How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 480.82

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3:59 PM EST

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To: t2 who wrote (23172)	5/24/1999 11:23:00 PM
From: RTev	Read Replies (2) of 74651

Here's a story on a different lawsuit than the one getting all the publicity. It's a all about $16 million and maybe something in penalties so it's not a big deal in the grand scheme: Enemies support Microsoft in battle with IRS seattletimes.com The tax case is being heard in a Seattle courtroom. In this one, the software industry is backing Microsoft, including some groups and companies that strongly support the DOJ in the antitrust case. The IRS contends Microsoft owes about $16 million for deductions it claimed in the early 1990s under a tax-code provision meant only for the motion-picture and music industry. Microsoft claims the deductions, in which it claimed up to 15 percent of its gross exports, were legitimate. ... The IRS contends that the deductions were not intended for software companies. Originally outlined in the Internal Revenue Code 22 years ago, they were meant for motion pictures and the music industry, the IRS ruled several times in the past two decades. ... Key to Microsoft's case is its contention that software is no different than a movie or compact disc ... that is sent overseas on a master recording tape for mass reproduction. ... IRS attorneys are countering that if Microsoft wins, a judge would effectively create a loophole that could extend huge tax benefits to other industries, including book publishers. Unlike the antitrust case, in this one Microsoft seems to have the attorney with the better sense of humor. When the IRS counsel noted that Microsoft had arrayed one of the largest defense teams ever gathered for a tax case, Microsoft's lead counsel from the Chicago firm of Baker & McKenzie shot back, "I think the IRS District Counsel staff is probably as large or larger than Baker & McKenzie and could probably overwhelm us in a football match."

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