Law Commons^™

The Congressional Response To Corporate Expatriations: The Tension Between Symbols And Substance In The Taxation Of Multinational Corporations, Michael Kirsch

Journal Articles

During the past few years, several high-profile U.S.-based multinational corporations have changed their tax residence from the United States to Bermuda or some other tax haven. They have accomplished these expatriations, and the resulting millions of dollars of annual tax savings, merely by changing the place of incorporation of their corporate parent, without the need to make any substantive changes to their business operations or their U.S.-based management structure. Congress and the media have focused significant attention on this phenomenon. Despite this attention, Congress initially enacted only a non-tax provision targeting corporate expatriations - a purported ban on expatriated companies …

Practicing What We Preach: A Call For Progressive Church Taxes, Matthew Barrett

Journal Articles

Many Catholics do not know that canon law allows their bishop to impose taxes on the parishes in his diocese for diocesan needs. Under canon law, these diocesan taxes, sometimes called diocesan assessments, parish assessments, or quotas, must be proportionate to [the parishes'] income. To a tax lawyer, the adjective proportionate describes a so-called flat tax, or a system that imposes the same tax rate on every taxpayer's taxable income. Canon law commentators, however, have consistently agreed that diocesan bishops can use a progressive tax, which in this context would impose a higher tax rate on parishes with larger incomes. …

"Tax Services" As A Trojan Horse In The Auditor Independence Provisions Of Sarbanes-Oxley, Matthew J. Barrett

Journal Articles

This article argues that the failure of the Sarbanes-Oxley Act of 2002 (SOx) to prohibit auditors for public companies from also providing tax services to audit clients or their executives and selling tax shelters to anyone remains a Trojan horse that threatens both the investing public and the auditing profession. Although SOx enacted several reforms designed to enhance auditor independence, the legislation and implementing regulations that the Securities and Exchange Commission (SEC) subsequently promulgated allow an auditor for a publicly traded company to provide tax services to the company as long as the audit committee preapproves the engagement.

As the …

The Theological Case For Progressive Taxation As Applied To Diocesan Taxes Or Assessments Under Canon Law In The United States, Matthew J. Barrett

Journal Articles

Canon 1263 of the 1983 Code of Canon Law allows the diocesan bishop to impose taxes on the parishes in his diocese for diocesan needs. Canon 1263 requires that such taxes be proportionate to [the parishes'] income. To a tax lawyer, the adjective proportionate describes a so-called flat tax, or a system that imposes the same tax rate on every taxpayer's taxable income. Canon law commentators, however, have consistently agreed that canon 1263 also authorizes a progressive tax, which in this context would impose a higher tax rate on parishes with larger incomes. This article argues that Catholic social teachings, …

Enron, Accounting, And Lawyers, Matthew Barrett

Journal Articles

Enron's collapse painfully illustrates the importance of financial accounting to all lawyers. Accounting is often referred to as "the language of business." Virtually every lawyer represents businesses, their owners, or clients with adverse legal interests, such as creditors and customers. Especially after Enron, lawyers cannot competently represent clients if they do not grasp certain basic principles about accounting. This article lists the top ten accounting lessons that any lawyer could learn from the scandal. These lessons include the components of a complete set of financial statements, the choices inherent in generally accepted accounting principles, the distortions possible in pro forma …

The Use And Misuse Of Antiabuse Rules: Lessons From The Partnership Antiabuse Regulations, Alan Gunn

Journal Articles

Subchapter K of the U.S. Internal Revenue Code was designed to achieve simplicity and flexibility in taxing partners. To limit this flexibility the regulations under subchapter K contain "antiabuse rules", aimed at insuring that subchapter K rules are applied consistently, with the "intent" of those rules in mind and allowing the Commissioner to treat a partnership as an aggregate of its partners in applying any Internal Revenue Code provision. Though antiabuse rules have received harsh criticism for being badly written, they are valuable in many ways. Such rules define abuse as something distinct in principle from substance-over-form and business purpose …

The Market For Deadbeats, Margaret F. Brinig, F. H. Buckley

Journal Articles

This article outlines three explanations for why states seek migrants and tests them by references to 1985-90 interstate migration flows. On race-for-the-top theories, states compete for value-increasing migrants by offering them healthy economies and efficient laws. On vote-seeking theories, states compete for clienteles of voters, with some states seeking to attract and some to deter welfare- or tax-loving migrants. On deadbeat theories, states compete for high human capital debtors by offering them a fresh start from out-of-state creditors. Our findings support vote-seeking and deadbeat theories.

