I apologize for posting this in the General Chat Forum. I don't know how I missed it!
So far this week I've gotten to communicate with some stalwart members of the C= Community. I commend you all!
When I posted the message about selling my Source many of you had discussed the possibility of making it Public Domain. I proposed an alternative.
After some long discussions with my Accountant, E-Mails from various User Group Presidents and some detailed research I want to share with you something that I believe will work and will be a MAJOR benefit the whole C= World.
I am pasting part of an E-Mail that I sent to one of the User Group Presidents who stated that they were thinking of formalizing their group.
Start of E-Mail Paste"
This may help you out in two ways: Making your decision to formalize your group and providing an avenue to encourage C-64/128 developers to release their now dead products to a Non Profit User Group.
This is all fact that I am posting as I have been working with my accountant on this specific issue and have it ironed out completely.
First off:
A copyright is a tangible asset whether owned by a person or another entity (i.e Corp, LLC etc.). In my case, I personally held the Copyright in my name and assigned the rights to a company that I owned. When the company disbanded the rights came back to me personally. In other cases where the copyright was derived by "work for hire" (employed programmers) the company held the Copyright.
What I see here is it encourages both the individual programmers and the larger companies, such as Abacus Software, to release the source codes to a specific user group (with the intentions that the User Group will propogate the software freely). Most likely it will have to be done in a basic contract.
The User Group would have to agree to distribute the software freely and no damages or actions may be made towards the donating entity. No big deal here.
The User Group will also have to provide a letter stating the fair market value of the software being donated. While many people think that this is a tough point it really isn't. I was originally asking $ 2,000 for my source. For one person to buy this with the intent on marketing it would be ludicrous (although I would like to think that there is someone out there who knows the package, has the money and would just love to say that he owned it now).
What is the fair market value to the world of Commodore Users? Is it worth $2,000 to the world? Absolutely!
One of the things a User Group does is propogate software, critique it, refine it and pass it along.
While people like Matthew Montchalin (I am assuming) and myself would be happy to get a $ 2,000 write off on our taxes there is even a bigger door to be opened.
Let's look at Abacus and what they put out, in my opinion they were the best company hands down for programming tools. What impact would it be to have them release all their source to you? Monumental for sure! In my opinion, if I had to take a rough guess, I'd put it at $ 100k or more. Abacus is still in business, has retired all products and support for the C= and was open to discussing this prossibility. I spoke with someone from Abacus earlier in the week and it was all positive. If I had a company with a dead product that I could get a $ 100k write-off by donating I'd be driving it to them.
BTW, Abacus appears to be a company who needs a boost. The now make Flight Sim Software for the PC's and appear to only employ a handful of people without a receptionist. I spent about 15 minutes with them on the phone and by the end of the conversation I was offering them marketing tips (i.e. bundling their software with Controller packages).
While I am sure that NOT (oops) all the major C= companies have evolved and still exist the ones that do might be lining up to donate.
All you need to do is come up with a fair dollar value to it's release.
BTW, It cannot be released purely to Public Domain as Public Domain is not a formal entity.
Secondly,
It is not hard to formalize your User's Group. You don't need a Lawyer to do it but I do recommend a good accountant setting it up for you.
I believe you have to apply for Tax-Exempt Status with the IRS 1st.
When awarded Tax-Exempt Status you must register your group as an LLC or Corporation.
You will have to fill paperwork out on occassion depending on what type of company your group becomes.
You will also have to pay a yearly LLC or Corporation Fee.
Here in New Jersey it is $ 50 for an LLC and $ 500 for a Corporation each year. I believe LLC is less expensive in each state.
An LLC or a Corp does not need to have any employees. It must have Officers but not employees. It's better not to any way in this case because payroll taxes would be a pain. This can be done with a minimal amount of paperwork.
Almost all User Groups have a hierarchy of officers which could remain the same after it becomes a formal entity. $ 50 a year to maintain status with the state and gain once lost software let alone the source codes is a pittance.
Another thing (I am not totally sure) that creates a benefit for the User Group is that it's Users may donate money to the group and write it off on their taxes. This adds a little paperwork on the officers part but could cause an increase in contributions rather than it just coming out of the members pockets. The one thing I am not sure of is the Officers can take advantage of this since they are affiliated with the organization. I don't think it is an issue but it is grey right now.
I plan on posting part of this E-mail on a C= forum as I think that this would have a MAJOR impact on the C= Community and maybe other groups will follow suit and formalize.
I actually forgot to put this sentence in the E-mail and will add it here:
Some companies that went dormant may still exist as a shell. Most likely, they are not in good standing but nevertheless if they were able to be contacted some arrangement could be made. They could have also been set up like my company where the rights were assigned to it by me personally andit reverted back to them. With the ability to track down anyone who ever published anything with the Internet, all the great software of the C= era may see new life and offer the authors some relief.
I think this is a great idea. It's a win-win for everyone.
I would like to hear your comments on this.
Regards,
Jim
(I'm sorry if the following sounds harsh - it's not meant to. I'm no native english speaker, the following is the most harmless version I could come up with ;) )
Quote from: MachineDrWhat is the fair market value to the world of Commodore Users? Is it worth $2,000 to the world? Absolutely!
No, it's not - and that's the problem.
The "market value" is what a potential buyer would be willing to pay for the rights to a certain software package. Nobody's going to pay $2000 (or $1000, or any other remarkable amount of money) for the rights to your BBS software - there are dozens of easily available BBS packages for Commodore computers, some of them in the Public Domain, some of them distributed under the GPL. Not to mention that the 'market' for C128 BBS software consists of about 5 or 10 retro-geeks. There is no demand, hence there's no real market value.
