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Full-Text Articles in Law
What Would Henry Simons Do?: Using An Ideal To Shape And Explain The Economic Substance Doctrine, Charlene Luke
What Would Henry Simons Do?: Using An Ideal To Shape And Explain The Economic Substance Doctrine, Charlene Luke
UF Law Faculty Publications
The law and policy governing tax shelters is incomplete, sometimes contradictory, and occasionally incoherent. Indeed, consensus has yet to emerge even as to which transactions should bear the tax shelter label. Often reform efforts are grounded in theories that are largely external to tax law—for example, economic theory relating to incentives. Fewer approaches rely on intrinsic tax policies, including that most fundamental of income tax principles—the Schanz-Haig-Simons income concept ("H-S"). Under H-S, an income tax base should be expansive, requiring inclusion of an individual's increases in wealth and allowing reductions only for non-personal costs that reduce wealth. This Article seeks …
Cobra Strikes Back: Anatomy Of A Tax Shelter, Karen C. Burke, Grayson M.P. Mccouch
Cobra Strikes Back: Anatomy Of A Tax Shelter, Karen C. Burke, Grayson M.P. Mccouch
UF Law Faculty Publications
Paul Daugerdas gained notoriety for himself and his erstwhile firm, Jenkens & Gilchrist, as the designer of a tax shelter that uses contingent liabilities to generate artificial tax losses on a grand scale. The basic shelter transaction is surprisingly simple. In essence, it uses offsetting options to inflate the basis of property that is distributed by a partnership and then contributed to and sold by another partnership, resulting in a large tax loss without any corresponding economic loss. In principle, this type of shelter could be replicated indefinitely and generate unlimited tax losses. Mr. Daugerdas is by no means unique. …
Repairing Inside Basis Adjustments, Karen C. Burke
Repairing Inside Basis Adjustments, Karen C. Burke
UF Law Faculty Publications
Optional basis adjustments under Subchapter K have come under increased scrutiny as a result of tax shelter abuses involving partnerships. Recent legislation requires mandatory adjustments under sections 734(b) and 743(b) upon certain distributions of partnership property and transfers of partnership interests. These amendments were targeted at situations in which the failure to make such adjustments potentially gave rise to duplication of losses. While preventing loss duplication may be particularly urgent, these anti-tax-shelter measures represent a retreat from broader proposals calling for mandatory section 734(b) adjustments for both current and liquidating distributions.
In a recent article, Professor Abrams criticizes the common …
Contributions, Distributions, And Assumption Of Liabilities: Confronting Economic Reality, Karen C. Burke
Contributions, Distributions, And Assumption Of Liabilities: Confronting Economic Reality, Karen C. Burke
UF Law Faculty Publications
To combat a relatively arcane international tax-shelter abuse, Congress recently amended Code sections 357 and 362 governing contributions of encumbered property to a corporation. This Article offers a critical assessment of the recent amendments to the liability assumption rules of section 357 and corresponding basis provisions of section 362. Part I explores the divergence between the former liability assumption rules and the "economic benefit" doctrine of the section 1001 regulations. Part II focuses on the technical definition of assumption of recourse and nonrecourse liabilities under amended section 357(d). Part III examines the corollary basis provisions of section 362, as modified …