Tax excemption (Re: Scenario O (was: Re: Upcoming: further thoughts on where from here))

Harald Tveit Alvestrand <harald@alvestrand.no> Wed, 22 September 2004 13:10 UTC

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Date: Wed, 22 Sep 2004 14:56:28 +0200
From: Harald Tveit Alvestrand <harald@alvestrand.no>
To: John C Klensin <john-ietf@jck.com>, scott bradner <sob@harvard.edu>, ietf@ietf.org
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Subject: Tax excemption (Re: Scenario O (was: Re: Upcoming: further thoughts on where from here))
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--On 21. september 2004 23:50 -0400 John C Klensin <john-ietf@jck.com> 
wrote:

> (time to change the subject line enough to do some
> differentiation)

good principle......

as I said on another thread, I think we should take competent tax advisor's 
advise on whether or not we can achieve this, and how fast (unless we 
dismiss the scenario for other reasons).

The two "interim plans" I have heard bandied about are:

- Start operation, but run the corporation in such a way that taxable 
profits (which would normally be used to build funds) is minimized, thus 
minimizing tax liability

- Incorporate, but don't transfer operations to the corporation until 
tax-excempt status has been granted.

I like the first one best, because it has the least impact on the other 
things that I want the reorganization to achieve, but I am not an US tax 
lawyer.....

One last note: The whole tax-excempt vs taxable issue is (I believe) 
exactly the same for operations organized as a subsidiary of ISOC as for 
opoerations organized as a separate corporation. That's one reason why 
Scenario O doesn't propose a subsidiary organization - that form seemed to 
commit the sin that Brian has warned us against: Complicating things and 
adding uncertainty for no easily visible gain.

                           Harald






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