If you'd donate your software to a user group, and said user group would acknowledge this with a letter stating you donated software worth $2000, the two of you would be committing tax fraud.
I think you came up with a rather clever concept, actually - but the problem is: how do you define "market value" for 8bit software (as opposed to 8bit games, which definitely still have a market value)?
Don't get me wrong: your software is probably worth $2000, and the Abacus stuff might even be worth $100k ("worth" as in man hours invested etc.) - but the "market value" for both packages is pretty close to zero.
Quote from: KorodnyThe "market value" is what a potential buyer would be willing to pay for the rights to a certain software package. Nobody's going to pay $2000 (or $1000, or any other remarkable amount of money) for the rights to your BBS software - there are dozens of easily available BBS packages for Commodore computers, some of them in the Public Domain, some of them distributed under the GPL. Not to mention that the 'market' for C128 BBS software consists of about 5 or 10 retro-geeks. There is no demand, hence there's no real market value.
True - take for example Amiga CNET BBS. The Amiga is a far more powerful machine (& is arguably more supported than the 8 bitters are - witness the new software uploaded to Aminet on a daily basis). However there is hardly any commercial software being created for that machine anymore.
Back to CNET - in 2005 the rights to the package were bought by someone who is now trying to sell the package for $US49.95 a license. In two years he's sold maybe half a dozen copies.
Now let's look at the PC BBS market. There are really only two major contenders left (I mean "classic" style BBS systems - not web based communities or forums) - Synchronet & EleBBS; both are being actively developed, but neither charges for the distro, there isn't a market for the applications any more - and this is under a supported, current OS.
Does an 8 bit BBS package stand any change of surviving as a commercial entity ? Realistically, the answer has to be no.
The possible user base for such a market (as Korodny points out) is less than ten & most of these are already running something else (ie All American) that also has a long & well-tried pedigree.
We can all appreciate the man hours put in to the development of any package (there are many people on this forum that have done the same), however the chances of any of us re-couping any of our development costs is zero. I've been retrieving all of my Amiga related projects that I worked on from the lat '80's to the mid '90's - this represents thousands of hours of my time (plus costs involved with development tools), however I know there's no market, but rather than let the project vanish, the lot will be placed into the public domain, if someone can use the stuff, great! If not, at least it won't be lost (& besides, someone may geta good laugh out of my coding techniques :) ).
My 2 cents worth (plus GST!) anyway!
Now on to something that may cause offense - any individual or company that is attempting to sell an item of software for a dead platform (& face it, despite the fervour we all exhibit here, the 128
is dead) strikes me as either attempting to gouge a very tiny community or make a buck off it.
Realistic projects (like Mangelore's) that create something new that will extend the usability of our machines is a different story - we're all quite prepared to support
new hardware projects that helps keep the machine usable in a modern environment.
But software that has an extremely limited audience ? Probably not.
I recall that when I was negotiating in '95 for the rights to a then popular BBS package (can't say which, I'm still under commercial-in-confidence restraints) on the PC platform that I wasn't willing to pay the $US1,000 that the author wanted - I offered half that & I was still the highest "biddder". Even then, that market was diminishing, a couple of years later many PC BBS authors were releasing their products (even commercial) into the public domain. Needless to say, the source code for that particular package has now vanished forever.
cheers,
Lance
Quote from: Korodny(I'm sorry if the following sounds harsh - it's not meant to. I'm no native english speaker, the following is the most harmless version I could come up with ;) )
Don't worry, I take no offense at any opinions posted here. If you remember I asked for comments. BTW, your English is not bad at all.
Quote from: MachineDrWhat is the fair market value to the world of Commodore Users? Is it worth $2,000 to the world? Absolutely!
Quote from: KorodnyNo, it's not - and that's the problem.
Quote from: KorodnyThe "market value" is what a potential buyer would be willing to pay for the rights to a certain software package. Nobody's going to pay $2000 (or $1000, or any other remarkable amount of money) for the rights to your BBS software - there are dozens of easily available BBS packages for Commodore computers, some of them in the Public Domain, some of them distributed under the GPL. Not to mention that the 'market' for C128 BBS software consists of about 5 or 10 retro-geeks. There is no demand, hence there's no real market value.
FMV is a VERY subjective term (even cited in IRS Publications). First I'd like to say that the way I see this happening is that a User Group serves multiple people as well as other User Groups. For a User Group )NON-PROFIT) to acquire the rights for any commercial package with the intent to propogate it for free would be a coup. They would be acquiring this to better serve their members NOT to resell.
Would it be unrealistic or unethical for a User Group to get a coveted piece of commercial software to serve their members better? I believe the answer to this is NO. Now getting that piece of software has value to the user group which serves many members and other groups has value. Be it based on creativity/novelty. specific routines that were previously unavailable, to allow their members to see what makes it tick and gain knowledge and potentially add to it adds to this value.
The IRS does not Publish anything specific on Copyrights and I am basing this on their Patent guidelines. There are 3 criteria that has to be met. The first criteria presents the only obstacle; has the patent been obsoleted by new technology? Again this is a very subjective guideline. Arguments can be made for both sides BUT the fact that there are people still interested in it makes me come up with an answer of no.
Here is a link to determining FMV by the IRS:
http://www.irs.gov/pub/irs-pdf/p561.pdf
Quote from: KorodnyIf you'd donate your software to a user group, and said user group would acknowledge this with a letter stating you donated software worth $2000, the two of you would be committing tax fraud.