Can A Deficiency Notice To A Non-Filing Taxpayer Shorten The Time To Claim A Refund In The Tax Court?, Matthew J. Barrett

Journal Articles

Each year, about three million people overpay their federal income taxes but don't file returns. Taxpayers usually have three years to claim a refund. When a non-filer waits more than two years before seeking a refund, the IRS often seeks more tax because the taxpayer has not filed. If the taxpayer appeals to the Tax Court to avoid paying the additional tax, the IRS says the refund period is only two years. Now the Supreme Court decides if a deficiency notice can shorten the time to claim a refund in the Tax Court.

Can The Government Change Tax Laws Retroactively?, Matthew J. Barrett

Journal Articles

This case presents an issue regarding the constitutionality of retroactive taxes. In December 1987, to correct a drafting oversight, Congress retroactively amended the requirements of a federal estate tax deduction enacted in October 1986. The Ninth Circuit, using a lenient test, invalidated the amendment’s retroactive application to a December 1986 transaction. Now the case is before the Supreme Court whose decision should indicate whether the Court will relax the almost overwhelming barriers to a successful attack on retroactive taxation established by its earlier cases.

Determining An Individual's Federal Income Tax Liability When The Tax Benefit Rule Applies: A Fifty-Year Checkup Brings A New Prescription For Calculating Gross, Adjusted Gross, And Taxable Incomes, Matthew J. Barrett

Journal Articles

The tax benefit rule should be described to indicate that it applies to credits and exclusions besides deductions, and deduction recoveries should be reported in the same location as was affected initially. The recovery should not affect gross income, for the purpose of tax equity. The recovery should rather affect either taxable income or adjusted gross income. The IRS and the courts should adopt this new description and principles.

The "Estate Planning" Interviewer, Thomas L. Shaffer

Books

Book Introduction

Professor Shaffer's article The "Estate Planning" Interviewer is the Introduction: Part II, in J.K. Lasser's Estate Tax Techniques on pages INT-25 to INT-51

Some Observations On The Interpretation Of The Internal Revenue Code, Alan Gunn

Journal Articles

According to the author, a minor problem in partnership taxation provides a useful illustration of the problem of following the language of the Internal Revenue Code slavishly, without regard to context and history, even if a literal reading leads to absurd results.

Matching Of Costs And Revenues As A Goal Of Tax Accounting, Alan Gunn

Journal Articles

A central principle in accounting is that accounting methods must “clearly reflect income”. They must match a taxpayer’s revenues with the expenses of producing these revenues to determine their income. The article argues against this principle with an examination of accrual accounting methods. It looks at the role of matching in connection with two fundamental concerns of accrual accounting, the “all events” test and the principle of “clear reflection” of income. Through this examination the article notes that matching is generally irrelevant in principle, since the goal of tax accounting is to produce administratively feasible and economically sensible rules for …

The Case For An Income Tax, Alan Gunn

Journal Articles

Recent studies by the US Treasury Department and the Meade Committee in Britain have one thing in common. They recommend a progressive tax on personal consumption as an alternative to the income tax and discuss of the practical problems of substituting consumption for income as the tax base. These studies suggest that replacing the income tax with an expenditure tax is now being considered a serious possibility. Advocates for the expenditure tax base their arguments on considerations of equity, administrative convenience and economic efficiency. The article examines the merits of these arguments, with a focus on four important non-economic issues …

Is An Interest Deduction For Personal Debt A Tax Expenditure?, Alan Gunn

Journal Articles

In the United States, generally all interest payments are deductible. In Canada, by contrast, only interest that is incurred for a business purpose is deductible. In both countries, however, the deduction for interest paid on debts connected with the acquisition of a personal asset is commonly analyzed and defended as if it were a tax expenditure. Thus, in the United States the "Deductibility of Mortgage Interest on Owner-Occupied Homes" (which constitutes about 60 per cent of all deductions for interest paid) and the "Deductibility of Interest on Consumer Credit" are included in all published tax expenditure lists. In Canada, the …

The Development Of The Federal Law Of Gambling, G. Robert Blakey, Harold A. Kurland

Journal Articles

The Commission on the Review of the National Policy Toward Gambling, believing that the States should have the primary responsibility for determining what forms of gambling may legally take place within their borders, recently suggested that the federal government should prevent interference by one State with the gambling policies of another, and should act to protect identifiable national interests.

