It may sound awful mean, but remember that the possibility of changing very high prices on occasion may be the only thing that makes the good available in the first place. The diabetic will surely be sorry he's not getting his insulin cheap, but if the possibility of his getting taken advantage of and providing big money to the pharmacist is the only reason the pharmacy is there in the first place, and otherwise the diabetic would die, then he can't be very sorry.
In the case of the taxi driver, remember that prices can't get too high, because (in the absence of collusion) otherwise other taxis would step in, at a price approximating their actual cost, not the benefit to the consumer, under perfect competition.
There are some laws limiting price discrimination. The most widely discussed is the rule of maritime law that a salvage ship can only charge a reasonable price, even if it's the only one around and gets the sinking ship's owner to promise something higher. There is extensive economic analysis of such rules; the general conclusion is that they are not useful, subject to the usual long list of exceptions.
There's a broader question, though. Suppose price gauging is "immoral" according to our common sense but its existence in a particular case is Pareto efficient: that is, it makes everyone in the world better off. Utilitarians would say that, in such a case, we are obligated to discard our moral intuition to make everyone better off. Do you disagree?
Price discrimination by itself is totally legal; in fact, it is almost always economically efficient, so that some otherwise possibly illegal acts (subject to "rule of reason" antitrust analysis) can be legal if they enhance price discrimination.
On the other hand, in conventional economic models at least, the existence of price discrimination is evidence that someone has market power and so should be subject to antitrust scrutiny. But, of course, there are lots of legal ways to have a monopoly (own IP, just happen to make the product better than anyone else...)
Microsoft lost because its benefits plans were misdrafted. They covered everyone who was in fact an employee, not only those the company considered employees. If they had just written the plans correctly, to cover only those who were treated as employees by Microsoft instead of by law, there would have been no problem.
There is no requirement to provide any benefits for contractors, and hardly any law requiring any for employees, for that matter.
1. They may not be sufficiently "original" to be copyrightable, since they're just made up at random to look like real entries. This is a tough call, since the standard is so low. In contrast, if it was a book of paintings of the Old Masters, say, and you added one which was your own genuine artwork, you would have a case.
2. Even if they were theoretically protected, they would have no value. Money damages in copyright are measured by some combination of what the copied work is worth to the copier (here, a negative amount) and what the copyright holder loses from the copying (which, again, is nothing here; the fact that he loses from copying the noncopyrighted entries doesn't count). You couldn't possibly get enhanced damages for willful copying if you had disguised the copyrighted fake entries as freely copyable real entries. If the copyright holder qualified for equitable relief (an injunction to stop continued copying), at most, he would get the copier ordered to remove the fake entries, which he would have to identify. This might cause the copier a little trouble (having to reprint his phone books or whatever), but wouldn't stop him from copying the "good" entries again.
In general, trying to extend your "monopoly" on the fake entries to the real ones might prevent you from getting any relief on the grounds of "copyright misuse," and might be an antitrust violation, the DMCA attitude notwithstanding.
The difference between our viewpoints is, mine is correct, while yours is stupid.
"We conclude that the names, towns, and telephone numbers copied by Feist were not original to Rural and therefore were not protected by the copyright in Rural's combined white and yellow pages directory. As a constitutional matter, copyright protects only those constituent elements of a work that possess more than a de minimis quantum of creativity. Rural's white pages, limited to basic subscriber information and arranged alphabetically, fall short of the mark. As a statutory matter, 17 U.S.C. 101 does not afford protection from copying to a collection of facts that are selected, coordinated, and arranged in a way that utterly lacks originality. Given that some works must fail, we cannot imagine a more likely candidate. Indeed, were we to hold that Rural's white pages pass muster, it is hard to believe that any collection of facts could fail." Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 363 (1991).
Some uneducated people used to believe the contrary...until 1991.
Wood blocks for me, including the funny-shaped ones. To me, all that plastic stuff isn't real Risk, especially Roman numerals. I mean, attacking somebody with a number is too Sesame Street for me.
To sue you register. So, when you find someone infringing, then you register and then sue. Big deal. The difference in damages is meaningless if the copyright is actually valuable. Thus, when the a priori probability of infringement is seen as low, there's no point in wasting the time and money of registering.
We can conclude nothing at all about the value of the innovation, or the movivation that copyright had on it, from the nonregistration of a work.
Are you sure about that? We always played that the defender could decide based on the attacker's rolls. Of course, our Risk set lost the rules, along with a few colors of armies, sometime in the 1970's.