I disagree. Maybe I oversimplified it or you oversimplified it but that is not what the letter would state. It would go something more like this:
The CUG has accepted a donation of the source code of commercial program xxxx. As it is our mission to supprt the C= Community worldwide we have made the following evaluation of the software package to the goals of our mission based on the following criteria: (List criteria) and therefore feel that the FMV of this product is $xxxx based on our evaluation and needs. In the IRS Publication, a qualified appraisal must be made ONLY IF the FMV Value exceeds $ 5,000. A User Group is more than qualified and most likely assign a fair value based on the impact of the acquisition to the C= Community. I believe that this makes it even easier to pull off and remain legal.
Quote from: KorodnyI think you came up with a rather clever concept, actually - but the problem is: how do you define "market value" for 8bit software (as opposed to 8bit games, which definitely still have a market value)?
Thank you. The publication I linked to above has guidelines for determining the FMV and again are very subjective.
Quote from: KorodnyDon't get me wrong: your software is probably worth $2000, and the Abacus stuff might even be worth $100k ("worth" as in man hours invested etc.) - but the "market value" for both packages is pretty close to zero.
There you go, I am not talking about a Market Value for Profit, I am talking about a Market Value to a Tax Exempt User Group for IT's purpose in life. Man hours could also be part of the evaluation criteria.
I appreciate your comments. I posted this to get some feedback and am happy to hear a negative aspect of it but I believe that it can be easily countered especially onthe guidelines of intellectual property/know how (also in the posted IRS Publication).
I hope this thread continues, maybe we can actually make something big happen to bolster the C= Community. I believe that there are more than a few people who won't let go, especially overseas.
Please don't believe that I think this is the definitive answer by a longshot. There are a lot of details that need to be addressed but I also believe that there is a legitimate a qualifying answer to each hurdle.
I've spoke at length to my Accountant (Former President of the New Jersey Association of Accountants) and while we don't have iron glad contracts or guidelines to pull this off at this very moment we both think it is VERY doable and LEGAL.
Thanks again for your comments!
-Jim
Quote from: adminNow on to something that may cause offense - any individual or company that is attempting to sell an item of software for a dead platform (& face it, despite the fervour we all exhibit here, the 128 is dead) strikes me as either attempting to gouge a very tiny community or make a buck off it.
Realistic projects (like Mangelore's) that create something new that will extend the usability of our machines is a different story - we're all quite prepared to support new hardware projects that helps keep the machine usable in a modern environment.
But software that has an extremely limited audience ? Probably not.
I recall that when I was negotiating in '95 for the rights to a then popular BBS package (can't say which, I'm still under commercial-in-confidence restraints) on the PC platform that I wasn't willing to pay the $US1,000 that the author wanted - I offered half that & I was still the highest "biddder". Even then, that market was diminishing, a couple of years later many PC BBS authors were releasing their products (even commercial) into the public domain. Needless to say, the source code for that particular package has now vanished forever.
cheers,
Lance
Trying to recoup some of the expense that a programmer put into a product is not gouging. I also seem to remember a post in the General forun that you made " And they said the C-128 was dead.....". If there are people interested in it, is it not really dead (I'm splitting hairs here)?
This thread represents a proposal to get commercial products, previously unavailable unless you paid for them freely into the open market with the added benefit of having the source code to change the code as they see fit; making things better, fixing known bugs etc.
The unique thing about this proposal is that no one has to put out a cent (except to formalize a User Group). I guess you could look at it as government subsidized Freeware.
I have not addressed licensing issues as when you donate something you cannot have any strings attached. As a courtesy, the User Group could state that it intends to recognize the original author as a foundation on how the software package began. That would be fine with me.
BTW, I hope that you don't think that I was trying to gouge the C= Community. My 1st post was just an attemot to see if I could sell something I owned. As that thread evolved I believe that you will see that I saw some very valid points that would most likely prohibit the sale but I was still willing to find a way to get it out to the public.
Also, someone made a point about all the Freeware and Shareware programs out there. Ths isn't an Apples to Apples comparison as when I developed my software it was purely a commercial venture. I spared no expense in buying the devices that the program would need to support whereas many BBS authors assumed rather than borrowing or buying all devices that needed to be supported. We also can't forget that many of them were made to be Freeware or Shareware from the get-go. Additionally, I invested much time in the development, testing and optimization of the software.
Please don't take offense at my response. Like I said, I really hope this thread thrives and something positive (similar to the proposal I made) will happen.
We all have our own opinions about this and on various facets of the proposal. In the end, I believe the Tax Laws will prevail and indicate whether this is doable or not.
BTW, Another example of a big company that evolved and no longer sells or supports C= is Broderbund Software. Again, Thet also appear to be a company that is not thriving in today's software world and possibly be persuded to give up the C= line in exchange for a Tax Write-Off.
I believe the concept has merit.
Please continue with your comments. I'd like to see where this goes.
Regards,
-Jim
Quote from: MachineDrThis thread represents a proposal to get commercial products, previously unavailable unless you paid for them freely into the open market with the added benefit of having the source code to change the code as they see fit; making things better, fixing known bugs etc.
Companies & individuals have done this in the past - simply by placing an item into the public domain. Witness Digital Research & CP/M - it was released into the public domain (not to a user group) with the company not making a cent out of doing it (lots of goodwill from the CP/M community though).
Quote from: MachineDrWe all have our own opinions about this and on various facets of the proposal. In the end, I believe the Tax Laws will prevail and indicate whether this is doable or not.
USA tax & copyright laws aren't applicable outside of the USA! Which is possibly one reason I'm guessing this particular idea hasn't ever been used before - impossible to enforce. The laws of the USA are not enforceable in, for example, Australia or the UK.
