PROFESSIONAL PHOTOGRAPHER

I enjoy reading tax court cases because they are great way to identify what the courts are scrutinizing and what they find important. It’s also a very inexpensive way to learn from the very expensive mistakes of others. It’s a great form of leverage.

A recent tax case caught my attention. It involved a doctor who operated his practice as a sole proprietorship for several years, and then changed the structure. The new structure involved several changes that provided significant tax savings.

Two of the key changes were:

1. Putting the practice in an LLC. The LLC was owned by the doctor and a newly formed corporation (owned by the doctor).

2. Forming another new corporation (owned by the doctor) to provide management services to the LLC.

On the surface, the structure isn’t unusual. It’s not uncommon for a doctor’s practice to outsource its management function, nor is it uncommon for a practice to undergo ownership and entity changes.

The court, however, disregarded the two corporations as separate entities for tax purposes. This had a significant impact on the tax savings because all the income earned by the corporations was attributed to the doctor. At the end of the day, because the corporations were disregarded by the court, the tax result was no different than when the doctor was a sole proprietorship.

What went wrong? While this was a U.S. Tax Court case, the lessons to be learned are universal. There is a lot to be learned here about what went wrong.

The main issue the court had with the structure was that the doctor continued business as usual and changes were not made to the business operations to reflect the new structure.

Here are few of the specific findings that the court relied on in its decision:

- Neither corporation ever had employees

- Neither corporation ever paid salaries

- There was no evidence that the management service corporation ever performed the management services for which it was paid

- There was no service agreement between either corporation and the LLC – Only one of the corporations had a bank account

- Neither corporation had assets (other than a bank account)

- Neither corporation had day-to-day activity

- Assets were not retitled to / from the LLC

If any genuine “free will” exists, it is at the level of the “I-ness” of a system, the decision making routine, that it comes into play. Before we dive into the technicalities of this issue, let’s first try to brainstorm on what can be understood by “free will”. Although intuitively we “know” what “free will” is, just as we know what consciousness is,it is extremely hard to define it in words. Let’s try to build an ontology “free will” by reciting its features and by drawing the borders of this concept from the notions of what it is not.

I followed a very interesting discussion on the issue of free will and whether it is needed in AI, which I will neither repeat nor summarise here, but a number of striking concepts of which I will use in this essay. I do not claim to have come up with those concepts myself nor do I claim to be an expert on the issue, but I believe that I can add some interesting concepts to the discussion deriving from Ben Jacob’s “Bacterial Wisdom”, “Global Brains” and “Societies-of-Minds”. I will also propose to incorporate an artificial functional mimic of “Free Will” in a Webmind such as the AWWWARENet (Artificial World Wide Web Awareness Resource Engine Net).

A number of concepts stood out above the noise of the aforementioned discussion, which I’ll mention here as features (and non-features) of the “free will ontology”:

“Choice, override, randomness, unpredictability, (non)determination, chaotic, (non)causality and evolution”.

Indeed, for a “Will” or decision-taking routine to be “free”, it must be able to override those possible decisions, which are “causality-determined”. In Goertzel´s Webmind the discriminating faculty is the AttentionBroker routine). In the AWWWARENet, the AttentionBroker presents its conclusions, what course of action is to be taken as being the most rational, as having the highest probability of success, to the I.I.I (Identity,Initiative and Illusion generating routine). In as far as the system has an “override” function, the system appears to be endowed with a faculty of “choice” to an outside observer of the system.

The need for a random-picking faculty arises, when the AttentionBroker present the I.I.I-routine with more than one equally likely options i.e. options with identical priorities.

The issue becomes more poignant, when due to a scarcity of resources or time imposed resource constraints not all options can be carried out simultaneously or worse are mutually exclusive i.e. some must be sacrificed at the expense of others.