If you are correct, the attacker's advantage seems much easier to understand.
Nobody's stopping anyone from running fiber to the home. The RBOCs have a near-monopoly on wires because nobody has wanted to spend the money on them, not because they can't.
The phone companies will do this here, in urban areas at least. Somebody else will if they take too long.
To the extent they actually spend money, it would have been deductible to AOL anyway as a business expense.
The question comes up when they give more in a year than they spend. That lets them (1) accelerate the deduction to the present for spending in the future (provided they make the donation now) and (2) let the money accumulate and earn interest tax-free, since it will be owned by a tax-exempt.
So it is an issue, but other people do get away with similar things. Our good friends at Fannie Mae, for example, set up the Fannie Mae Foundation to run ads they previously ran themselves, with similar effects; this has been somewhat controversial.
IAAL, so the "sneaky" aspect counts as a plus in my book.
Intel's is not one of the top 100 legal departments in the country. They have about 60 lawyers worldwide. AOL has 353, HP has 171, and Citigroup has 1200 (at least, they did as of August 2000).
But don't let the facts get in the way of your ranting.
Ah, sorry about the gap there in the last line of the second paragraph: it was supposed to say "or ." Somebody must've went and patented the preview button on me.
There's another possible explanation: all of/.'s readers have suddenly become sophisticated legal analysts and realize that the article makes no sense.
We all realize that our present patent law is questionable from a policy standpoint. The possibility that an anti-abortion group might invent and patent an abortion method just to stop it from being used is a little troubling, but much less so (IMHO) than that Amazon can patent one-click checkout, or . So the article really isn't very convincing on the policy side.
From a legal standpoint, it's just plain silly. The only legal argument it suggests against this kind of patent is the nondelegation doctrine, which says that Congress cannot allocate to the President the power to make laws. The Supreme Court has invoked this doctrine very rarely and only in extreme cases where Congress has done just that. Note that there is generally no Constitutional problem with Congress granting to federal agencies the power to write regulations implementing laws, which have the full force of law, even where it gives only very slight guidance as to what those regulations should say. The patent system involves much less delegation than that. In fact, it really involves no more than when a private landowner is allowed to decide freely who can be on his land, by whatever criteria he chooses, and the Framers clearly had no problem with that.
In short, there are lots of problems with software, business method, and other new age patents. This is not one of the big ones.
Well, there are a couple of reasons. For one thing, disallowing the deduction of expenses would hit some crimes much harder than others in ways not really related to how bad the crime is. The cost of bullets is (I would imagine) small compared to the cost of ordering a hit, which means hitmen would not be much affected by losing their deduction. On the other hand, if an investment bank violated some technical regulation in the course of buying a bunch of stock for $1 billion and reselling it for $1,001,000,000, it might be forced out of business.
The real answer is that there are "whys" behind the tax code, but not a single set of consistent explanations. There are two separate themes running throughout: one, economically correct taxation, which should seek to tax all income equally so as to minimize distortions; and two, arbitrary-looking rules to achieve all sorts of goals, great and petty. Congress wants to encourage efficient business arrangement, so it gives us detailed rules on consolidated returns and foreign passive investment companies; it wants to encourage Christmas tree growing, fraternal societies organized on the lodge system, and mobile machinery equipment, so it provides subsidies for all of them. If the Code should discourage crime, then it should have lots of special penalties for it; if it should promote economic efficiency and leave social policy to the criminal justice system, then it should treat crime the same as everything else. Either approach makes sense; it only doesn't make sense to do what Congress does, and take each approach in some cases, with no coherent pattern.
The interaction between the tax system and crime has been studied extensively, and there are more puzzling aspects to it: fines are generally not deductible; on the other hand, being sent to prison hurts partially because of lost income opportunities, but we don't try to tax you on the income you forgo. This is an area of active economic research.
There is absolutely no question that expenses incurred in a criminal business are deductible (to the same extent as in a legitimate business) except where a specific rule provides otherwise. (Guns should presumably be depreciated rather than deducted immediately.) Remember that the deduction for business expenses is not some kind of subsidy for businesses we want to encourage, it is fundamental to the tax system's goal of taxing income (i.e., profit) rather than revenue (i.e., sales with no deductions for expenses).
The best known exception is for bribes and kickbacks, which are not deductible and subject to other unfavorable treatment (e.g., they automatically constitute "Subpart F Income," which means that if a foreign corporation owned by Americans pays bribes, the bribes are actually taxable to the American stockholders immediately). The drug-dealers' exception is in I.R.C. section 280E. As you can see, it is very clearly limited to (illegal) drug dealers, which clearly implies that other criminals are not subject to this treatment.