Quote from: MachineDrI believe the concept has merit.
Perhaps, but it flies in the face of what other companies & individuals have done in the past by freely releasing redundant & long dead software "into the wild".
cheers,
Lance
If this method will get software companies to release software to the public (indirectly through user groups) then I think it is a good idea, espicially if the company plans to let the software vanish into obscurity.
Although all user groups and software companies are not in the USA, enough of them are for this idea to be viable. Of course I don't pretent to speak for all US user groups, but I don't think they would horde it to themselves forever. Rather I expect they would distribute it on the internet for world wide consumption (maybe not initially).
Quote from: MachineDrTrying to recoup some of the expense that a programmer put into a product is not gouging. I also seem to remember a post in the General forun that you made " And they said the C-128 was dead.....". If there are people interested in it, is it not really dead (I'm splitting hairs here)?
Hi Jim,
Thanks for participating in this forum. While there's a few C128 users out there, I doubt there's many active C128 User Groups or C128 Bulletin Boards.
I would like to believe that you managed to recoup most of the expenses for your product while it was actively sold in the 80's. If you're expecting to be rewarded with significant amounts of money from the current market then you may be dissapointed with the outcome.
While I myself have spent a fair amount of money recently on eBay for vintage C128 commercial software, it's been purely for collection purposes. As others have already mentioned, the potential market for commercial C128 software is very small. Maybe it's worth while compiling a list of current active Commodore Bulletin Boards. Some of these sysops would then be your potential target market as not all of them may be programmers.
Your other option may be to attempt to sell a few copies of your program without the source code on eBay or through these forums. While you may not make thousands, you might be surprised of the outcome.
Quote from: MachineDrThis thread represents a proposal to get commercial products, previously unavailable unless you paid for them freely into the open market with the added benefit of having the source code to change the code as they see fit; making things better, fixing known bugs etc.
....
I believe the concept has merit.
Please continue with your comments. I'd like to see where this goes.
Regards,
-Jim
Like Lance, I'm also based in Australia where the tax system differs to the U.S. so I'm not sure if you're concept is valid here.
Best of luck,
Fotios
Quote from: adminQuote from: MachineDrThis thread represents a proposal to get commercial products, previously unavailable unless you paid for them freely into the open market with the added benefit of having the source code to change the code as they see fit; making things better, fixing known bugs etc.
Companies & individuals have done this in the past - simply by placing an item into the public domain. Witness Digital Research & CP/M - it was released into the public domain (not to a user group) with the company not making a cent out of doing it (lots of goodwill from the CP/M community though).[quote/]
Well for most small C= developers such as myself, we didn't have the luxury of developing a product that was massly produced and money was made prior to it's being released freely. Not to mention the CP/M Community goodwill.
Programmers such as myself, we served an equal purpose, we served a niche market for two reasons: Our love for the C= and to fill a gap that few people would touch and pull off correctly (subjective term). I don't want to sound egotistic, but when I said that the BBS ran 4 years straight without a crash or a glitch I was not exagerating. My mission was to create the best BBS for the 128 and I feel at that time it was. I did have a steep price for it but it was worth it. I also provided free support (which was minimal) and free upgrades to anyone who owned the software.
Getting a 1k or 2k write-off for donating it to a non-pofit entity who will propogate it through the C= Community isn't much to ask for.
Quote from: adminQuote from: MachineDrWe all have our own opinions about this and on various facets of the proposal. In the end, I believe the Tax Laws will prevail and indicate whether this is doable or not.
USA tax & copyright laws aren't applicable outside of the USA! Which is possibly one reason I'm guessing this particular idea hasn't ever been used before - impossible to enforce. The laws of the USA are not enforceable in, for example, Australia or the UK.
I asked my accountant specifically that question today. He stated that if there was no non profit group in the US I could donate it to a Country recognized Non-Profit organnization outside the US. It's based on US law. My example to him was TPUG.
The receiving company would simply have to list it as a donation on their records and issue a statement of FMV as explained previously. Oh before I forget, it would have to be stated in $ US dollars rather than in the country's native currency. This is to avoid the spot price rates. He said that was the most important point.
The donating company would simply file the approriate donation forms and attach the letter from the User Group.
Done Deal
Quote from: adminQuote from: MachineDrI believe the concept has merit.
Perhaps, but it flies in the face of what other companies & individuals have done in the past by freely releasing redundant & long dead software "into the wild".
Not to sound nasty, sarcastic or mean but shame on them for not thinking of it 1st? Maybe that's an unfair statement as many of the small developers such as myself were just average guys who loved to code and create something that would be used by many people. There's no excuse for the larger companies not doing this.
My career evolved to a significant engineering role in hybrid automation languages and ultimately led me to start my own engineering company which I sold last year. I was a sharp business owner (I had a GREAT Mentor) and always looked at every angle to save or make money (all legit of course). So maybe my business experience led me to this idea where the others didn't have that trigger.
Case in point: I had a project with a large Pharmaceutical Manufacturer coming up that required 3 Servo Drive/Motor Systems on it. Approximately a month before the order hit there was a seminar held on the specific Servos I needed for the job. As an incentive for attendance, The company offered one free Servo Motor with the pruchase of one Servo Drive per person. Knowing that I was getting the order I took myself, an engineer and an Assembler (no Servo Skills just needed a body) to the 3 hour seminar. We all received our vouchers and when the order came in a month later and I placed my order we received three $1700 Servo Motors for free thus saving $5100 in material costs.
