Law Commons^™

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.

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.

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.