Law Commons^™

Conservation Options: Conservation Easements, Flexibility, And The "In Perpetuity" Requirement Of Irc § 170(H), Molly Teague

Vanderbilt Law Review

Conservation easements have been closely tied to tax incentives since the 1970s, when Congress passed legislation to encourage land preservation. In an attempt to balance the desire to conserve more land with the desire to prevent tax abuses, Congress later passed § 170(h) of the Internal Revenue Code, which requires that conservation easements be donated “in perpetuity” to be eligible for the federal tax deduction.

As climate change increases global temperatures, shifts migratory patterns, and causes sea levels to rise, conservation easements’ ability to adapt to changing circumstances must also become part of Congress’s balancing equation. This Note evaluates the …

Tax Incentives For Innovation In A Modern Ip Ecosystem, Joshua Chao

Vanderbilt Journal of Entertainment & Technology Law

Technological innovation is a long-recognized catalyst for economic growth in the United States, and its promotion is an important feature of national economic policy, as evidenced by the presence of various tax incentives for innovation in the US Internal Revenue Code. Tax incentives are an important means by which governments can deliver subsidies to promote such innovation. To be effective, however, any system of tax incentives must be tailored for current economic conditions and competitive landscapes. In the current ecosystem of innovation in the United States, this means that, at the very least, the incentives for innovation in the US …

Perpetuation Of The Foreign Earned Income Exclusion, Hale E. Sheppard

Vanderbilt Journal of Transnational Law

This Article discusses Section 911 of the Internal Revenue Code, also known as the Foreign Earned Income Exclusion (FEIE), as an example of a provision that has been sustained, not on the basis of sound economic analysis and compliance with established U.S. international tax policy, but rather because of effective lobbying and political circumstance. First providing an overview of the U.S. system of worldwide taxation, and the place of the FEIE within that framework, Mr. Sheppard explores the forces underlying the perpetuation of the FEIE. He demonstrates that FEIE is inconsistent with each of the primary components of U.S. international …

Common Misconceptions: The Function And Framework Of "Trade Or Business Within The United States", Nancy H. Kaufman

Vanderbilt Journal of Transnational Law

In this Article, Professor Kaufman examines the administrative and jurisdictional functions of the Internal Revenue Code's term "trade or business within the United States" in the taxation of foreign persons' income and the existing framework established for the term's interpretation. The author contends that the courts, by relying on two common misconceptions of the term, have made the term's application unpredictable. The author further believes that defining the term according to its functions would serve United States tax policy and economic interests. This definition would focus primarily on facts indicating an ongoing commitment to participation the United States economy. The …

Case Digest, Law Review Staff

Vanderbilt Journal of Transnational Law

United States Tax Principles Govern Determination of Accumulated Profits Under Foreign Tax Credit Section of Internal Revenue Code, United States v. Goodyear Tire & Rubber Co. 110 S. Ct. 1172 (1990).

Tax Injunction Act Bars Foreign Parent of Subsidiary Doing Business in California from Raising Foreign Commerce Objections to Tax Board's Formula Franchise Tax Board of California v. Alcan Aluminum Ltd. 110 S. Ct. 661 (1990).

Correspondence Bank Account with United States Trust Company Held Insufficient Contact with United States to Establish Subject Matter Jurisdiction under the FSIA--International Housing Ltd. v. Rafidain Bank Iraq, 893 F.2d 8(2d Cir. 1989).

Successful …

United States Employment Taxation Of German Nationals Working In The United States, John L. Gornall, Jr., Kevin Conboy

Vanderbilt Journal of Transnational Law

This Article begins with a discussion of the general application of FICA, SECA, and FUTA to nonresident aliens. Knowledge of the ordinary United States employment taxation scheme is necessary for an understanding of how the totalization agreement works.

The second part of this Article explains how totalization agreements between the United States and certain foreign countries--including the Federal Republic of Germany--have altered the United States employment taxation of nonresident aliens. These agreements generally provide the following: (1) the foreign worker and employer may pay taxes and receive benefits from either the home country or the temporary host country, but in …

Book Reviews, Lawrence M. Friedman, Allaire U. Karzon

Vanderbilt Law Review

The Politics of Justice: Lower Federal Judicial Selection and the Second Party System - Book Author: Kermit L. Hall; Book Reviewed by Lawrence M. Friedman

In The Politics of Justice, Kermit L. Hall, a history professor at Wayne State University, takes a look at the way Presidents from Jackson through Buchanan picked judges for the federal district courts and for the territories. There were 240 such appointments during the period studied...

