TRADERS
ADVOCACY: OPEN SOURCE TAX

Open Source tax and investment related benefits can be arranged with GreenCompany.com’s Active Investor Open Source projects plan.

Open source project contributors are intellectual capital investors, yet few receive any investment or tax related benefits from their open source efforts. You can do both - honor the open source concept and receive tax benefits from day one and possibly a return on your intellectual capital down the road. This tax secret is now open!

An original idea and article by Robert A. Green, CPA.

Borrowing from our concept of “Active Investors”, discussed on our Web site at http://www.greencompany.com/OtherServices/RaisingMoney.shtml, Open Source contributors can restructure their open source projects into partial commercial (business) activities (hybrid open source/commercial ventures) in order to unlock the opportunity to receive thousands of dollars in income tax savings.

Our first goal here is the creation of income tax benefits, not commercialization of open source projects; which are mostly formed as an alternative to commercialization. But in order to unlock tax benefits possible in the tax code, you need a business purpose.

We are the leading tax firm for traders in American, because we showed them how to rise above a mere investing activity to a business trading activity in order to unlock thousands to tens of thousands of dollars in tax benefits.

Whether or not you want to commercialize a project as an intellectual capital investor, most open source contributors will value thousands of dollars in tax benefits. Think of it as having Uncle Sam help the open source cause.

Open Source for Tax Savings:

Here's the open source recipe for tax and investment related benefits. A group of open source contributors adds a commercialization element to a new or existing open source project. We suggest the chassis or vanilla portion – the ground breaking element – remain open source, but you add some commercialization features and services. Either add ons that you develop, market and sell directly or your group licenses to another business developer for a royalty. At this point, you are a business in the eyes of the IRS and you may deduct your business related expenses from gross income.

Here is the beauty of these tax deductions. You convert many of your existing (non tax deductible) personal expenses into (tax deductible) business expenses. You don’t need to spend more money for tax deductions; you simply get tax deductions for money you already spent.

Cash funds that will inevitably be needed for further business development and operations can be raised from outside Active Investors like bankers, sales professionals, managers and others who can add value to the business activities; besides adding intellectual capital to the project product or service.

Here are some examples of these tax deductions. Home office expenses, computers, furniture and fixtures, Internet expenses, supplies, communication services, travel & entertainment and more.

Here is how to set it up. Let’s say five intellectual capital investors decide to pool their efforts into a hybrid open source/commercial venture. They form an LLC and each LLC member gets a Form K-1 from the partnership tax return with zero gain or loss; until down the road when their may be LLC level activity.

Each tax year, each LLC member (partner) deducts “unreimbursed partnership expenses”
UPE) on their individual tax returns. This will vary by partner; some will have a few thousand dollars in tax savings, some even more.

The key tax point here is that each investor is active rather than passive. That navigates around the passive activity loss tax rules, which prevent passive investors from getting tax deductions through investment partnerships.

The best recipe for tax savings are business tax deductions, which also protect you from stealthy tax increases. The dreaded Alternative Minimum Tax (AMT) does not allow unreimbursed employee business expenses, investment expenses and interest, and state, local and real estate taxes. Self employment taxes may be increased as part of the social security reforms underway in Washington and they are based on net business income, after these deductions.

Turn your open source project into tax benefits and intellectual capital benefits.

Don’t worry, this is not a tax scam in the eyes of the IRS. Open source projects generate far lower revenues than their commensurate commercial projects and therefore open source projects generate zero to low profits and income taxes (based on profits). Fiscal (tax) policy is intended to encourage new business innovation with tax benefits that later pay off for the Treasury with taxes based on commercial profits.

Its not just about tax savings, it’s a chance to own a profitable business while still being a valued contributor to the open source community:

Although focusing on tax benefits to start, this concept can have more profound implications, including a new intellectual capital ownership/working class.

Open source has been a great pioneer against the big goliath commercial vendors in software, Internet services and other products and services. Open source has marshaled the anger of its intellectual capital investors (David’s) against the protracted interests of the goliaths. But pioneers always get the arrows in their backs and anger alone is not enough to perpetuate this model breaking transformation.

Think clicks versus bricks, the bubble bursting and bricks and clicks together now in transformation. Compare that with open source versus commercialization and picture a transformation based on convergence; hybrid open source/commercial projects (bricks and clicks).

Open source intellectual capital investors are currently giving away their hard work to commercial interests who are finding ways to work with the open source community. Look at how IBM is working nicely with the open source community; giving back, but maybe taking more for their own commercial benefit.

Why leave your tax money and intellectual capital on the table and walk away from it? Why not find a clever hybrid open source/commercial solution for your group of collaborators, adhere to the spirit and vision of open source, but also get tax benefits while you create your own socially conscious killer application for success.

Stay on top of this transformation and get the credit David deserves. Goliath is transforming, so you should too!

I applaud New York Time’s columnist Thomas Friedman for his excellent new book “The World is Flat.” His chapter on Open Source, as one of his 10 flatteners of the world leveling the playing field helped me reinforced my ideas. Friedman paints a picture of a polarized world between the new open source non-profit movement and the old for profit business economy. Friedman further writes about other polarizing ideologies like communism versus capitalism, high tech convergence versus the old ways of doing things, and emerging markets (like China, India and Russia) versus mature markets (North American and Western Europe).

Hybrid open source/commercialization projects with world wide intellectual capital investor collaborators in these active investor companies can serve as another bridge between these polarized worlds and can help accelerate the transformation that Friedman and others recognize as being needed and is underway.

