Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for September 24th, 2003

Going To The Source Of Spam

Posted by taxguru on September 24, 2003

There has been a lot of news coverage of the recently signed law in the PRC that will supposedly penalize spammers $1,000 for each message they send. Enforcing that new penalty, which is supposed to take effect 1/1/04, against the scumbags who churn out the actual email will be difficult. What has more potential than hitting those spawns of Satan in the pocketbook is penalizing the vendors of the products they are advertising.

I have been noticing over the past several months dozens of spam messages each day trying to interest me in signing up for the Stamps.com service. I know that these spams were being sent by freelancers, but they do reflect badly on the Stamps.com management. This morning, I sent the press contact office at Stamps.com the following message.


Dear Stamps.com:

I am currently working on an article on ways to deal with spam. One is to prosecute and in other ways punish the advertisers who allow their products to be promoted via spam.

I receive well over two dozen spams each day pushing your service. I have been using your service for a few years, so I am already a customer. I do find it quite annoying to have to wade through dozens of spam solicitations every day.

As you may have heard, the governor of California just signed a law, effective 1/1/04, that will penalize spammers and the advertisers $1,000 per item.

For my article, I am interested in learning what, if anything, you are doing to police your affiliates from the abuse of spam. I would also be interested in knowing if you have a mechanism for recipients of spam advertising your service to forward those emails to a special email address for you to follow up on.

I am hoping to publish this article over the coming weekend. Your comments on these points would be greatly appreciated.

Kerry Kerstetter

Publisher

Kerstetter Letter

http://www.TaxGuru.net

A few hours later, I received the following reply from Stamps.com, expressing complete ignorance of the spam being sent on their behalf.


We received your complaint regarding an affiliate that may be using

unsolicited email addresses to send our offer. This would certainly

violate the rules of our affiliate program and I would be interested in

getting the original email that you received so that we can aggressively

pursue the responsible party. Thank you for taking the time to bring

this to our attention as we do not support the use of unsolicited bulk

mail.

Robert Bowman

Business Development

Stamps.com

3420 Ocean Park Blvd. Ste. 1040

Santa Monica, CA 90405

310-581-7206 office

To show Mr. Bowman exactly what I was talking about, I am now forwarding him each of the spams I receive advertising the services of his company. If others do the same thing, there is a better chance of Stamps.com exercising some of its clout to shut down those affiliates. Mr. Bowman’s email address is: rbowman@Stamps.com

My next target will be NetFlix, which is advertised in at least a dozen spams a day.

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Terminating Taxes In The PRC

Posted by taxguru on September 24, 2003

Arnold has obviously been receiving some good advice in his campaign to improve his focus on battling taxes and try to convince Republicans that his isn’t just a typical RINO. If what he claims in this column for the Wall Street Journal is true, that is step in the right direction. He does still need to counter the fact that he supports larger and more expensive government programs.

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Section 179

Posted by taxguru on September 24, 2003

The newly increased limits on the Section 179 expensing election have generated some confusion. One is the effective date, mainly for corporations that have fiscal years ending in a month other than December, which is how I advise most of my C corp clients to set theirs up. Since almost all of my C corp clients are wisely using a non 12/31 fiscal year, I have had to break the bad news that the tax returns I am now preparing, for years ending in 2003, have a Section 179 limit of $24,000. The new $100,000 limit will apply to the next year, that starts in 2003 and ends in 2004.

There is also some confusion regarding the purpose and benefits of the Section 179 expensing election, such as in this email I received last week from a reader:


With the new limit of $100,000 to expense equipment – – – –

Is my understanding correct that you can only expense items purchased up to $100,000 so long as it does not result in a negative or loss for the business. Any amounts that can not be expensed must then be depreciated as normal over their life. If this is truly the case – what good does that do for the small business guy – who does not make enough to expense anywhere near that amount against?

My response:


You are correct that the Section 179 expense allowable in any single year is limited by the overall taxable income. Any excess can be carried over to future years; or what often do, is opt out of the Sec. 179 and claim normal depreciation, that often gives a higher net loss, which can be carried back to recover previously paid taxes.

The reasoning and potential benefit behind having larger immediate deductions for new equipment purchases is to avoid the situation where a small business owner has plowed all of his/her profits and liquid cash into those purchases. If they are not immediately deductible, there could be a paper net taxable profit; yet there might be no cash left with which to pay the taxes. This kind of thing does happen a lot, plus situations where there is a paper taxable profit, but because the owner used all of the available cash to stock up on inventory (not deductible until sold), there was no money left to use to pay the taxes. Including the cost of new equipment along with other operating expenses does usually give a better representation of net cash generated from the business and thus makes it easier to pay the taxes on any net income.

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