Regards,
Jim
Quote from: hydrophilicIf this method will get software companies to release software to the public (indirectly through user groups) then I think it is a good idea, espicially if the company plans to let the software vanish into obscurity.
Although all user groups and software companies are not in the USA, enough of them are for this idea to be viable. Of course I don't pretent to speak for all US user groups, but I don't think they would horde it to themselves forever. Rather I expect they would distribute it on the internet for world wide consumption (maybe not initially).
I think you see where I am coming from. The governemt foots the bill and commercial software that is no longer produced will ive on forever.
It will take a lot of lobbying with the companies in order to get them to do this but if we have a well laid out plan and can prove that it it 100% legal and an immense goodwill gesture to the people that put them on the map OR supported them while they were in business.
The 1st step might be to compile a list of companies to contact while concurrently reasearching the Gifting to a Tax Exempt organziation. After a fomal and legal proposal is drafted then the companies can be approached.
If this takes off do you really think anyone group would horde anything? I doubt it but then again haven't interacted with many. As I see it C= people are a family and are more than happy to share an acquisition.
Thank you for your comments!
Regards,
Jim
Quote from: MangeloreThanks for participating in this forum. While there's a few C128 users out there, I doubt there's many active C128 User Groups or C128 Bulletin Boards.
I would like to believe that you managed to recoup most of the expenses for your product while it was actively sold in the 80's. If you're expecting to be rewarded with significant amounts of money from the current market then you may be dissapointed with the outcome.
While I myself have spent a fair amount of money recently on eBay for vintage C128 commercial software, it's been purely for collection purposes. As others have already mentioned, the potential market for commercial C128 software is very small. Maybe it's worth while compiling a list of current active Commodore Bulletin Boards. Some of these sysops would then be your potential target market as not all of them may be programmers.
I think you are misunderstanding me. This started out with me trying to sell my program. What it has evolved into only briefly touches on me and is directed more so to the larger developers. As for recouping everything, I would have to say NO. While it was sold and it was a business, I did it for the love of what I was doing. All I'm saying is that anyone, large or small, that wants to donate their commercial source should be entitled to a tax write-off for relinquishing all ties to the program to a non-profit organization.
Quote from: MangeloreYour other option may be to attempt to sell a few copies of your program without the source code on eBay or through these forums. While you may not make thousands, you might be surprised of the outcome.
This is not an option. And I seriously doubt that I might make thousands, I'd be happier with the tax write-off and the fact that I contributed something of quality to the C= Community.
Quote from: MangeloreLike Lance, I'm also based in Australia where the tax system differs to the U.S. so I'm not sure if you're concept is valid here.
Your post came in as I was posting my message explaining the international implications. I addressed that specifically with my Accountant. You might want to look up as I think you may have missed a post that I clarified a few things. In short, it is not an issue.
Regards,
Jim
]
First, I'm not a CPA, but I have studied accounting and have some understanding of what's being proposed here. I think the issue for some folks is that it's not clear what the ownership of the software would entail after the transfer is complete, or what the benefit would be to Jim and others who donate software to a user's group.
Once a UG was setup as a non-profit LLC in the USA, it's a legal entity which is recognized world-wide. That legal entity would now own the copyright on all the code transfered to the UG. If the UG never makes the product available to anyone else (ie, never distributes a single copy), then it is simply an asset that the UG can keep on it's books until the copyright expires.
Before the UG distributes a copy of the software, they must modify it to reflect the new ownership by including a copyright statement. This is the legally binding act that prevents others from being able to claim ownership of the software. The UG should also at this point decide if they will only distribute the binaries, or if they will also distribute the source code. If they distribute the source code, they should decide on an official license. This can be as simply as "The UG retains copyright, but you may do whatever you want with this otherwise.". The UG would NOT be able to release the source code in such a way that the copyright is not retained by the UG, otherwise it would definitely be tax fraud on the part of both the UG and Jim.
Jim, through his donation, is allowed to reduce his taxable income by the amount of the FMV that the UG provides via a receipt for the transfer of the property. This is no different than donating a sofa to Goodwill and getting a $50 receipt which you file with your taxes.
This whole scenario does open up some questions on the front of open source software in general. Many of the non-profit organizations that own open source projects require transfer of copyright for all code submissions. This can be considered a charitable donation given the scenario above. I believe that this practice could bring forward a method of compensating open source developers through tax write-offs if you live in a location that allows for deductions for charitable donations. If we were to organize all of the Commodore scene's open source projects under a UG, and have that UG provide receipt for charitable donations, then I believe this could help motivate people to put more time and effort into some of the projects that move ahead in long, drawn out fits and spurts.
Quote from: plbyrdOnce a UG was setup as a non-profit LLC in the USA, it's a legal entity which is recognized world-wide. That legal entity would now own the copyright on all the code transfered to the UG. If the UG never makes the product available to anyone else (ie, never distributes a single copy), then it is simply an asset that the UG can keep on it's books until the copyright expires.
Before the UG distributes a copy of the software, they must modify it to reflect the new ownership by including a copyright statement. This is the legally binding act that prevents others from being able to claim ownership of the software. The UG should also at this point decide if they will only distribute the binaries, or if they will also distribute the source code. If they distribute the source code, they should decide on an official license. This can be as simply as "The UG retains copyright, but you may do whatever you want with this otherwise.". The UG would NOT be able to release the source code in such a way that the copyright is not retained by the UG, otherwise it would definitely be tax fraud on the part of both the UG and Jim.
Jim, through his donation, is allowed to reduce his taxable income by the amount of the FMV that the UG provides via a receipt for the transfer of the property. This is no different than donating a sofa to Goodwill and getting a $50 receipt which you file with your taxes.
