Law Commons^™

The De-Gentrification Of New Markets Tax Credits, Roger M. Groves

ExpressO

This article provides the most comprehensive analysis to date of the New Markets Tax Credits program established by Congress. The purpose of the NMTCs is to use tax credits as incentives for investors to provide equity funds into low income areas. The article reveals that over $2 billion of federal tax subsidies that have been allocated to gentrified projects for the wealthy, rather than the intended beneficiaries – low income residents in the urban core – as Congress intended. The article proposes amendments to the statute and regulations to close unintended loopholes.

Taxing Emotional Injury Recoveries: A Critical Analysis Of Murphy V. Internal Revenue Service, Gregory L. Germain

ExpressO

Does Congress have the power under the United States Constitution to tax compensatory personal injury awards? Several months ago, the D.C. Circuit Court of Appeals said "no" in Murphy v. Internal Revenue Service. The court theorized that Ms. Murphy’s compensatory damages award did not constitute “income,” as understood by the enactors of the 16th Amendment, because the award merely made Ms. Murphy whole rather than increasing her wealth.

This paper disputes virtually every aspect of the Murphy decision. The court made errors from the beginning in analyzing the statutory issues. While the court ultimately reached the correct preliminary conclusion – …

A Complete Property Right Amendment, John H. Ryskamp

ExpressO

The trend of the eminent domain reform and "Kelo plus" initiatives is toward a comprehensive Constitutional property right incorporating the elements of level of review, nature of government action, and extent of compensation. This article contains a draft amendment which reflects these concerns.

Fiction, Form And Substance In Subchapter K -- Approaching Partnership Mergers, Divisions And Incorporations, Heather M. Field

ExpressO

The tax consequences of substantively equivalent partnership mergers, divisions and incorporations can vary dramatically depending on the form of the transaction. This disparate treatment arises because the tax analysis of these partnership transactions inconsistently adheres to the “form” of the transaction and limits the use of legal “fictions”. This part-form, part-fiction approach distorts parties’ incentives about whether and how to undertake such transactions and can make the transactions less efficient, all without materially advancing other policy goals. This result is exacerbated by non-tax business exigencies that restrict parties’ abilities to implement certain transaction forms and by the increase in “formless” …

Tribal-State Gaming Compacts And Revenue Sharing Provisions: Are The States Upping The Ante? , Richard L. Skeen

ExpressO

In the ten years following, the Supreme Court’s ruling in the Seminole Tribe v. Florida, Indian Gaming has grown to over a $19 billion a year industry, in 26 States, involving over 241 Approved Class III Tribal Gaming Ordinances. States have been eager to get a piece of this ever-increasing pie. Some commentators have predicted that States will be reluctant to enter into new compacts or renew existing compacts, however, other’s have indicated that States will continue to demand a percentages of Gaming revenues.

This comment addresses the central issue of whether the Tribal-State compacts entered into subsequent to the …

Is It "Charitable" To Discriminate?, Nicholas A. Mirkay

ExpressO

With federal subsidies to charitable organizations exceeding $232 billion for fiscal years 2007 to 2011, the public benefit conferred by such organizations is an increasingly hot topic for Congress, the Internal Revenue Service and the entire nonprofit sector. Despite the national debate over nonprofit versus for-profit hospitals and excessive executive compensation, and the call for stricter governance and regulation, one recurring activity of charities appears to fly under the radar of reformers – discrimination. As illustrated in real-life occurrences contained in pages 3 and 4 of the article, seemingly widespread discrimination by charities exists not only with respect to employment, …

Repairing Facade Easements: Is This The Gift That Launched A Thousand Deductions?, Martha W. Jordan

ExpressO

The Internal Revenue Code encourages owners of buildings listed on the National Register of Historic Places to protect them by donating façade easements to charities dedicated to the preservation of our built environment. The building owner is permitted to claim a charitable contribution deduction equal to the value of the easement. A façade easement is an agreement between the building owner and the charity restricting the ability of the building owner to make changes to the building’s façade. Additionally, the façade easement may require the building owner to maintain the building in a specified condition. This article discusses the impact …

Revitalizing Our Urban Core Without Marginalizing Our Core People: Closing Tax Credit Loopholes For The Wealthy While Generating Ethnic Entrepreneurial Self Help Alternatives To Subsidized Gentrification, Roger M. Groves

ExpressO

This article provides the most comprehensive analysis to date of the New Markets Tax Credits program established by Congress. The purpose of the NMTCs is to use tax credits as incentives for investors to provide equity funds into low income areas. The article reveals that over $2 billion of federal tax subsidies that have been allocated to gentrified projects for the wealthy, rather than the intended beneficiaries – low income residents in the urban core – as Congress intended. The article proposes amendments to the statute and regulations to close unintended loopholes.