If you want to avoid employment taxes, don't bother with an S corporation, where you risk having dividends recharacterized as salary. You want a limited partnership, in which you, as limited partner, receive 100% of profits after a fixed amount to the general partner (which could be a corporation you own). The Code specifies that, in the case of limited partners, payments other than guaranteed payments are not subject to employment tax. (It doesn't define "limited partners," but being one under substantive state law should be reasonably safe.)
* This is an actual tax loophole. If your primary business is selling insurance policies to farmers, and you meet some other requirements, you don't have to pay federal taxes. Recently this loophole has been heavily abused, but I can't find the reference. Anyone?
I assume you are talking about section 501(c)(17). But it's not only for insurance sold to farmers, it's for all very small (<$350,000 premiums/year) nonlife insurance companies.
There are many other farm-specific tax breaks, of course.
Your income has to be low (extremely low if you don't have children), but you must have income from working. That really is about it. The Earned Income Tax Credit is really more of a welfare program than a part of the tax system; it just happens to be claimed on the same forms as other people use to pay taxes.
How does this post deceive us? Let me count the ways.
1. Schedule C, and the rest of Form 1040, are for individuals only. A C corporation will be filing Form 1120. The Service does provide publications "explaining" this form, but we are talking about a lot more complexity.
2. The individual cannot deduct the corporation's business expenses. The corporation just wouldn't owe any taxes, and could (potentially) carry the net operating loss forward to future years, but the losses of a C corporation cannot reduce its shareholders' taxes.
3. It's not 3 consecutive years, it's 3 years out of 5 (except that it's 2 out of 7 in the case of certain horse-related businesses).
4. It's not up to the IRS. The Code uses this as a presumption only. It is always a question of fact: if an individual has an honest subjective intent to make a profit at an activity, the expenses are deductible; if not, they are not (with many exceptions, as usual).
5. None of that matters, since it's the corporation's taxes. You can't possibly reduce your taxes by forming a corporation to pay the costs of your hobby. Deductions would be disallowed if, hypothetically, the corporation did not have a profit motive, but a bigger worry would be the almost certain constructive dividend treatment of payment of the shareholder's expenses. But the deduction is worthless to a corporation with no income anyway.
Ah, more (probably) bad tax advice from Out There.
Yes, forming a corporation is (in many cases) a bad idea. But that's not where our hero is: he already has one, and it is already doing something (if not much). Liquidating the corporation will mean that the corporation will owe taxes on the difference between the fair market value of its assets and their basis, and the shareholder will owe taxes on the difference between that amount and his basis in his stock. Even if nothing has increased in value since the corporation was formed, the combined tax due could be large if he had built-in gain on assets he contributed to the corporation, including intangibles, thanks to the "gain duplication" inherent in Section 351.
Moral of the story: Don't try this at home, kids. Corporations are strictly for tax professionals and other masochists.
Interestingly enough, drug dealers are the only people in the world who the U.S. tax system does not give a deduction for ordinary business expenses. (There is legislative history, though, that this is not meant to disallow the subtraction of cost of goods sold.) If you're in the murder-for-hire business, make sure you don't also deal drugs, or you run the risk the IRS will think your bullets are for defense of your drug territory and disallow your deduction for them.
This is a rather trickier question than it may sound like.
First of all, it's less than 100% clear that "private benefit" prevents an organization from getting 501(c)(3) status. The traditional test as to this, and the only one (on this issue) that's in the code, is not "private benefit" by "inurement" to a private shareholder, which sounds like a considerably narrower concept. In particular, "inurement" was traditionally understood not to include much beyond direct financial benefit.
Several years ago, the IRS asserted the broader "private benefit" test, which has been accepted by some courts. The seminal case involved a school which taught political organization. The purpose of the school was to train Republican Party activists, but it had no formal affiliation and did not do anything to stop its students from working for other parties or causes. The court accepted the IRS's argument that the school provided too much benefit to the party, but this case has been controversial since.
Remember, though, that benefiting the public, or even a class of members, is not improper. Though some churches help the world at large, there is nothing illegal about one which serves only the religious needs of its members. By that context, writing software which some people happen to want should not be an improper private benefit.
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It may sound awful mean, but remember that the possibility of changing very high prices on occasion may be the only thing that makes the good available in the first place. The diabetic will surely be sorry he's not getting his insulin cheap, but if the possibility of his getting taken advantage of and providing big money to the pharmacist is the only reason the pharmacy is there in the first place, and otherwise the diabetic would die, then he can't be very sorry.