You are dead on Payton! This is exactly (at a high level) of what I am proposing.
BTW, a Copyright is unlike a Patent. A Patent expires in a fixed amount of years (different for each industry) while a Copyright remains in effect foro 75 years after the death of the Author.
Regards.
-Jim
Quote from: MangeloreThanks for participating in this forum. While there's a few C128 users out there, I doubt there's many active C128 User Groups or C128 Bulletin Boards.
At present, there are 9 active BBS's running on C128's, 3 of which are running C64 software in 64 mode. There are also 6 BBS's running on C64's, and 2 running on WinVICE.
Quote from: MangeloreMaybe it's worth while compiling a list of current active Commodore Bulletin Boards. Some of these sysops would then be your potential target market as not all of them may be programmers.
Uh... There's already someone doing this... Me. :P
The most recent list is always available here:
http://hometown.aol.com/cottonwoodbbs/cbm-bbs-list.txt
I'll be releasing an updated list soon, probably within the next week. 8-Bit Junkyard has gone offline permanently.
-Andrew
Quote from: MachineDrHere is a link to determining FMV by the IRS:
http://www.irs.gov/pub/irs-pdf/p561.pdf
Let me quote from that document:
"Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller"
Now, several people in this thread seem to share my opionion that there wouldn't be a "willing buyer" for the property you are offering - or if there would be one, he'd be willing to pay only a
very small amount.
Hence my claim that your property's "fair market value" is close to zero.
Quote from: MachineDrQuote from: Korodnythe two of you would be committing tax fraud.
I disagree.
If most people in this thread agree that the FMV of a certain piece of code is close to zero, a user group would probably come to the same conclusion. Hence, they'd have to state a really small amount of money in the letter aknowledging your donation. If they state a higher value and you use said letter to get a tax write off, the two of you would be committing tax fraud.
That's the big hole in your plan: 8bit software does not have any "fair market value", you can't just make one up by saying "this helps my cause so much, it must be worth $XY" and then use this artificial market value to enable somebody else to get tax write-offs.
QuoteI am talking about a Market Value to a Tax Exempt User Group for IT's purpose in life. Man hours could also be part of the evaluation criteria.
Neither of these are important to determine fair market value, only "the price that the property would sell for".
Korodny,
It's late and I just got back from a long day out so I will post this as a reply rather than quoting the message you posted.
1st off, this isn't just about me and my BBS Software it's for the whole C= development Community.
Secondly, I WOULD NEVER do anything that even comes close to committing tax fraud or entice someone to commit tax fraud. I hold myself to very high standards and would never risk my name, reputation or freedom for any amount of money.
Did you read the publication all the way through? From your post I don't think so. There is a section specifically on intellectual property/know how in that publication.
I can't stress enough that the determination of FMV is very subjecive and even the IRS states it in the publication.
Selling a program to a person is much different than selling a program to a User Group. The User group represents the masses and therefore the value does increase. Again I AM NOT specifically referring to my software package but rather ANY software package.
Say ONE User Group spearheads this, they are now representing the whole country. The value does increase as opposed to selling it to ONE individual. For arguments sake, let's say that any commercial program (large, small or even niche market) is donated to a User Group with 2000 members. Is it worth $1 a member for the User Group to acquire and have free distribution rights to a commercial software package? My answer is yes.
Maybe that is the key, one central User Group representing the entire US (and disseminating it to the smaller user groups).
Additionally, the FMV can be determined without a formal appraisal providing the FMV does not exceed $ 5,000.
Here's an example of a State run entity receiving a donation of books from me:
I have 100 Hard Cover Techno Thriller novels. I am donating them to the County Library. When I asked about a receipt I was told that I had to state the value of the books. I chose $2.00 ea. Yet I could not even give them away to a used book store (they are common and would not accept them).
The same this goes when you donate to Goodwill, Vietnam Vets and other non-profit entities. The donator assigns the value and IT IS accepted by the IRS unless it is an outrageous number and by outrageous I mean more than the 1k or 2k write-off I would like to take,
This is a legitimate write-off and will not suffer any repercussions.
This makes my point about FMV being VERY subjective. Maybe in the future the IRS will create stricter guidelines but now it is fair game.
I would not have brought the topic up if I hadn't discussed it in detail with my accountant. He as well as myself.will not help perpetuate tax fraud at any level. He has been my accountant for over 20 years and knows all the holes in the tax laws and takes full advantage of them.
While I like you playing the role of devil's advocate I am curious, are you an accountant (I'm not trying to bait you or shut you down if you aren't, I''m just curious)? Also, are you based in the US?
While I see your points and respect your opinion, I do feel that there is a hole in the IRS guidelines that can be used as stated in my proposal.
If you read the publication in it's entirety, you will see what I state is true and it has been verified by my accountant.
I know it sounds too good to be true but once in a while it is true. There are many loopholes when it comes to things like this. While the proposal may take advantage of a loophole in the IRS System, is it wrong? NO, they are responsible for defining their guidelines and by their own admission FMV is a subjective call.
I don't have all the answers yet that's why I started this thread. I wanted to hear what the people thought and refine the idea in order for it to work for EVERYONE and be 100% legal.
Regards,
Jim
Jim,
While agree with you that this is something that would be highly beneficial to the whole community, the community would have to band together and fork up some cash to make it happen. Forming an LLC takes about $1500 based on personal experience. There would need to be an overwhelming community approval (ie donations) to get such a user's group off the ground. Perhaps a mass of donations of hardware and eBay fire-sale could raise the funds. Once the club was and received non-profit status it could then provide the tax refundable receipts for funding the founding of the club.
