Life is Simple & Easy

Mr. SEO Eschews Content
Someone said "your front page reads like a book report." I replied that simple alone is most potentially misleading especially for complex topics. "But," implies Mr. SEO, "the simple, attractive words draw attention from those who would rather have unpleasant things to happen, than to either acknowledge the details or take time and effort to plan against unpleasant things, and that the vast majority of those who might acknowledge & plan, are simply too uncaring or lazy to read the warnings.  People crave simplicity even where it does not exist." But I say that it is generally known in our society, the existence & publication of the warnings have an beneficial effect, even if ignored.

A Listing of the Overly Simple, with warning paragraphs after each one:

 

PROTECTING THE INVENTOR

Usually the inventor won't listen. My approach to defending inventors, on the rare occasion when they do listen, is with instructive suggestions regarding the following:

Protect the inventor from dangerous& harmful agreements & relationships with others.

Optimize initially to avoid a need to unwind licenses & agreements harmful to the inventor.

Avoid trademarks that will cause personal & business liability& conversion cost.

Entity Selection driven by asset isolation& risk diversification.

Evaluating production versus licensing for instant capital gain versus bankruptcy isolation.

IRS sale/license rules& control versus passive status.

Ordinary income versus self-employment income; inventory versus investment.

Isolate & optimize sales tax liability; opting not to charge sales tax re: T&RC 6829.

Residence & Domicile of principals to reduce tax liability & increase after tax profit.

Residence & Domicile of business for distribution& employment efficiency.

Preparing for sale of a separate line of business; tax history & voidable preferences.

Never put a patent inside a business entity unless performing bankruptcy planning.

Programming & analog alternatives to overcome 101 statutory subject matter rejection.

Licensing carrot & stick technique to encourage sales while reserving sale &  re-license.

Analyze "Prolific Inventor vs. Unitary Business" to enable best future opportunity.

Arbitrage driving force between Internal Revenue Code 174 & 1235.

Consider & compare operations in California, Oregon, Nevada, Arizona, Texas  & Florida.

Isolating the inventor, business& assets to prevent abuse by lenders& investors.

Analyze foreign factors: revenue repatriation, transfer pricing, need for foreigner to file in U.S., & withholding agent, RE: (FDAP)(TIN)(FIRPTA) (FBAR) & (FATCA).

Analyze & warn regarding adjunct nonprofit entities for improper relationships.

 

Finishing the Invention is Easy

Finishing the invention is easy if you are completely obsessed about it. You find yourself dining with it, you dream about it, you are completely consumed with your invention to the exclusion of all else, and spend 24 hours per day researching every possible variation that will improve quality and reduce cost. After you can verify the existence and maintenance of obsession, jotting down a spread sheet of how to manufacture, material specifications, materials cost, labor time expense, machine time, testing, distribution topology, import-export cost factors, the cost of production at 10,000; 100,000; 1,000,000; & 10,000,000 units produced, the next most available product, materials and manufacturing available, a list of importance of each structure or process that enables the product to actually BE BETTER and listed in order of importance, have attended all the world-wide trade shows on your product, have a complete list of every potential manufacturer for license and every possible competitor as well as a listing of the important players in the potential manufacturers and competitors world-wide, a plan to introduce the product, market test the product and get feedback before your corporate entity configuration has committed you to any liability, and to complete this single sentence, you know essentially everything about your inventive product, how to make it, distribute it and sell it.  See? because you are already obsessed, all of the above elements just fall onto the paper while you are busy feeding the obsession.  You won't be one of those callers with a homework problem  for a licensee, rather than a real, obviously money-making product.

 

