CLIENT UPDATE
Published for the Clients and Other Friends of Zegarelli Associates

TAX LAW UPDATE

Recent changes to the federal tax law (the "1996 Tax Law") will have a significant impact on our business clients. In most cases, we believe that the impact will be positive. Following are provisions which you should investigate further, if any appear to apply to you.

• The annual amount that may be expensed for new assets has been increased from $17,500 to $25,000 over a 6-year period. The 1997 amount is $18,000, and $18,500 in 1998.

• S corporation limitation of 35 shareholders has been expanded to 75 shareholders, effective for tax years after 1996. In addition, the IRS now can approve S status, even if there is an inadvertent failure to qualify. There are also expansions on certain S corporation ownership limitations.

• The law clarifies the employee/independent contractor distinction, and provides a safe harbor.

• There is a new retirement plan called a Savings Incentive Match Plan for Employees (SIMPLE). It may be in the form of an IRA or a 401(k). IRA contribution rules have been expanded. The self-employed health insurance deduction has been increased from 30% to 80% over a phase-in period. The deduction is 40% in 1997, and 45% in 1998.

• Employers may claim a tax credit for certain FICA taxes paid on employee tip income. A home office deduction is allowed for business expenses related to space within a home regularly used to store inventory or product samples.

Please call us for details on the new law and how it may affect you. Also, consider adding these tax planning issues to your annual meeting agenda or your annual legal checkup. Provisions of the 1996 Tax Law will be explained in more detail in future editions of our Client Update.


THE WORLD WIDE WEB

The "Internet," also known casually as the "Information Superhighway" and the "world wide web" is one of the most powerful means of communication since the beginning of time. If you have the entrepreneurial spirit, then you need to understand how the Internet works, and how you can make it work for you! We have implemented new services for our clients in good standing, even if you’re not on line. Read on for details.

What You Can Do.

How about: locate a person or company, with address and telephone information • get competitive pricing and product information • find an article on a medical problem, or a map for a trip • get the latest government rulings, cases, forms or tax information • search for a certain word in every Shakespeare work • get the latest software updates • contact someone across the block, the country or the world, and have the mechanism for receiving a written response in minutes—at no incremental cost • give people the ability to learn about your products and services at no incremental cost, with pictures and sound • increase your knowledge about almost anything.

With a few clicks of a button, you can go from an IRS tax form to an encyclopedia to a video game. That’s why it’s called "surfing the net." It is the world in a window, right at your desk.

If business is war, the Internet is a powerful weapon.

What You Need.

We represent many clients in the computer industry, with different credentials and cost structures, so we can give you referrals to get the equipment and knowledge that you need. Many clients will offer you discounts if you are also our client.

Remember that computers are now sophisticated enough to think like you, rather than the other way around. They talk to you, have pictures to help you, and are just a lot friendlier than in the old days. If you can’t afford a computer right now, consider visiting a library or one of many public facilities that offer Web access.

Surfing with Zegarelli Associates.

If you’re already on line, then you know what the Net can do as a business and communication tool. We don’t need to convince you. However, it’s important that you know we’re on the Net.

All attorneys and staff at the firm have access to the Net to communicate with you, and, accordingly, we can get the latest government information or perform research for you cost-effectively. We send and receive files, such as contracts and electronic mail, in the ordinary course of business. For example, we can e-mail you a word-processing data file for a contract we wrote for you, so that you can make a quick edit to a business issue without incurring additional legal fees. Our web site is at http://www.zegarelli.com. Any employee at the firm can be accessed at [initials]@zegarelli.com.

What’s On line.

All of our newsletters, such as our Legal Links™, and Client Updates are now on line. As you might expect, you can perform text searches of all articles. Best of all, our articles are cross-linked, as well as linked to the relevant government office. For example, if you’re reading our Introduction to Copyrights article, when you get to a section discussing the implication of being an independent contractor on copyright ownership, with a click, you’re at the IRS web site relating to standards for determining who’s an independent contractor. Another click, and you’re back to the article. Where we mention the Copyright Office, with a click, you’re at the Copyright Office web site, etc.

New Web Services for Clients.

To assist our clients leverage into the Net, we have implemented new client services. Following are a few casual introductory Internet definitions for the newcomers:

A domain usually consists of ("hosts") one or more web sites. For example, our domain name is "zegarelli.com" (pronounced "zegarelli[dot]com") and is usually used on a computer with a technical introduction in the form of "http://www.zegarelli.com." (E.g. if you’re sitting at your computer, and you type in this phrase, you will then be looking at information about our firm.)

A web site resides on a domain and is usually a collection of information about a company. Each screen of information is called a "page." A "home page" is usually a single page about an individual or the introduction page of a web site. "E-mail" (short for "electronic mail") is just a message that is sent or received by telecommunication, via the Internet in this case.

Following are the client services that what we’ve implemented for clients in good standing, on a first-come, first serve basis:

Web Hosting: We can host your web site or web page. For example, if your client name is "ACME, Inc." we could host your web site at the designation of "http://www.zegarelli.com/acme." You or your consultant need to provide us with the complete web site documents, and we will publish the site.

Links: We would be glad to give your web site or e-mail designation a link on our "Cool Links" web page. If you have a web site, then we ask for a mutual link on your site.

E-Mail: If you need to send or receive e-mail via the Net, but you’re not on line, you can have the firm handle it for you. To receive e-mail, have the sender send the mail to "clientMail@zegarelli.com" (capitalization is not relevant). Have the sender indicate your business and/or contact name on the first line of the message. To send e-mail, just contact your attorney or Responsible Legal Assistant with the information. Call Lisa Davis, Legal Coordinator, for information on these services.


CLIENT SPOTLIGHT

Zegarelli Associates is pleased to feature:

PIZZAIOLO

in the Client Spotlight. Pronounced "peez-i-ol-o", our feature is a start-up restaurant with an emphasis in Italian cuisine—and has been very favorably reviewed by the Pittsburgh Post-Gazette. It is open every day and has a great menu of fantastic specialty pizzas, salads, and more! When you want a great casual atmosphere for an evening out, try Pizzaiolo. They certainly have the entrepreneurial spirit!

Pizzaiolo is centrally located in the Mt. Lebanon area of Pittsburgh at 703 Washington Road, West Liberty Avenue, Pittsburgh, PA 15228, and may be contacted at 412-344-4123.

As this month's feature client, Pizzaiolo receives a free web site at http://www.zegarelli.com/spotlight until our next issue of the Client Update.

Zegarelli Associates: We represent the entrepreneurial spirit!®

Articles and information are for general information only, and often address issues, without expressly indicating, in generalizations. Laws vary between and among jurisdictions.  You should not rely upon any information provided by or on the website, including articles, as applicable to your particular situation. The law, filing fees, etc., change often, so the information in this document may not be current. The laws of various jurisdictions may be different than provided here.  Please contact us at info@zegarelli.com if you are interested in becoming our client--only then would this office be in the position to provide advise with regard to your particular situation.  It is important for you to review Terms of Use.

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