There is something of a literature on the selection process,"although Hall's book does fill a rather glaring hole. The tale Hall tells rings true if we ignore a few …

Narcotics Offenders And The Internal Revenue Code: Sheathing The Section 6851 Sword, John M. Fite

Vanderbilt Law Review

This Note first will analyze the Internal Revenue Code provisions supporting the current crackdown by the IRS on suspected narcotics dealers. Secondly, it will examine the split in the federal circuit courts of appeal on the issues of the availability of Tax Court review of an assessment made pursuant to a section 6851 termination of a taxable year and the availability of equitable or statutory protections to prevent the seizure and sale of property belonging to the taxpayer. Lastly, a discussion of the propriety of such conduct by the IRS and its constitutionality in light of recent Supreme Court decisions …

The Taxation Of Interest -- Free Loans, James T. O'Hare

Vanderbilt Law Review

The dramatic rise in interest rates in the United States in the past few years has given added significance to the uncertain tax consequences of interest-free loans made between family members, between corporations and shareholders, and between affiliated corporations. Such loans can create a variety of tax problems depending on the relationship of the parties. An interest-free loan from one family member to another may constitute a gift equal in value to the use of the money loaned or even to the amount of the entire principal. A corporation that makes an interest-free loan to one of its shareholders not …

The Tax Benefit Rule, Claim Of Right Restorations, And Annual Accounting: A Cure For The Inconsistencies, John G. Corlew

Vanderbilt Law Review

The Internal Revenue Code is premised on an annual accounting concept which requires the taxpayer to count up his transactions at the end of the year and remit to the Government taxes based on the occurrences of that particular year. In theory this requires disregarding the factors of prior or subsequent taxable years, despite the irrelation to events of the tax year in question. In most instances, annual accounting poses no special problem. When applied to certain items whose tax impact transcends more than a single taxable year,however, inconsistencies and inequities may result. Two instances in which inconsistent tax treatment …

Real Property Depreciation Recapture: An Ineffectual Reform Of The Tax Laws, Charles S. Franklin

Vanderbilt Law Review

This note stems from a belief that an asymmetrical body of tax laws is a challenge to the legal profession which, by training, experience and tradition, is well situated to spur and guide reform. It is my intention to outline the story of but one section of the Internal Revenue Code: why it was proposed, what it sought to do, how it underwent modification by an unsympathetic congressional committee, and how it was finally enacted as a superficial compromise with the underlying asymmetry of our tax laws. In short, what follows is an appended bar in the organ theme entitled …

Unexpected Disqualification Of Reorganizations Under The Internal Revenue Code By The Inadvertent Transfer Of Boot, Alden H. Smith, Jr.

Vanderbilt Law Review

It is common today to read of corporations "merging" or of one corporation "buying out" another. Many of these transactions will be "reorganizations" under section 368(a) of the Internal Revenue Code. Section 368 is the current congressional resolution of two conflicting policies of tax law. On the one hand, it is desirable to promote the free mobility of capital in order that it be used in the most economical manner. On the other hand, there is the desire to prevent shareholders from using corporate reorganizations as a means of avoiding income taxes. The most common of shareholder schemes are those …

Distributions By Charitable Organizations: Their Effect On Tax Exempt Status And Deductibility Of Donations Received, Thomas H. Belknap

Vanderbilt Law Review

The number and importance of tax exempt organizations has steadily grown in the past decade to the point where there were over 45,000 as of the beginning of 1963, as compared with 12,000 at the end of 1952. "Unquestionably, the economic life of our nation has be-come so intertwined with foundations that unless something is done about them, they will hold a dominant position in every phase of American life." This, according to the Patman Report, is because"multi-million-dollar foundations have replaced the trusts which were broken up during the Theodore Roosevelt administration." Both the Patman Report and the increased activity …

The Western Hemisphere Trade Corporation:A Functional Perspective, Leo J. Raskind