In the case of the taxi driver, remember that prices can't get too high, because (in the absence of collusion) otherwise other taxis would step in, at a price approximating their actual cost, not the benefit to the consumer, under perfect competition.
There are some laws limiting price discrimination. The most widely discussed is the rule of maritime law that a salvage ship can only charge a reasonable price, even if it's the only one around and gets the sinking ship's owner to promise something higher. There is extensive economic analysis of such rules; the general conclusion is that they are not useful, subject to the usual long list of exceptions.
There's a broader question, though. Suppose price gauging is "immoral" according to our common sense but its existence in a particular case is Pareto efficient: that is, it makes everyone in the world better off. Utilitarians would say that, in such a case, we are obligated to discard our moral intuition to make everyone better off. Do you disagree?
Price discrimination by itself is totally legal; in fact, it is almost always economically efficient, so that some otherwise possibly illegal acts (subject to "rule of reason" antitrust analysis) can be legal if they enhance price discrimination.
On the other hand, in conventional economic models at least, the existence of price discrimination is evidence that someone has market power and so should be subject to antitrust scrutiny. But, of course, there are lots of legal ways to have a monopoly (own IP, just happen to make the product better than anyone else...)
You don't know what you're talking about.
Microsoft lost because its benefits plans were misdrafted. They covered everyone who was in fact an employee, not only those the company considered employees. If they had just written the plans correctly, to cover only those who were treated as employees by Microsoft instead of by law, there would have been no problem.
There is no requirement to provide any benefits for contractors, and hardly any law requiring any for employees, for that matter.
Good question. I think the answer is twofold:
1. They may not be sufficiently "original" to be copyrightable, since they're just made up at random to look like real entries. This is a tough call, since the standard is so low. In contrast, if it was a book of paintings of the Old Masters, say, and you added one which was your own genuine artwork, you would have a case.
2. Even if they were theoretically protected, they would have no value. Money damages in copyright are measured by some combination of what the copied work is worth to the copier (here, a negative amount) and what the copyright holder loses from the copying (which, again, is nothing here; the fact that he loses from copying the noncopyrighted entries doesn't count). You couldn't possibly get enhanced damages for willful copying if you had disguised the copyrighted fake entries as freely copyable real entries. If the copyright holder qualified for equitable relief (an injunction to stop continued copying), at most, he would get the copier ordered to remove the fake entries, which he would have to identify. This might cause the copier a little trouble (having to reprint his phone books or whatever), but wouldn't stop him from copying the "good" entries again.
In general, trying to extend your "monopoly" on the fake entries to the real ones might prevent you from getting any relief on the grounds of "copyright misuse," and might be an antitrust violation, the DMCA attitude notwithstanding.
The difference between our viewpoints is, mine is correct, while yours is stupid.
"We conclude that the names, towns, and telephone numbers copied by Feist were not original to Rural and therefore were not protected by the copyright in Rural's combined white and yellow pages directory. As a constitutional matter, copyright protects only those constituent elements of a work that possess more than a de minimis quantum of creativity. Rural's white pages, limited to basic subscriber information and arranged alphabetically, fall short of the mark. As a statutory matter, 17 U.S.C. 101 does not afford protection from copying to a collection of facts that are selected, coordinated, and arranged in a way that utterly lacks originality. Given that some works must fail, we cannot imagine a more likely candidate. Indeed, were we to hold that Rural's white pages pass muster, it is hard to believe that any collection of facts could fail." Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 363 (1991).
Some uneducated people used to believe the contrary...until 1991.
There is no copyright in white-pages-style phone listings, so doing this is pointless.
Right idea, wrong conclusion.
It is perfectly legal to copy all the listings out of a phone book under your own name with no attribution.
The phone book publishers that caught people copying this way discovered that it did them no good.
Wood blocks for me, including the funny-shaped ones. To me, all that plastic stuff isn't real Risk, especially Roman numerals. I mean, attacking somebody with a number is too Sesame Street for me.
Nonsense.
To sue you register. So, when you find someone infringing, then you register and then sue. Big deal. The difference in damages is meaningless if the copyright is actually valuable. Thus, when the a priori probability of infringement is seen as low, there's no point in wasting the time and money of registering.
We can conclude nothing at all about the value of the innovation, or the movivation that copyright had on it, from the nonregistration of a work.
