Sohodojo Advisory Board Member
Jim Schneider
The Taxman86 Speaks...
15 April 2000
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Bigstep is alive and well; Clinton-Gore like the Silicon Valley; and the Taxman keeps taking.
1. We thought Dr. No had taken over Bigstep, but now we know it was a "small glitch," and it is fixed.
As all may know Bigstep was closed from the 12th to the 14th but it is back up again, and so is the Taxman86 Speaks. Unfortunately the stock market has been open for all to see and feel. Will that stop venture capital from flowing? Not in San Diego if the headline, IdeaEdge's Goal: to make S.D. the hub of Internet tech. is to be taken seriously, after this week's 'Black Friday'. Los Angeles is not far behind with Idealabs, the father of Dot-Com Incubators says the L.A. Times.
However, we believe in the concept that tax savings begins at home, or to put it another way, capital raising begins at home. Thus we were really pleased to see on the Front Page of the Wall Street Journal yesterday that Urban Renewal Tax and Financial Incentives Legislation will be before the House in early May. What this means, if we read the tea leaves is the concept of "ZERO CAPITAL GAINS ZONES," as is now available in Washington, D.C. will be coming to 100 Community Renewal Zones next January. It will also mean $65,000 in IRC Section 179 deductions, and other things.
2. The Dot-Com Money keeps flowing.
If there is a legacy for President Clinton and possibly Al Gore it is that Venture Capitalists have done well during the Clinton-Gore Administration and now they are paying back with political contributions. In our opinion the seeds for this venture capital revolution were started at a similar fundraiser in the fall of 1992 according to the then new startup magazine Red Herring's Premier Issue.
IRC Section 1202, effective for all Qualified Small Business Stock issued after August 10, 1993,and IRC Section 1045, for all sales after August 3, 1997, is the Venture Capitalist's dream come true, NO TAX on the sale of Qualified Small Business Stock after only a six month holding period.
Is it possible that IRC Section 1045 could be amended to include Enterprise Zone Business, so that we can look back in 2005 and say that the Clinton-Gore Legacy also included the revitalization of distressed communities? We hope so.
3. The Marriage Penalty lives on for home-based businesses.
As everyone finishes their 1999 tax returns or files for the automatic four month extension, it may be time to compare the Republican vs. the Democrat versions of the Marriage Tax Penalty issue again.
- 1. President Clinton supports giving married couples two standard deductions;
- 2. The House-passed bill allows double standard deductions, and double the amount subject to the 15% Bracket, for married persons filing joint returns;
- 3. The Senate Finance Committee has jumped into the 28% bracket with a doubling of the amount that qualifies for married persons filing joint returns.
Missing in this debate is the reason we got there in the first place, and that is the issue of Community Property vs. Separate Property, and the beat goes on. Hopefully we will see if Home-based Businesses owned by married couples gets a tax cut this year sooner than later. Congress intends to pass major tax legislation on or before July 15, 2000, which will include the marriage penalty, the Small Business Tax Cut Package, and Urban Renewal Tax Incentives.
Jim Schneider, LL.M.
Taxman86
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