Tag Archives: e-commerce

Saving Taxes in the E-commerce & the Cloud (Virtual) Computer World

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E-commerce businesses are saving taxes with cloud computer tax planning.

E-commerce tax planning and Cloud tax planning uses unique tax laws.  As a result, saving taxes in this century’s cross-border business environment is easier than ever.  

Small businesses are saving taxes with eCommerce tax planning and cloud computer tax planning.  

The cloud has level the playing field between small business and big business.  Amazon is leading the way.

 Small businesses can benefit from cloud computer tax planning.  

Cloud tax planning allows big state and federal tax savings.  A popular term for this is “third wave” tax planning.  The second wave was most of last century and a little of the 1800s.  The first wave is from  10,000 BC to the late 1800s.  This explains the loophole.  Our tax laws were designed in the early 1900s.  While the laws are more complicated, the basis framework is unchanged.

We all have heard people say that things are not what they used to be.  This is particularly true in American business.  In 1910, electricity was not in the White House.  Cars were laughed at with jokes like “Get a horse!” 

Phones were rare, and there was no air travel.  U.S. E-commerce tax laws are written for last century’s business.  E-commerce tax planning provides significant tax savings.   Here is what has gone wrong for the Government and good for small business.

  Who is this man?    He is Robert Lee Doughton.   He was the powerful chairman of the U.S. Congressional committee that writes the tax laws.

This man designed and wrote our international tax laws. His education was only high school. His father fought with General Robert E. Lee (General of the Confederate States of America).  He was named after the General.  He was born in 1863. His view of international commerce was via steamship

In 1939, he wrote the international tax laws that govern today’s international taxation in America.[1]  Most of the congressional representatives who wrote the 1939 tax code were born before 1900.    Their view of the world was what you see in many silent movies … and so was their tax law.

Their idea of technology was steamships and the telegraph.  It is this world vision that governs how the U.S. taxes international business and investment today.

On this link, you can view my forty-minute of my presentation of the California Society of Certified Public Accountants on profiting from Congress’s failure to innovate.

Successful E-commerce international tax planning revolves around a major flaw in American tax law caused by the speed of change (more on this link).  

If you need to up the quality of your tax planning, then contact me, Brian Dooley, CPA, MBT, at [email protected]

[1] Congress renamed the tax code in 1986 to the “Internal Revenue Code of 1986.” As I wrote this, I realize that 1986 was just at the end the “second wave” of business. The tax consequences of leaving the economics of the second wave and moving into the economics of the third wave are discussed in this video.

 

Ancient American Tax Laws Create New Tax Planning for Ecommerce

STEAMSHIP

E-commerce’s innovation has left gaps in U.S. tax laws.  The tax savings for electronic commerce are enormous.  Congress’s ineptness in using ancient tax laws for today’s virtual world and E-commerce creates an environment where the tax laws do not fit.

Look at this change.  In 1910, electricity was not in the White House.  Cars were laughed at, with jokes like, “Get a horse!”    Phones were rare, and there was no air travel.    It is these concepts of the World that exist in the American international tax law.

Our ancient tax laws have created new tax planning for E-commerce cloud base businesses and artificial intelligent (AI) software.  And get ready for the tax haven boon with 3D printing software.

Saving taxes has never been easier for the E-commerce business.  By mere locating a cloud computer in a tax low tax or no tax country, an E-commerce business can save taxes.  Learn how cloud computer tax planning is using innovation to avoid taxes.

Below you can watch the CPAs International Tax Conference on E-Commerce and learn why these ancient tax laws are allowing significant tax savings for small businesses with their foreign corporations.

Don’t have time to watch and listen on the web (the play time is about 40 minutes)?  Then visit our iTunes page on the link.  
Get my book International Taxation in America for the Entrepreneur (at Amazon on this link) to learn more. The Kindle edition is on sale for $9.50.