Although this broad recommendation reinforces the role the federal government has traditionally played in regulating gambling, the Commission also proposed specific amendments to the cur- rent federal gambling laws. Should Congress act upon the Commission's report or otherwise attempt a comprehensive …

Tax Avoidance, Alan Gunn

Journal Articles

Professor Gunn explores the merits of “tax avoidance” approaches in dealing with cases involving unpaid taxes. He describes definitions of the term and also illustrates some alternatives to the tax avoidance approach. Looking at how tax avoidance is dealt with in laws and in judicial decisions Gunn notes that lawmakers should not attempt to formulate authoritative rules on preventing it. This is because taxpayers have a well-known desire to reduce their taxes, and will find ways to get around laws. Authoritative and too well defined rules ignore what taxpayers might do in response to them. Professor Gunn concludes by arguing …

Taxation Of Distributions From Accumulation Trusts: The Impact Of The Tax Reform Act Of 1976, David T. Link, Michael J. Wahoske

Journal Articles

The complex rules governing the taxation of income from trusts and estates have at times been described as incomprehensible. Perhaps the most confusing of these are the accumulation distribution throwback rules. In an effort to alleviate some of this confusion, Congress included accumulation trusts within the purview of the Tax Reform Act of 1976. Though Congress claimed that the rules are now "considerably simplified," it is not without some effort that one is able to translate the statutory language into a form useful to the practitioner.

Given the complexity of the rules, it is necessary to begin with a caveat. …

The Psychological Autopsy In Judicial Opinions Under Section 2035, Thomas L. Shaffer

Journal Articles

It is surprising how many cases have been litigated under Section 2035 of the Internal Revenue Code, which imposes an estate tax on inter vivos gifts in contemplation of death. It is also surprising that those hundreds of judicial opinions embody rigid perceptions of human life, and of attitudes toward death-perceptions which range from incisive to naive. They disclose a judicial system of death psychology which is detailed, systematic and (sometimes) accurate. This is an inquiry into those opinions as psychological autopsies.

The traditional judicial view of a gift in a contemplation of death case implies that the dead man …

Computation Of Future Damages: A View From The Bench, William Burns Lawless

Journal Articles

At the turn of the century the United States Supreme Court held that a common-law action could not be maintained in a court of the United States against a Mexican railroad, incorporated in Colorado, for the wrongful death in Mexico of an American switchman. Mr. Justice Holmes, writing for the majority, said that the American court should refuse to administer a Mexican statutory rule of damages which provided compensation in the form of scheduled, periodic payments instead of the lump-sum award traditional to American jury verdicts.

While the case is of primary interest for students of conflict of laws, it …

Rira -- A Legal Information System In The Internal Revenue Service, David T. Link

Journal Articles

The IRS legal information retrieval program is still in its infancy. The results of its use so far indicate that the program is on a sound foundation. Consequently, the Office has great hopes for it. By eliminating a great deal of the duplication of effort among the attorneys it promises to result in certain economies to the Office. More important, it should assure a more consistent treatment of taxpayers through greater coordination than has ever been possible in the past. And most important, by providing more comprehensive and timely decision-making information the system should further the Offices constant goal of …

Valuation Of Closely-Held Stock For Federal Tax Purposes: Approach To An Objective Method, Joseph O'Meara, Lyle R. Johnson, Eli Shapiro

Journal Articles

The present double-standard approach to the valuation problem discriminates against owners of closely-held stock, that is, corporate shares which have no public market. The disparity of treatment is traceable to the unfortunate fact that, whereas actual sales or bona fide bid and asked prices govern the valuation for federal tax purposes of listed stocks and of unlisted stocks which "are dealt in through brokers or have a market," the criteria employed in valuing closely-held stock are predominantly subjective. This makes a paradise for "experts" but they seldom agree and few, if any, of their assumptions and conclusions are anything more …

Federal Income Tax In Relation To Consumer Cooperatives, Joseph O'Meara

Journal Articles

The taxation of consumer cooperative associations has proceeded on an erroneous assumption deriving from Eisner v. Macomber. Contrary to that assumption, so long as these non-profit, mutual-benefit undertakings confine themselves to their proper functions they have no income under the Sixteenth Amendment and cannot validly be required to pay an income tax.