committee with full support of the Clinton Adminstration.

This Tax Bill may be one of the most important for those interested in Internet Sales, whether local, state, national, or international since it provides the quidelines for NEXUS. As Chairman Archer stated: "...This is the most important tax measure the Committee will pass this year...." We agree.

Will H.R. 4923, "Community Renewal and New Markets Act of 2000" and Section 206 therein [Roll Over of Empowerment Zone Investments] change the business world, effective in September 2000, we think so if this article says anything. Ideas are hot, and launching them in the Los Angeles Federal Empowerment Zone may be the place to do it.

Our Home Page lays out the new Roll Over rules [IRC Sections 1397B and 1400F], effective in September 2000.

2. What Is An Intangible?

The same tax bill referred to above also discusses what is an Intangible, and clearly excludes music, film, software, and similiar items, like Webcasts.

3. How To Develop Affordable Housing?

If affordable housing is a major factor in keeping quality employees, as seems to be the case, then the IRC gives us the answer: make it part of the employees fringe benefit package just like medical, educational, etc. Just make sure you follow the rules of IRC Section 119, and bring the Employer's Business Premises into the home, or as the L.A. Times said yesterday, LIVE AT THE OFFICE.

Jim Schneider, LL.M.

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