The article also creates a model for a …

Revitalizing Our Urban Core Without Marginalizing Our Core People: Closing Tax Credit Loopholes For The Wealthy While Generating Ethnic Entrepreneurial Self Help Alternatives To Subsidized Gentrification, Roger M. Groves

ExpressO

This article provides the most comprehensive analysis to date of the New Markets Tax Credits program established by Congress. The purpose of the NMTCs is to use tax credits as incentives for investors to provide equity funds into low income areas. The article reveals that over $2 billion of federal tax subsidies that have been allocated to gentrified projects for the wealthy, rather than the intended beneficiaries – low income residents in the urban core – as Congress intended. The article proposes amendments to the statute and regulations to close unintended loopholes.

The article also creates a model for a …

Five Recommendations To Law Schools Offering Legal Instruction Over The Internet, Daniel C. Powell

ExpressO

This article addresses the emerging market for legal distance education. The market is being driven by recent changes in ABA regulations, as well as specialization in the curriculum, and expanding costs of traditional education. We are seeing the emergence of legal distance education consortiums, which offer a platform for the trading or selling of courses and programs.

However, much skepticism remains about the ability of distance education technology to offer law schools and law students a sufficiently interactive pedagogy. In the words of Supreme Court Justice Ruth Bader Ginsburg legal education is a “shared enterprise, a genuine interactive endeavor” that …

The Much Maligned 527 And Institutional Choice, Lloyd H. Mayer

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The continuing controversy over “527” organizations has led Congress to impose extensive disclosure requirements on these political organizations and to consider imposing extensive restrictions on their funding as well. The debate about what laws should govern these entities has, however, so far almost completely ignored the fact that such laws raise a complicated institutional choice question. This Article seeks to resolve that question by developing a new institutional choice framework to guide this and similar choices. The Article first explores the context for making this determination by describing the current laws governing 527s, including both federal election laws administered by …

The How And Why Of The New Public Corporation Tax Shelter Compliance Norm, Susan Cleary Morse

ExpressO

This paper examines the recent shift toward an anti-tax shelter federal income tax compliance norm at public corporations, as evidenced by practitioner and government comments and survey results. The paper focuses on the organizational behavior of tax decisionmakers within public corporations as they respond to Sarbanes-Oxley, enforcement and publicity initiatives, and tax shelter regulation.

The paper identifies three elements that have contributed to the development of a stronger tax compliance norm. First, Sarbanes-Oxley has resulted in the expansion and increased transparency of public corporation tax decisionmaking groups. Organizational behavior insights suggest that this may produce more considered decisions. Second, civil …

Substance Over Form? Phantom Regulations And The Internal Revenue Code, Amandeep S. Grewal

ExpressO

This paper addresses the appropriate response to tax statutes that call for the issuance of regulations, but that have been ignored by the Secretary. The courts and the IRS have taken the unusual step of treating these statutes as self-executing, notwithstanding the absence of regulations, and have invoked phantom regulations to enforce the statutes. Several commentators have analyzed the Tax Court's and the IRS's approaches, but have focused mostly on cases interpreting delegations found in the Internal Revenue Code. Because those cases themselves are inconsistent, it is not possible to extract a clear rule from analysis of those cases alone. …

The Partnership: Preserving Capital Gains On Real Estate Investments, Charles E. Mcwilliams

ExpressO

This paper considers the use of partnerships as an effective tool for preserving capital gains on real estate investments. For tax purposes, the Internal Revenue Service generally treats a limited liability company as a partnership. This form of organization is widely used for real estate investments, and by taking a few simple precautions an LLC may ensure that any gain on its investments in undeveloped real property will be treated as capital gains. Such treatment may reduce the LLC’s tax costs substantially.

The Fifth Circuit developed a framework that has proven invaluable for analyzing the activity of the LLC to …

Finding The Constitutional Right To Education In San Antonio School District V. Rodriguez, John H. Ryskamp

ExpressO

In Lawrence v. Texas, the Supreme Court abolished the scrutiny regime because it impermissibly interfered with an important fact, liberty. And yet, even in earlier cases which ostensibly upheld the scrutiny regime, it is difficult to see that the Court ever did so to the detriment of facts it considered important. In short, the Court often (always?) found itself raising the level of scrutiny for a fact in the same case it upheld the regime, leaving us to wonder if the scrutiny regime ever actually had any effect at all, or even whether the Court felt it was relevant. As …

The United States' Experience With Energy-Based Tax Incentives: The Evidence Supporting Tax Incentives For Renewable Energy, Mona L. Hymel

ExpressO

Developing sustainable markets for renewable energy technologies presents complex challenges. Financial, institutional and informational obstacles impede advancement of these technologies. Tax incentives are often utilized to assist policy makers in dealing with these challenges. Because tax incentives and subsidies generally decrease governmental revenues, understanding their costs and benefits is critical in determining policy choices. For almost 90 years the United States has granted tax incentives, direct subsidies and other support to the energy industry in an effort to enhance U.S. energy supplies. Historically, those incentives targeted only the petroleum industry. Since the late 1970s, however, Congress has enacted incentives to …

Constitutional Limits On State Taxation Of Nonresident Trusts: Gavin Misinterprets And Misapplies Both Quill And Mcculloch, Joseph W. Blackburn

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No abstract provided.