 The Glide To Monetary Exploitation Is Swift

The glide to monetary exploitation is swift if an entrepreneur runs at light speed to maniacally finish the tasks necessary for inflow of income.  After finishing the invention, preparing a complete patent application capturing each and every technical value structure relationship and step in the new product and filing a regular patent application the start of the exploitative path will have been marked. The path to monetary exploitation and the glide to and through it at light speed through a chain of preplanned after-filing tasks will include submitting an application to insurance, using the articles and illustrations you generated in the month before filing, including the short, medium and long stories and photograph sequences so that the proficiency in getting placement in trade magazines will be facilitated. Swift contact and follow-up with trade publications and potential licensees will be performed, preferably with a trade show meeting venue within 3 months of the patent filing date to save transportation expense and encourage potential licensees to bid against each other.  The swift timing will be further stimulated by the completed spread sheet prepared during the period in which the invention was finished, and will reflect an exacting profit for the level of production and sales projected, with a decision algorithm as to the manufacturing returns versus royalty returns upon which a decision will be made to elect royalties or to elect self-manufacture.
For the royalty route, swiftness will also be aided by a policy outline concerning a preference for active, passive, exclusive, and sale treatment that will have already been explored, along with the resulting tax result for each of the treatments. Policy issues that will also be at the ready includes responsibility for infringement, the treatment of improvements, the cooperation in joint researching of improvements with licensee staff, creating and filing security interests, steps to avoid or minimize licensee bankruptcy, and a schedule of royalties that follow the expected market penetration and maturity, actions reserved to check the books and manufacturing of the licensee, to name a few.
For the self-manufacture route, swiftness will be aided by plotting a path from initial production and sales to steady-state production and sales, including an examination of milestones at which outsourcing is efficiently brought in-house, distribution systems including the logistics and cost of site of manufacture, site of distribution, sales volume, entity function differentiation to preserve personal and corporate assets and survivability, minimize tax and operating cost.
Actions in both paths are measured against other personal income maximizing decisions regarding individual involvement, selling separate lines of business, further innovations in the manufactured product, new products inside and outside of the field, synergy of new introductions and business, the prevailing interest rates, and whether the entrepreneur is oriented for serial creation or operation of a single industry growth as the best path for such income maximization.

 

FREE BANKRUPTCY

Our government provides pro se bankruptcy filing with no fee as a possibility where the bankruptcy filer has an income less than 150% of the income official poverty line applicable to a family of the size involved. See 2016 Table. For a one-person family, for example, the free, no cost bankruptcy filing is available if the bankrupt earns less than $1485 per month in 2016. See Procedures


 California Nonprofit For $110 In Government Fees

The breakdown on the $110 government fees spent for the smallest nonprofit includes fee to the Secretary of State to register the Educational non-profit corporation $30, FTB (Franchise Tax Board) Request for Exempt Status $30; Secretary of State Statement of Officers $20; Atty General's Charitable Registry initial registration $25; and Postage $5. Later annual recurring fees depend on annual budget level, & a de minimis budget causes average annual government fees to $10 per year as amortization of the statement of officers due every two years. High budget & / or a need for federal exemption applications will require higher and additional government fees. Articles of Incorporation, Bylaws, Attorney General Registry, Officers Statement, Tax ID, State Exemption Application should be prepared and tailored to the strategic & planning purpose needs of the nonprofit. Additional narrative with other factors appears in my LinkedIn Article: https://goo.gl/4N7rPp

 

 Utility Patent $400 Filing Fee

The micro entity government filing fee of $400 requires a statement of compliance that will generally require the filing to be one of an inventor's first four in number and an adjusted gross income less than a multiple of periodically determined median income limit. Income tax filing status and community property state residence may affect the limit. There currently are other government fees for issuance.

 

 Never Pay Tax Again

Two basic methods (1) stop earning & having assets or money or (2) use the IRS expatriation form 8854 (https://goo.gl/z6Teh1). In both methods its good to keep filing returns because it helps to keep a record.  For method (1) Zero dollar tax returns creates a record verifying your report of no income and its not as challengeable , if true, after 3 years. Method (2) requires a theoretical one-time tax computed on an "as if you property were sold, what would the taxable gains be?" basis. IRS wants that last tax return as you expatriate. Method (2) also requires an annual filing because the government doesn't trust expatriates to refrain from sneaking back into the U.S. and living illegally.  Method (2) can be more beneficial if you choose a country to live and work that does not have an income or property tax.  Warning, you may not be as able to use method (1) in the country to which you immigrate in method (2) because most countries don't have the prohibition on "head tax" found in the U.S. Constitution.

   

 Preparing Your Own Tax Return Is An Easy Winner

There are a number of reasons that everyone should prepare their own tax returns:

 (1) A paid preparer, even if they are an attorney, waives all privilege as to your interaction with them.  The paid preparer, regardless of their professional license status, can be called upon to testify against the taxpayer.  (see  Loss of Privilege on Tax or Bankruptcy Filing )

(2) There are preparer penalties that make paid preparers unwilling to take positions in favor of the taxpayer.  Preparer Penalties are in addition to other penalties, so using a paid tax preparer just increases the total penalties that may be assessed against your case.

(3) Paid preparers defend against preparer penalties by "throwing the taxpayer under the bus." by showing that the taxpayer swore, authorized, and verified the return position that triggered the penalty.