Vanderbilt Law Review

Among the statutory forms available for the conduct of foreign operations the Western Hemisphere Trade Corporation, traditionally the Cinderella of the Internal Revenue Code, has been reoriented by the new provisions of the Revenue Act of 1962. Unlike its story-book counterpart, however, the Western Hemisphere Trade Corporation does not emerge in a state of new magnificence. The new act,by curtailing, but not eliminating, the deferral of taxation on earnings retained abroad by United States controlled foreign subsidiaries, has initiated a process of review and of reorganization of the tax planning of foreign operations. Since the new statutory provisions affect existing …

Characterization Of An Income Tax For The Purpose Of The Foreign Tax Credit, Stanley L. Ruby

Vanderbilt Law Review

Perhaps the best reconciliation of the many conflicting policies underlying the foreign tax credit would be to give preferential treatment by tax treaties to investment income from those areas where our foreign policy dictates that investment should be encouraged, whereas taxes imposed on income from other areas should be handled by the deduction approach. Thus the loss of revenue through investment in heavily industrialized areas (with stable governments and relatively little risk-taking) with high tax rates would end, but there would exist the flexibility, through treaties, to encourage investment in underdeveloped areas.

Deferred Compensation Plans: Qualifying For Non-Qualified Treatment, James F. Neal

Vanderbilt Law Review

For an important number of people in our "affluent society," the problem of spreading large current earnings, and the federal income tax imposed thereon, over a number of years has taken on sizeable proportions. Only slightly helpful for some of these people are the deferred compensation provisions of sections 401 through 404 of the Internal Revenue Code of 1954 (hereinafter referred to as the Code).'Consequently, many highly paid executives must still resort to other arrangements. The purpose of this paper is to explore the present status, from an income tax standpoint, of those non-qualified arrangements between employers and employees which …

The Tax Treatment Of Collapsible Corporations, Boris I. Bittker

Vanderbilt Law Review

Introductory.-Section 331 (a) (1) of the Internal Revenue Code provides that a complete liquidation of a corporation is to be treated by the shareholder as a sale of his stock, which will ordinarily produce capital gain or loss, and section 334 (a) provides that the shareholders' basis for property acquired on the liquidation is its fair market value at the time of distribution. These rules, which are of long standing, led to the tax avoidance device known as the "collapsible corporation," which in its turn led,in 1950, to the enactment of what is now section 341. As will be seen, …

Tax Considerations In Selecting A Form Of Foreign Business Organization, Walter W. Brudno

Vanderbilt Law Review

The provisions of the Internal Revenue Code which are of particular relevance to the planning of foreign operations are few in number and are generally deceptively simple in phraseology. The substantive provisions consist of those sections which specify rules for determining the source of income, for calculating the credit for foreign taxes paid in respect of foreign source income, and for allowance of concessional treatment accorded Western Hemisphere Trade Corporations, United States Possessions Corporations, and China Trade Act Corporations. Measures designed to prevent tax avoidance which are of particular relevance are those which relate to acquisition of corporate control for …

Section 112(B)(6): Benefit Or Burden?, Raymond Whiteaker

Vanderbilt Law Review

The general provision in the Internal Revenue Code pertaining to the liquidation of corporations is section 115 (c). Under this section gain or loss on a liquidation is recognized to the extent that the assets received in liquidation exceed or fail to exceed the basis of the share-holder's stock. An exception to this general rule, however, is provided by section 112(b) (6) whereby a parent may liquidate a subsidiary without recognizing any gain or loss on the liquidation if the statutory requirements are met.

The nonrecognition provision first appeared in the Revenue Act of 1935 as section 110 (a).' This …

Tax Planning For Nontaxable Estates, William J. Bowe

Vanderbilt Law Review

Owners of modest estates are always greatly relieved to learn of the liberal federal estate tax exemption of $60,000. Freed from the burden of federal estate tax planning they frequently turn their attention to methods of transferring property which will avoid the heavy cost and delay incident to probate administration. Joint ownership, gifts of remainder interests, donee-beneficiary contracts, revocable trusts are among the more common devices available. Use of any one of these plans may accomplish a shift in possession and enjoyment of property upon the death of the planner with no delay and minimum expense.

But the income tax …