Are you sure about that? We always played that the defender could decide based on the attacker's rolls. Of course, our Risk set lost the rules, along with a few colors of armies, sometime in the 1970's.
If you are correct, the attacker's advantage seems much easier to understand.
Nobody's stopping anyone from running fiber to the home. The RBOCs have a near-monopoly on wires because nobody has wanted to spend the money on them, not because they can't.
The phone companies will do this here, in urban areas at least. Somebody else will if they take too long.
This is an issue, but not much of one.
To the extent they actually spend money, it would have been deductible to AOL anyway as a business expense.
The question comes up when they give more in a year than they spend. That lets them (1) accelerate the deduction to the present for spending in the future (provided they make the donation now) and (2) let the money accumulate and earn interest tax-free, since it will be owned by a tax-exempt.
So it is an issue, but other people do get away with similar things. Our good friends at Fannie Mae, for example, set up the Fannie Mae Foundation to run ads they previously ran themselves, with similar effects; this has been somewhat controversial.
IAAL, so the "sneaky" aspect counts as a plus in my book.
Intel's is not one of the top 100 legal departments in the country. They have about 60 lawyers worldwide. AOL has 353, HP has 171, and Citigroup has 1200 (at least, they did as of August 2000).
But don't let the facts get in the way of your ranting.
Ah, sorry about the gap there in the last line of the second paragraph: it was supposed to say "or ." Somebody must've went and patented the preview button on me.
There's another possible explanation: all of /.'s readers have suddenly become sophisticated legal analysts and realize that the article makes no sense.
We all realize that our present patent law is questionable from a policy standpoint. The possibility that an anti-abortion group might invent and patent an abortion method just to stop it from being used is a little troubling, but much less so (IMHO) than that Amazon can patent one-click checkout, or . So the article really isn't very convincing on the policy side.
From a legal standpoint, it's just plain silly. The only legal argument it suggests against this kind of patent is the nondelegation doctrine, which says that Congress cannot allocate to the President the power to make laws. The Supreme Court has invoked this doctrine very rarely and only in extreme cases where Congress has done just that. Note that there is generally no Constitutional problem with Congress granting to federal agencies the power to write regulations implementing laws, which have the full force of law, even where it gives only very slight guidance as to what those regulations should say. The patent system involves much less delegation than that. In fact, it really involves no more than when a private landowner is allowed to decide freely who can be on his land, by whatever criteria he chooses, and the Framers clearly had no problem with that.
In short, there are lots of problems with software, business method, and other new age patents. This is not one of the big ones.
Well, there are a couple of reasons. For one thing, disallowing the deduction of expenses would hit some crimes much harder than others in ways not really related to how bad the crime is. The cost of bullets is (I would imagine) small compared to the cost of ordering a hit, which means hitmen would not be much affected by losing their deduction. On the other hand, if an investment bank violated some technical regulation in the course of buying a bunch of stock for $1 billion and reselling it for $1,001,000,000, it might be forced out of business.
The real answer is that there are "whys" behind the tax code, but not a single set of consistent explanations. There are two separate themes running throughout: one, economically correct taxation, which should seek to tax all income equally so as to minimize distortions; and two, arbitrary-looking rules to achieve all sorts of goals, great and petty. Congress wants to encourage efficient business arrangement, so it gives us detailed rules on consolidated returns and foreign passive investment companies; it wants to encourage Christmas tree growing, fraternal societies organized on the lodge system, and mobile machinery equipment, so it provides subsidies for all of them. If the Code should discourage crime, then it should have lots of special penalties for it; if it should promote economic efficiency and leave social policy to the criminal justice system, then it should treat crime the same as everything else. Either approach makes sense; it only doesn't make sense to do what Congress does, and take each approach in some cases, with no coherent pattern.
The interaction between the tax system and crime has been studied extensively, and there are more puzzling aspects to it: fines are generally not deductible; on the other hand, being sent to prison hurts partially because of lost income opportunities, but we don't try to tax you on the income you forgo. This is an area of active economic research.
There is absolutely no question that expenses incurred in a criminal business are deductible (to the same extent as in a legitimate business) except where a specific rule provides otherwise. (Guns should presumably be depreciated rather than deducted immediately.) Remember that the deduction for business expenses is not some kind of subsidy for businesses we want to encourage, it is fundamental to the tax system's goal of taxing income (i.e., profit) rather than revenue (i.e., sales with no deductions for expenses).
