Tax Law Commons^™

Section 179 Expensing And The Bonus Depreciation Allowance: Their Application, History, Costs, And Benefits., Alice E. Keane

Alice E. Keane

This article examines Section 179 expensing and the bonus depreciation allowance, tax incentives that allow businesses to dramatically accelerate deductions on purchases of most tangible property. Generally, Section 179 expensing benefits smaller businesses, while the bonus depreciation allowance, which is more controversial and costly, is more useful to larger businesses and C corporations. Both of these tax incentives expired at the end of 2014. Congress is currently considering bills that would extend these incentives retroactively to 2015 and beyond. There is conflicting evidence of the benefit to the economy of Section 179 expensing and the bonus depreciation allowance, with certain …

Income Tax Accounting Consistency: Eliminate Accrual And Depreciation, And Revamp The Tax Treatment Of Borrowing, Joseph M. Dodge

Joseph M Dodge

Abstract for

INCOME TAX ACCOUNTING CONSISTENCY: ELIMINATE ACCRUAL AND DEPRECIATION, AND REVAMP THE TAX TREATMENT OF BORROWING

Joseph M. Dodge

Professor Emeritus, Florida State University College of Law

The thesis is that inconsistent tax accounting rules undermine the individual income tax, and the best available move for improving it – given the unassailability of the realization principle - is to eliminate its accrual (and quasi-accrual) features. Specifically, the agenda is to eliminate tax accrual accounting in the conventional sense, revamp the tax treatment of borrowing to (inter alia) abolish the Crane doctrine, and eliminate depreciation deductions for indivisible productive assets. …

Allocative Fairness And The Income Tax, Joseph Dodge

Joseph M Dodge

Abstract for: Allocative Fairness and the Income Tax

This article seeks to provide a normative justification for the “allocative tax fairness” principle of “objective ability to pay.” First off is a brief overview of norm categories as they relate to taxation. Here, the category of internal-to-tax fairness (“allocative fairness”), referring to how the tax burden should be apportioned among the population, is identified as being distinct from a conception of a good or just society (social equity). Allocative tax fairness is often referred to as “horizontal equity.” Unfortunately, that notion is purely formal, and the remainder of the article develops …

The Origins Of Affirmative Fiscal Action, Mirit Eyal-Cohen

Mirit Eyal-Cohen

This article highlights an anomaly. It shows that two tax rules aimed to achieve a similar goal were introduced at the same time. Both meant to be temporary and bring economic stimuli, but received a dramatically different treatment. The less efficient or economically inferior survived. Its superior counterpart did not. The article reviews the reasons for this paradox. It shows that the reason is both political and an agency problem. The article not only enriches an important and ongoing debate that has received much attention in recent years, but also provides important lessons to policymakers.

The Fair Income Tax, Joseph M. Dodge

Joseph M Dodge

Abstract for: The Fair Income Tax

This article argues that the classic “accretion” Haig-Simons formulation of personal income, namely, an individual’s consumption plus net increases in wealth for the taxable year, not only was not actually advocated by Simons himself, but also is (in part) contrary to fundamental political values and raises unnecessary practical problems. Contrary to what is commonly supposed, consumption is best seen not an independent category of income, but only a deduction-disallowance principle. Likewise, the “accretion” notion of “changes in wealth” – requiring the annual valuation of asset values – is (mostly) impractical, psychologically unacceptable, and contrary …

The Untold Story Of Crane V. Commissioner Reveals An Inconvenient Tax Truth: Useless Depreciation Deductions Cause Global Basis Erosion To Bait A Hazardous Tax Trap For Unwitting Taxpayers, I Jay Katz

Irwin J Katz

Facts not discussed in the Supreme Court's decision in Crane v. Commissioner (much better known for Footnote 37) reveal an inconvenient tax truth of a hazardous tax trap for unwitting taxpayers (the "Basis Reduction Tax Trap"). For seven years, Beulah Crane operated an apartment building at a loss. For that reason, the substantial amount of allowable depreciation deductions on the building produced minimal tax benefits for her. Notwithstanding the lack of tax benefits, the basis of the apartment building was reduced by the depreciation deductions pursuant to section 1016(a) (2) of the Internal Revenue Code. Under threat of foreclosure, Beulah …