Quote from: plbyrdJim,
Forming an LLC takes about $1500 based on personal experience.
Payton,
Thank you for your reply.
I am still getting over the sticker shock!
I formed 2 Class C Corps last 2 year through my accountant and it was close to that price for both! LLC's are considerably less expensive than forming a Corp.
I appreciate that you understand what I am trying to do and will do some research to see which state is the most affordable to do it through. New Jersey may be the most affordable (I actually think Delaware is the least expensive) but let me do a little research on Monday and I will post my findings.
Thanks for your reply and interest.
-Jim
What sort of administrative overheads does a scheme like this impose to a User Group?
Also, let's assume that a tax exempt User Group accepts donations for 20 programs with a fictitious value of $5,000 each, totaling $100,000 in the first 12 months. Wouldn't the $100,000 donations appear in their books as assets?
Whilst I'm not familiar with the regulation of tax exempt bodies, wouldn't the User Groups be audited and thus have trouble justifying the $100,000 valuation of software assets?
Cheers
Fotios
Some good questions Mangelore! Let me try to answer. Please be aware that I can only answer based on US laws.
Quote from: MangeloreWhat sort of administrative overheads does a scheme like this impose to a User Group?
Since UGs usually have a hierachy of officers, that would not change. There would need to be a little more on the accounting end of it though (valuatings and ussuing receipts etc).
Also, you would have to file State and Federal Tax forms but as a Non-Profit Entity the UG would not be imposed taxes.
You will need to pay a State fee for the entity (to start it up and for each subsequent fiscal year), in Nw Jersey it is $50 for an LLC and $500 for a Class C Corp (not sure about S Corp).
Quote from: MangeloreAlso, let's assume that a tax exempt User Group accepts donations for 20 programs with a fictitious value of $5,000 each, totaling $100,000 in the first 12 months. Wouldn't the $100,000 donations appear in their books as assets?
Yes, it would as will User cash donation (which are deductible by the User The UG will have to issue an end of year receipt to each User as churches do for tithing). BTW, the use of "fictitious" I have an issue with. See below:
Quote from: MangeloreWhilst I'm not familiar with the regulation of tax exempt bodies, wouldn't the User Groups be audited and thus have trouble justifying the $100,000 valuation of software assets?
Cheers
Fotios
Ok, let look at it a few ways. As Payton wrote "It's no different than taking an old sofa to Goodwill and getting a $50 receipt for it to use as a Tax deduction. Is the sofa worth $50? Most likely not, Will Goodwill get $50 for iot, most likely not. These are the US tax laws at work.
Now onto a UG. For examples sake let's call the UG "The US C= User's Group and repoisitry for all Commodore related products". When auidted they will find in the records, what was donated, how it was evaluated and how many times it was disseminated. This is not a big issue if audited as the UG's purpose is to acquire (by any means) C= software and make it available (even by donation) to it's user's.
Let's go back to the Sofa. It's donated once and sold/given away once. End of Sofa.
With Software it's donated once an given way an infinite amount of times.
Does that help?
Regards,
-Jim
Quote from: MachineDr1st off, this isn't just about me and my BBS Software it's for the whole C= development Community.
Of course, I'm just using your case as an example.
QuoteSecondly, I WOULD NEVER do anything that even comes close to committing tax fraud or entice someone to commit tax fraud.
Ah, sorry - I was not trying to claim anything like that, I was just trying to point out that there are lots of rules and regulations to be kept in mind, and that one should really try to understand these rules before getting all too excited or even get into action. If the US tax authorities are anything like the German "Finanzamt", you'd better take great care that they don't get the impression you're trying to fool them. It#S way too easy to get into trouble.
QuoteDid you read the publication all the way through? From your post I don't think so. There is a section specifically on intellectual property/know how in that publication.
Yes, I read the whole thing, and I can't see anything that contradicts what I said. Perhaps I'm missing something (wouldn't be the first time ;)), in that case, feel free to point out the important part.
QuoteI can't stress enough that the determination of FMV is very subjecive and even the IRS states it in the publication.
The approach for determining fair market value is clearly described in the document you linked to. It's "the price that property would sell for on the open market" - the only subjective part is deciding how much it would sell for. Apparently, you disagree here - could you please point out where in the document they describe a different way of determining FMV?
QuoteSelling a program to a person is much different than selling a program to a User Group. The User group represents the masses and therefore the value does increase.
What's the source for this claim? That's exactly where we disagree.
Obviously, if your assumption would be true, your whole concept would work. But so far, I haven't seen any evidence that supports your theory. And to be honest: if it turns out you're right, the US tax laws seem to be even worse than the German ones. A loophole that lets you turn a property without any real market value into a tax write-off of several thousand dollars is a pretty impressive loophole.
QuoteWhile I like you playing the role of devil's advocate I am curious, are you an accountant (I'm not trying to bait you or shut you down if you aren't, I''m just curious)? Also, are you based in the US?
No and no.
QuoteWhile I see your points and respect your opinion, I do feel that there is a hole in the IRS guidelines that can be used as stated in my proposal.
It's enterily possible that such a loophole exists, but the only source you provided so far actually
contradicts what you say (unless I'm missing something, of course).
Quote from: MangeloreWhat sort of administrative overheads does a scheme like this impose to a User Group?
Also, let's assume that a tax exempt User Group accepts donations for 20 programs with a fictitious value of $5,000 each, totaling $100,000 in the first 12 months. Wouldn't the $100,000 donations appear in their books as assets?