Want to take your tax planning to the next level, then contact me, Brian Dooley, CPA, MBT  at [email protected]

Ancient tax laws create chaos in the virtual cloud world

Mr. and Mrs. Robert Broz won the FCC lottery in the cell phone industry and received an exclusive license to provide mobile services.   Within a few years, they owed $16 million taxes, and his company was bankrupt.  Confused?  

How can you be poor and bankrupt yet owe income taxes?  As Tax Court Judge Kroupa stated, Many issues raised questions of the first impression because transactions were structured in this ever-changing technology industry.

When ancient Second Wave  (the industrial age) tax laws meet today’s Third Wave business, either the IRS or you will be the winner.  

In this case, Mr. and Mrs.  Broz had two collisions; first using last century’s  popular structure and second,  the collision with last century’s definition of business. 

This blog will cover the first issue… using a 20th Century entity for a 21st Century business.  

The companion blog on this link covers the issue of confusion tax planners will face as wealth is created more and more by intangible assets and less by tangible property (such as inventory or manufacturing).   You will find that blog on this link.

Mr. and Mrs. Broz contributed their cell phone license to their subchapter S corporation, RFB Inc, in exchange for all its stock.  RFB acquired another license in Michigan.  

All corporations have all of the anti-small business tax law of corporation.   These laws were designed in the 1950s for publically traded companies.  In the early 1960s, Congress did a retro-fitted the law and enacted Subchapter S.  It will not be until 1997, that the limited liability company is made the best small business structure.

A corporation is like the song “Hotel California”- once you check in you never check out (tax-free).

But, it gets worse for Mr. and Mrs. Broz.  As they expanded, they created more S corporations.  Each time, they trapped a valuable intangible in a corporate cage.  

In 2003, the Broz’s, RFB and the other S-corporations  filed for bankruptcy.  The IRS assessed a tax of $16 million denying losses by applying the “At Risk ” rules and by denying amortization because the ownership of a license was not a trade or business (to be discussed in another blog).  

The Brozs’ tax team missed that money borrowed by a corporation do not qualify for the “At Risk” tax law.  

This Ancient Law (passed in 1976) was enacted to hurt small business.  When you have multi- corporations loaning money to each other, none of your investment is “at risk.”  To be “at risk” each corporation must distribute money to the shareholder who then loans the money to the other corporation.

Below is a diagram of the structure that would have saved the day for the Broz’s.

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Best small business tax planning strategy is the two member LLC as a holding company.
A husband and wife or you and a trust can be the two members.

If you would like to brainstorm your tax planning, then please call me, Brian Dooley CPA, at 949-939-3414 for a free one-hour consultation.

How to save Taxes with Virtual Tax Planning in the Cloud Tax Haven

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Saving taxes with the cloud based business requires innovative tax planning,

So little written on tax planning for the virtual world  (today’s artificial intelligence,  e-commerce websites and big data computer systems).

Virtual business tax planning is virtually nonexistent.  Yet, the tax savings are huge for a business in the cloud. Special tax laws allow a controlled foreign corporation to avoid taxes when the cloud server is located outside of the U.S.

For example, placing the computer server in a tax haven can create tax-free income

 Currently, Canada is an attractive tax haven for the international eCommerce cloud business. Other countries include the Isle of Man and Cyprus.

If you live in a high-income tax state, such as California, you might want to place your computer server in Nevada.  This is an easy way to save on state income taxes with the right type of corporation.

Learn how to save taxes with international tax planning at that the California Society of CPA’s continuing education video below.

How do you save taxes in the virtual world?   Well, envision a world with no electricity, no cars and radio.  American international tax laws apply.to this world and not the cloud computer world.

Men born in the late 1860 and 1870 wrote today’s international tax laws in 1939.  Despite the thousands of new tax laws, the international tax laws remain unchanged.   These ancient tax laws provide tremendous tax savings for e-commerce businesses and cloud base businesses.

If you want to learn creative virtual tax planning, call me, Brian Dooley, CPA, for a free one hour brainstorming conversation at 949-939-3414.