(4) Preparers are generally required to file electronically.  Problems include: (a) electronic returns can be not completely filed and / or rejected by the IRS to create a very messy proof problem for the taxpayer; (b) electronic returns restrict what can be sent to IRS, including documentation, messages, Form 8275 disclosure, and much more. Taxpayers that cannot make an advance showing to IRS have a much higher probability of triggering a completely unnecessary audit.

(5) A taxpayer that prepares his or her own return will lack the cooperation of another person required to make a charge of conspiracy to defraud IRS (18 U.S.C. 371).  A situation with a paid preparer might result in the government charging a conspiracy to which the paid preparer responds by kicking the taxpayer even more severely under the bus. In the worst case, a paid preparer is someone that will help the government punish the taxpayer.

(6) A taxpayer that prepares his or her own return will keep better and more organized records. Each preparation and filing of a tax return is an opportunity to organize records that will be used in an audit defense.  Most paid return preparers don't go deeply enough into the computations upon which the data you give them is based.  By taking responsibility to be prepared for an audit, the taxpayer is more likely to retain, organize, and have the documentation prepared for an audit should an audit occur.

(7) Completeness. The average service client wants to throw the minimum loose data points at a service preparer and have the service preparer forge it into a an unchallengeable shield. This never works. The compromise is usually an attempt to force the client to fill out a "intake sheet" to try and glean a few more data points that the client doesn't want to tell about to begin with and are usually happy to hand it back in blank (which the preparer will use later on as evidence of an indication that the question had a "no" nor "null-set" answer.

(8) Proof of filing, including a proof of all materials sent requires a cover letter outlining all of the items included and a proof of mailing (such as express mail) number on the transmittal letter in order to be double-sure of the proof that you need in the event that the IRS (or state agency) loses your tax return. The key is the taxpayer's ability to prove that it was filed, and not whether the IRS lost it or not.

(9) Better management and optimization of the taxpayer's own life and finances. A taxpayer that prepares and files their own return will have more involvement and will have a better knowledge of, and more control of their own life and business.  The reality of reviewing their own records may lead the taxpayer to make decisions that can enable them to be even more prosperous next year.

  (10) If a taxpayer had the unfortunate experience of having a long time preparer, that preparer has 10 years of knowledge of the taxpayer's operations, practices and habits and can provide even more formidable evidence against the taxpayer. Even though there is no privilege for any tax preparer, and it makes no sense to use a paid taxpayer, it makes even less sense to keep using the same paid tax preparer that was used in the past.

(11) In some cases, a paid tax preparer will take a bad position on a small dollar arguable point, like a home office deduction, in order to trigger an audit so that money can be made by representing the taxpayer in an audit.  Audit representation by the preparer is problematic because (a) the paid preparer is defending the paid preparer's own potentially erroneous work in the return (and thus a conflict), and (b) if the taxpayer had excellent evidence on the issue, it would have already been included with the taxpayer's self-prepared and self-filed tax return had the taxpayer filed on his own, but again, because of the requirement to electronically file, this information was not included with the return.  The combination of the above enables preparers to set themselves up to create the audit and to represent in the audit showing the materials that would have otherwise been submitted if the return was self-prepared and self-filed.

(12)  Privacy may be waived by voluntary disclosure, so keep sensitive documents, tax information, identity information off of computers that are connected to the Internet.

(13) In the event of an audit or other adverse action, the biggest danger is for the taxpayer to speak with the tax authority.  Only a hired attorney with a power of attorney can limit inquiry in the most sensitive cases. Enrolled Agent and CPA privilege under U.S. Code 7525 are limited to situations that have no danger of becoming criminal matters. Every taxpayer thinks that their relationship with IRS cannot go criminal, but they are wrong.  Violations that are ancillary to tax often accompany tax prosecutions, including structuring, money laundering, bankruptcy crimes, conspiracy, obstruction of justice forgery & fraud.  Past acts and convictions can be used to add years to any sentence imposed.

 

 Defend Your Own Criminal Case

Fighting a criminal case without a lawyer is a constitutional right. At the federal level, this right is additionally guaranteed by statute. "28 U.S.C. 1654. APPEARANCE PERSONALLY OR BY COUNSEL. In all courts of the United States the parties may plead and conduct their own cases personally or by counsel as, by the rules of such courts, respectively, are permitted to manage and conduct causes therein." This is also known as "pro se". Cases guaranteeing this right include Rivera v. Florida Department of Corrections, 526 U.S. 135 (1999) and Faretta v. California, 422 U.S. 806 (1975). The state cannot force an accused to be compelled by the courts to either pay or accept the assistance of a lawyer.

 


Copyright (C) 1996-2017 Harrington & Harrington ~ All Rights Reserved