The best known exception is for bribes and kickbacks, which are not deductible and subject to other unfavorable treatment (e.g., they automatically constitute "Subpart F Income," which means that if a foreign corporation owned by Americans pays bribes, the bribes are actually taxable to the American stockholders immediately). The drug-dealers' exception is in I.R.C. section 280E. As you can see, it is very clearly limited to (illegal) drug dealers, which clearly implies that other criminals are not subject to this treatment.
If you want to avoid employment taxes, don't bother with an S corporation, where you risk having dividends recharacterized as salary. You want a limited partnership, in which you, as limited partner, receive 100% of profits after a fixed amount to the general partner (which could be a corporation you own). The Code specifies that, in the case of limited partners, payments other than guaranteed payments are not subject to employment tax. (It doesn't define "limited partners," but being one under substantive state law should be reasonably safe.)
* This is an actual tax loophole. If your primary business is selling insurance policies to farmers, and you meet some other requirements, you don't have to pay federal taxes. Recently this loophole has been heavily abused, but I can't find the reference. Anyone?
I assume you are talking about section 501(c)(17). But it's not only for insurance sold to farmers, it's for all very small (<$350,000 premiums/year) nonlife insurance companies.
There are many other farm-specific tax breaks, of course.
That, of course, would depend on what taxable year the corporation elected to have.
Your income has to be low (extremely low if you don't have children), but you must have income from working. That really is about it. The Earned Income Tax Credit is really more of a welfare program than a part of the tax system; it just happens to be claimed on the same forms as other people use to pay taxes.
How does this post deceive us? Let me count the ways.
1. Schedule C, and the rest of Form 1040, are for individuals only. A C corporation will be filing Form 1120. The Service does provide publications "explaining" this form, but we are talking about a lot more complexity.
2. The individual cannot deduct the corporation's business expenses. The corporation just wouldn't owe any taxes, and could (potentially) carry the net operating loss forward to future years, but the losses of a C corporation cannot reduce its shareholders' taxes.
3. It's not 3 consecutive years, it's 3 years out of 5 (except that it's 2 out of 7 in the case of certain horse-related businesses).
4. It's not up to the IRS. The Code uses this as a presumption only. It is always a question of fact: if an individual has an honest subjective intent to make a profit at an activity, the expenses are deductible; if not, they are not (with many exceptions, as usual).
5. None of that matters, since it's the corporation's taxes. You can't possibly reduce your taxes by forming a corporation to pay the costs of your hobby. Deductions would be disallowed if, hypothetically, the corporation did not have a profit motive, but a bigger worry would be the almost certain constructive dividend treatment of payment of the shareholder's expenses. But the deduction is worthless to a corporation with no income anyway.
Ah, more (probably) bad tax advice from Out There.
Yes, forming a corporation is (in many cases) a bad idea. But that's not where our hero is: he already has one, and it is already doing something (if not much). Liquidating the corporation will mean that the corporation will owe taxes on the difference between the fair market value of its assets and their basis, and the shareholder will owe taxes on the difference between that amount and his basis in his stock. Even if nothing has increased in value since the corporation was formed, the combined tax due could be large if he had built-in gain on assets he contributed to the corporation, including intangibles, thanks to the "gain duplication" inherent in Section 351.
Moral of the story: Don't try this at home, kids. Corporations are strictly for tax professionals and other masochists.
Interestingly enough, drug dealers are the only people in the world who the U.S. tax system does not give a deduction for ordinary business expenses. (There is legislative history, though, that this is not meant to disallow the subtraction of cost of goods sold.) If you're in the murder-for-hire business, make sure you don't also deal drugs, or you run the risk the IRS will think your bullets are for defense of your drug territory and disallow your deduction for them.
This is a rather trickier question than it may sound like.
First of all, it's less than 100% clear that "private benefit" prevents an organization from getting 501(c)(3) status. The traditional test as to this, and the only one (on this issue) that's in the code, is not "private benefit" by "inurement" to a private shareholder, which sounds like a considerably narrower concept. In particular, "inurement" was traditionally understood not to include much beyond direct financial benefit.
Several years ago, the IRS asserted the broader "private benefit" test, which has been accepted by some courts. The seminal case involved a school which taught political organization. The purpose of the school was to train Republican Party activists, but it had no formal affiliation and did not do anything to stop its students from working for other parties or causes. The court accepted the IRS's argument that the school provided too much benefit to the party, but this case has been controversial since.
Remember, though, that benefiting the public, or even a class of members, is not improper. Though some churches help the world at large, there is nothing illegal about one which serves only the religious needs of its members. By that context, writing software which some people happen to want should not be an improper private benefit.