There is a global revolution brewing of intellectual capital investors – in American, Europe, Russia, India, China and many other places - who are currently in the every downtrodden working middle class and yet aspire to join the ownership-based upper classes.

Communism failed its founders because it had trouble transforming itself from its industrial revolution creation; where mass capital and ownership was needed to drive mass production from a mass (non owner and even non union) working class. The industrial revolution is passé and the recipe for success is no longer mass capital driving mass workers. The new recipe for success is intellectual capital investors finding their niche in the collaborative small flat world of success and alliances. As Friedman points out (maybe with too much focus) is that all the collaborative tools exist. We have the entire Internet fast pipe already laid at very cheap to zero current prices to use, and tons of communication and collaborative tools and services. Friedman focused on the tools and I want to focus on the gold mines. You can have all the tools you need, but if you don’t know where to mine for gold, you won’t get rich.

That old recipe for success no longer applies in many cases. Workers can be intellectual capital investors and mass money and capital is not needed when alliances and collaboration is available, with the flat small world of the Internet and niche based success.

Many young people today think like open sources and in fact are open source contributors and they are opposed to big business, greedy profits, domination and oligarchies. Capitalism is under attack, as communism was before it. This bridging of the two worlds is needed and it’s right.

Intellectual capital workers unite as intellectual capital investors and lead the charge to a new ideology based on convergence. The world may be getting more flat but its still has tons of conflict. Turn collaboration into profits and success for the global good.

Now that we showed you where to mine for gold, we have some picks and shovels to sell you:

And some say taxes are boring? American is the land of innovation, often based on fiscal policy. Well this is it. Our law firm also specializes in international tax and we will hunt for tax savings in other countries in addition to the US. If you are in India or China, you still may want to join a US based LLC and we may be able to deliver the US related tax breaks to you on your worldwide tax situation.

We specialize in traders and many of our clients are both part time business traders and part time software engineers. This new idea may appeal to some of them, because they are already involved in the open source community and/or they have ideas for new trading software, products and services.

After all, we already showed our trader clients how to qualify for business tax breaks as traders; rising above investor tax status. A very similar concept applies here; open source with a business element, qualifies taxpayers for business tax breaks connected to their projects.

We have most of the help you need here. Our law firm can form your companies, prepare your shareholder agreements, help negotiate and prepare the business agreements for your licensing (royalties) deals and alliances.

When your hybrid open source/commercial business is ready to raise additional capital from other active investors (or others), we will prepare your investor documents. We are a leading law firm in the alternative investment (hedge fund) marketplace, and we have the key knowledge of tax, investments and securities law that you will need.

Our CPA firm can prepare the partnership tax returns for your LLCs as well as the tax returns for the individual intellectual capital investors; to deliver the active investor tax breaks mentioned above.

As Green & Company Inc. does in the trader and hedge fund markets, we will generate lots of leading content on these subjects for the Internet, magazines, other media and publishers. We will also operate a message board area on this subject and serve as a community destination to match intellectual capital investors, projects, business interests and other participants.

Robert Green has built unique and innovative firms in the CPA and law market places based on transformation and new ways of working. He has negotiated several successful alliances with leading brokerage firms and other companies and fully understands the concept of collaborative ownership and intellectual capital investors. Every CPA and attorney in our firm is an intellectual capital investor and not an employee. Green understands what it takes to be successful in the future global economy and has been a CEO of different types of businesses on different continents (US and Europe). He can offer vital help and vision to your venture.

Tax and law are not boring, they can be the blood and glue of a transformed creature (an evolved hybrid open source/commercial business):

Tax and law do not only serve the interests of for profit activities; they are a big part of the non profit, institutional and governmental worlds. Our Green tax and law firms are passionate about our visions for commercial success, but also about giving back with our leading content (open source). We have built our firms based on Internet communicates in cyberspace around the country and world and we support the social good. For example, read my original ideas for “Social Tax” published at http://www.greencompany.com/Traders/AdvocacySocialTax.shtml. Green also founded the GTT Alliance for Traders.

Share my vision and get started for social and self success soon:

If you are interested in learning more about hybrid open source active investing for tax and investment benefits, please participate on our message boards at http://www.greencompany.com/gttforum/ubbthreads.php?Cat=. Post your ideas, feedback, requests for collaborative ventures and questions. Feel free to also email us at opensourcetax@greencompany.com.

Young people, intellectual capital makers, and open source contributors, don’t sit on the side lines and take pot shots at global commercial goliaths. Rather, create your own hybrid open source/commercial venture and strike a deal with goliath, to transform you both for mutual success and reform.

Goliath is too smart now to be toppled by throwing stones, you need to bate goliath into a mutually agreeable venture for mutual success.

I think my idea can be a bridge and correct some abuses in the worlds of big business, globalization, and socialism or even communism. It’s time for intellectual capital investors to unionize, but not by paying dues to a union management class, but to themselves.

Think it up, spend some time and get your tax reward tomorrow. That’s a good start.

Robert A. Green, C.P.A., is the CEO of GreenTraderTax.com and GreenTraderLaw.com, America’s leading online tax and legal resources for traders and publishers. Author of the firm’s authoritative GTT Trader Tax Guides and “The Tax Guide for Traders” (published by McGraw-Hill), Green is a contributor to SFO and Futures and writes the monthly “Business of Trading” section for Active Trader. He is frequently featured in Fortune, Barron’s, and other leading financial publications, and has appeared on financial networks including CNBC and Bloomberg Television.