Taxes Change for Partnerships and S Corporations

Congress has been busy in recent weeks on changes to the tax code that will reduce the taxes paid by individual and corporate residents throughout the U.S. Whether that’s a good or bad thing is subject to debate and opinions as to how tax policy impacts behavior, and we’ll leave that discussion for other forums. But since many of our clients are pass-through entities (or owners of pass-through entities), we wanted to provide a quick update as to the changes.

The biggest change to discuss for pass-throughs is this: the current proposal is that sole proprietors, most S corporation shareholders, and partners in a partnership will be entitled to a deduction equal to 20% of their allocable share of business income. There are some limits to this. For example, the deduction cannot exceed 50% of the share of the W-2 wages paid by the business. Also, the owners of “personal service businesses” are not eligible to take the deduction unless the individual’s taxable income is less than $157,500 (or $315,000 if married, filing jointly).

This proposal has passed through conference committee, and both houses of Congress are set to vote on the proposal this week. Most expect the proposal to pass. Stay tuned …

Advertisements

Pinterest wins $7.2M in legal battle with cybersquatter

Chinese cybersquatter Qian Jin, in one of the most brazen cybersquatting cases to come to court in months if not years, has been ordered by the US District Court for the Northern District of California to pay Pinterest $7.2 million in damages and legal fees and turn over to Pinterest the domains (e.g. pintesrest.com, pinterests.com, etc.) he had set up to divert inadvertent searchers to his own slew of money-making websites.  Hat tip to Dara Kerr of CNET: Pinterest wins $7.2M in legal battle with cybersquatter | Internet & Media – CNET News.

Alleging Cyberpiracy, Trademark Infringement, Dilution, and a series of California state law claims, the complaint charges that Pinterest was not Jin’s only target: the serial cybersquatter registered “domains that appear to infringe upon the marks of popular companies, especially online companies, across the globe, including Google, Facebook, Twitter, Etsy, Eventbrite, Foursquare, Hotmail, Hulu, Lotus, Spotify, Blekko, Dwolla, Volunia, Skillshare, Jumio, Scribd, Zazzle, and Zynga.” (read the full complaint here).

Not only did Qian Jin register domains that were clearly intended to cause confusion with and dilute a wide variety of famous brands, he even tried to register Twitter, Foursquare, Instagram, Quora, and Pinterest  as trademarks in China… did he think that this would stop other Chinese cyberpirates from moving in on his territory?

Action in the case was suspended for some time while Pinterest achieved service on Jin in China, which it eventually managed to do in January, 2013. Qian Jin (perhaps not surprisingly) failed to file an answer in the case, and the Court finally awarded a default judgment to Pinterest, pulling the plug on Jin’s operation for good.

While the Court’s order may help Pinterest gain control of the infringing domains, Pinterest’s chances of collecting a single Yuan of the $7.2 million judgment from Qian Jin are probably as remote as, well, China.  For our purposes, however, the judgment is not just a shot across the bows of would-be domain squatters, cyberpirates, and trademark infringers across the globe but a salutary warning to small-time hucksters and wannabe cyberpirates trying to shake down local businesses in exactly the same way.