Working For Free: A New Tax Dodge For The Wealthy Magnifies Employment Tax Defects, Richard Winchester

ExpressO

Employment taxes account for an enormous share of federal tax receipts. And it is widely acknowledged that taxes on the self-employed are collected under a dysfunctional set of laws that is long overdue for repair. Yet, there is surprisingly little legal scholarship in the field. This article fills a portion of that gap. It examines some fundamental flaws that plague our nation’s employment tax laws, focusing on how President Bush’s dividend tax cut created an incentive for wealthy individuals to exploit those flaws at the government’s expense when they work for a corporation that they also own and control. Specifically, …

Forcing Fairness In State Taxation, Randall J. Gingiss

ExpressO

The article recommends amending the Internal Revenue Code to change to deduction for state and local income taxes to a credit up to some defined limit. This change will encourage states without an income tax to enact one at no cost to its taxpayers and will help these states and other states with a low income tax rate find a politically acceptable way to end the financial crisis in which many states find themselves. Recent recommendations of the Presidential Advisory Panel on Federal Tax Reform advocate eliminating the deduction for state and local taxes to finance elimination of other undesirable …

The Option Conundrum In Tax Law: After All These Years, What Exactly Is An Option?, Kevin J. Liss

ExpressO

Some of the latest financial products that have become prevalent on Wall Street defy easy categorization for tax purposes. Certain products, such as economic derivatives or weather derivatives, bear the trappings of options, but lack an underlying property component. Other products, such as credit default swaps, have option-type payouts, but are cast in the form of financial swaps. Which of these products are truly options and why? When and how to tax these instruments depends on proper resolution of this fundamental classification issue. With respect to credit default swaps, arguably the single most important product innovation on Wall Street in …

A Republic Of The Mind: Cognitive Biases, Fiscal Federalism, And The Tax Code, Brian Galle

ExpressO

Our federal government annually donates more than $75 billion in potential revenue to the States under section 164 of the Tax Code, the provision allowing itemizing taxpayers to deduct the cost of the state and local income, property, and sales taxes they paid during the tax year. This Article argues that expenditure may be a massive mistake. The deduction is, in theory, supposed to further federalism, by shifting revenues -- and therefore regulation -- downwards from the federal government to states and their local subsidiaries. What few commentators seem yet to have recognized, though, is that using the deduction for …

The Different Tax Treatment Of Investment Advisory Fees And Brokerage Fees; The Lower The Fiduciary Duty The Better The Tax Consequences, Barry W. Rickert

ExpressO

The current tax laws favor brokerage fees as compared to investment advisory fees, even though investment advisors are held to a higher standard of fiduciary duty. My article examines the different tax treatment of investment advisory fees and brokerage fees, analyzes the policy considerations of such treatment and proposes alternatives to the current system. Considering the large number of American investing in the securities markets, it is important that our tax laws be written in a way that encourages taxpayers to seek investment professionals who are held to higher standards of conduct. The policy implications of brokerage fees receiving preferable …

Circular 230 Opinion Standards, Legal Ethics And First Amendment Limitations On The Regulation Of Professional Speech By Lawyers, David T. Moldenhauer

ExpressO

This article addresses the legal ethics and First Amendment implications of recent Treasury Department regulations governing legal opinions on tax-motivated transactions. As discussed in the article, the regulations are intended to address the significant policy and budgetary issue of practitioners’ involvement in the development, marketing and encouragement of abusive tax shelters. However, the article concludes that the regulations are in many respects an inappropriate response to these problems because their prohibitions prevent a lawyer from giving taxpayers a complete, informed assessment of their rights. As such, they create significant ethical conflicts and deny the public legal advice. More generally, they …

Should We Adopt William Vickrey’S Cumulative Averaging Income Tax System? Progressivity And Simplicity In Tax Reform, Neil H. Buchanan

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This paper focuses on William Vickrey’s proposal to replace our current annual system of tax assessment with a new tax system that bases assessments on lifetime cumulative average income. After reviewing two key arguments in favor of the social goal of progressivity in taxation (a goal that Vickrey shared), I have examined whether adopting Vickrey’s cumulative averaging system would achieve a compelling change in the fairness of the tax system. While the current system undeniably creates a problem of horizontal inequity in that people with similar lifetime incomes can pay different tax rates based on the timing of those incomes, …