Whilst I'm not familiar with the regulation of tax exempt bodies, wouldn't the User Groups be audited and thus have trouble justifying the $100,000 valuation of software assets?
Cheers
Fotios
I believe tax exempt entities only have to make annual filings unless they have paid employees, in which case they must make quarterly filings of appropriate payroll taxes. Since each asset on the books will have a corresponding entry to Donations under the revenue column, then it's not a problem at all to have a valuation of $100,000.
Quote from: MachineDrOk, let look at it a few ways. As Payton wrote "It's no different than taking an old sofa to Goodwill and getting a $50 receipt for it to use as a Tax deduction. Is the sofa worth $50? Most likely not, Will Goodwill get $50 for iot, most likely not. These are the US tax laws at work.
....
Does that help?
Regards,
-Jim
Thanks Jim,
Yes, it does help.
As long as there's no way for the party providing the receipt to get in trouble with the IRS, it seems like a good idea.
Cheers
Fotios
Quote from: plbyrdI believe tax exempt entities only have to make annual filings unless they have paid employees, in which case they must make quarterly filings of appropriate payroll taxes. Since each asset on the books will have a corresponding entry to Donations under the revenue column, then it's not a problem at all to have a valuation of $100,000.
It's interesting to know that if the User Group got audited, it wouldn't need to provide any justification for the value of their donated assets.
Quote from: MangeloreQuote from: plbyrdI believe tax exempt entities only have to make annual filings unless they have paid employees, in which case they must make quarterly filings of appropriate payroll taxes. Since each asset on the books will have a corresponding entry to Donations under the revenue column, then it's not a problem at all to have a valuation of $100,000.
It's interesting to know that if the User Group got audited, it wouldn't need to provide any justification for the value of their donated assets.
I'm pretty certain that wouldn't be the case here.....
Lance
Quote from: adminQuote from: MangeloreQuote from: plbyrdI believe tax exempt entities only have to make annual filings unless they have paid employees, in which case they must make quarterly filings of appropriate payroll taxes. Since each asset on the books will have a corresponding entry to Donations under the revenue column, then it's not a problem at all to have a valuation of $100,000.
It's interesting to know that if the User Group got audited, it wouldn't need to provide any justification for the value of their donated assets.
I'm pretty certain that wouldn't be the case here.....
Lance
As long as the donations are valuated under $5,000, the in it truly doesn't matter as the IRS guidelines ONLY require an appraisal on donations valued at more than $5,000.
Now what WOULD be suspicious is if Jim formed the non-profit himself, and then transferred his own IP to it and then claimed a tax deduction. That would most likely draw some scrutiny; but it's still not clear if it would draw anything else as long as it was less than $5,000.
In regards to this thread and the questions of legality of my proposal I have found the following:
I am correct that an author may donate his work to a User Group and take a Tax write-off. As is stated in the listed proposal the Tax laws are subjective. The key point, is the fact that the Donor does not exceed $5k. $5k donations and above must be indepentaly appraised.
I was incorrect when I stated that the User Group could issue a letter of appraisal, based on evaluation criteria. Th IRS considers any non-profit entity of establishing a value on a donated good a conflct of interest. It is up to the donor to establish the value AND if it falls under $5k does not need to be substantiated.
I know this sounds to good to be true but I had two specific incidents happen this past week that corroborates this:
I donated a very large amount of books to the County Library. All that was issued was a receipt for books stating the number and type (i.e. Hardcover, paperback etc.). It is up to me to put a value to it. I chose $200. This is a fair amount and wouldn't even be scrutinized by the IRS. If I were ever audited I would have my receipt stating what I donated and the value I wrote on it.
The second incident came when I was donating my late Mother in Law's car to a charity that accepts them. Again, I had to state the value of the vehicle. I went to the Kelly Blue Book and made a fair appraisal of the car and actually thought it was higher than the car was worth, it stated $800 and I took $500.
This is not at all unlike a software author donating his source to a non-profit organization and taking a nominal tax write-off for his intellectual property. Additionally, based on the above examples. The User Group would simply state what it received with NO $ value. The author then has the onus of justifying the deduction.
One of the MAJOR differences in these scenarios is that when donating software it can be given out more than once (by the UG) unlike the sofa we talked about before and the books and car we talked about in this post.
From what I see, the people who disagree with my proposal are all outside of the US and may have stricter taxation laws than here in the US.
In the US, what I propose is 100% legal. So when I assign my 3 copyrights to a User Group, I can take a $1K deduction and will not be breaking the law or cheating the IRS. If I am ever audited I won't even have to break a sweat because I have a receipt of donation and the $1k value I assigned to my intellectual property is under the $5k limit and low enough to be reasonable to assign 3 copyrights.
I welcome any comments from any US members who may not agree. But since everything I am referring to is based in the US, I find it hard to explain it based on non-US people's tax bureau's.
BTW, obsolescence plays a big role here and the C-128, while not in production anymore is not obsolete. I just found out this week that there is an active effort to develop new hardware to interface with the 128 as well as software initiatives.
Korodny,
I wish I could address your concerns better as I am sure that this explanation will not satisfy your non-belief that this is legal and can be done. I've put a lot of time into this and have not had one accountant tell me that there is anything wrong with the idea. I tried to explain your point and was basically told that the FMV of the SOURCE is subjective and that what I want to deduct for donating it is a pittance (by IRS standards) and would be fine a long as I had a receipt of donation by a non-profit entity.
-Jim
I would like to chime in on this subject...
...but I cant... I have no clue. But if whatever you guys are thinking up is good for the 128, then Im for it, darn it.
...yeah..... ok, ill go back over there and be quiet...