Law Commons^™

I.R.C. §(A)(3)(D): Reorganizing An Insolvent Savings And Loan Association, Brenda D. Crocker, Michael L. Unti

Akron Law Review

Whether or not the new reorganization provision, section 368(a)(3) (D), succeeds in inducing the acquisition of insolvent savings and loan associations, it is likely to be viewed as a creative attempt at a solution. To best illustrate the novelty of Congress's approach, the ensuing sections begin with an explanation of federal tax law as it has evolved in the context of insolvency reorganizations.

The Use Of Short-Term Trusts In Conjunction With Interests In Oil Or Gas Properties: A Practitioner's Guide, Robert W. Malone

Akron Law Review

This article will address the tax consequences of the funding of a short-term trust with an interest in oil or gas wells. At the end of this article there is set forth as Appendix 11 a form of short-term trust which could be used for this purpose. Appendix 11 contains an example of a situation where such use would be appropriate and a computation of the tax savings which can be generated by the use of such a trust.

Federal Income Tax Developments: 1981

Akron Law Review

The scope of this survey is limited to the substantive developments in the field of income taxation. The thrust of this article is not only to identify new developments, but also to trace these concepts through their formulative changes.

Individual, Couple Or Family? The Unit Of Taxation For Transfer Tax Purposes: A Shifting Focus, Anne-Marie Rhodes

Akron Law Review

This paper examines the shifting focus of the transfer tax system from the perspectives of the articulated primary purpose for the taxes and the appropriate unit of taxation given that purpose. The historical progression shows that as a sense of purpose became less clear, the unit of taxation similarly became less focused.

Denial Of Tax Exempt Status For Racially Discriminatory Schools, Bob Jones University V. U.S., Margaret K. Cassidy

Akron Law Review

The extent to which the government may deny tax-exempt status in order to further its goal of eliminating racial discrimination is a question of paramount importance. The United States Supreme Court recently addressed this question in the case of Bob Jones University v. U.S., a consolidated action which involved a conflict between two established public policies: racial equality and religious freedom. The Court held that this nation's policy of racial equality overrides any interest that an educational and religious institution may have in promoting racial discrimination.

Partnership Sales: When Nonrecourse Debt Exceeds Fair Market Value, Commissioner V. Tufts, Joseph Perkovich

Akron Law Review

The United States Supreme Court has used its decision in Commissioner v. Tufts to settle a conflict between circuits and to fine tune an ambiguity which it created thirty-six years ago in Crane v. Commissioner. The circumstances focus on a taxpayer who sells his partnership interest by having the purchaser assume nonrecourse debt to which the partnership property is subject.

Internal Revenue Service Review Of Tax Accrual Workpapers United States V. Arthur Young & Co., Steven Dimengo

Akron Law Review

The broad summoning power of the Internal Revenue Service [IRS] which enables it to examine any documents related to a taxpayer's liability' was challenged in United States v. Arthur Young & Co. The major issue of the proceedings was whether tax accrual workpapers, prepared by a taxpayer's independent auditor during the course of an annual audit, were subject to disclosure to the IRS pursuant to a summons under section 7602 of the Internal Revenue Code of 1954. In reaching its holding, the Supreme Court had to determine whether tax accrual workpapers were relevant to an IRS inquiry within the meaning …

Dickman And Code Section 7872: The Death Knell To Interest-Free And Below-Market Loans, Beverly Mcdonel

Akron Law Review

This comment will discuss the history of interest-free and below-market rate loans, including recent changes in the law from Dickman and the Internal Revenue Code (Code) revision in 1984. In addition, some of the tax planning alternatives to interest-free loans will be briefly examined.

A Line Drawn By Unsteady Hands: Section 170, Charitable Contributions, And Return Benefits In Hernandez V. C.I.R., David M. Phipps

Akron Law Review

This Note analyzes the majority decision and dissenting opinion in Hernandez, which have far-reaching implications for charitable organizations, taxpayers, and the government. Traditional tax deductions for charitable organizations may be in danger and these organizations may suffer economic difficulty?

Taking It With Them The Dynamics Of Changing A State Income Tax Residence, Hamlin C. King

Akron Law Review

Since nonresidence is taking on "hot issue" status in Ohio, it is the purpose of this article to closely focus on two issues regarding the taxation of such nonresident income. The first issue is what constitutes a state income tax residence change. The second is to identify the income items originating from Ohio sources that may pass out to nonresidents free of the Ohio income tax. As we go along, we will take notice of how these two issues impact the taxpayers' federal income tax, as well as their Ohio and federal estate taxes.

Nonpayment Of Taxes: When Ignorance Of The Law Is An Excuse, Jon Strauss

Akron Law Review

"Ignorance of the law is no excuse" is a well-known saying regarding criminal law. Yet the 1991 Supreme Court decision of Cheek v. United States held that a defendant's ignorance of the federal tax laws is an excuse to the crime of nonpayment of income taxes. This paper reviews the history of the defense of ignorance of the law in tax crimes, discusses the philosophical ramifications of this defense, and examines the extent to which the Supreme Court's allowance of this defense is appropriate.

Gray Market Goods Produced By Foreign Affiliates Of The U.S. Trademark Owner: Should The Lanham Act Provide A Remedy?, Steven M. Auvil

Akron Law Review

I shall argue that, with limited exceptions, the problem posed by genuine gray market imports from an affiliated source is not a trademark problem per se, and as such federal relief must come from Congress in the form of sui generis legislation. First, I shall briefly examine the historical background of this problem and discuss the debate leading up to the K Mart decision. Second, I shall discuss the nature of the trademark right, provisions under the Lanham Act that safeguard that right and several illustrative gray market cases decided thereunder. Third, I shall discuss the relationship between the trademark …

Of Taxes And Duties: Taxing The System With Public Employees' Tax Obligations, Kenneth H. Ryesky

Akron Law Review

Governmental agencies, including and especially those involved in the taxation function, have compelling reasons to insist that individuals in their employ comply with the laws of the land, including the personal tax requirements. As tax law complexity increases, so does the general propensity for noncompliance. The governmental agencies are thus confronted with increasing volumes of disciplinary issues relating to employee tax obligations. This article will explore how the various types of governmental agencies deal with enforcing compliance by their employees with personal taxation obligations, and will discuss how fallout from thetax law arena affects the efficiency of government as compliance …

Carroll V. Commissioner: Narrow Judicial Interpretations Of Internal Revenue Code' § 7502 May Cause Increased Burden On Taxpayers, Nicole D. Stanger

Akron Law Review

In Carroll v. Commissioner, the United States Court of Appeals for the Sixth Circuit upheld the minority viewpoint that the statute repeals the common law presumption of delivery in all cases other than those where the taxpayer used registered or certified mail. Thus, taxpayers who do not send tax documents using registered or certified mail must bear the risk of nondelivery. Critics of this decision contend that the court misinterpreted the I.R.C. As a result of the court's narrow interpretation, taxpayers may suffer substantial tax losses and penalties even when a document is lost through no fault of their own. …

Commissioner Of Internal Revenue V. Lundy: Transforming "An Intended Benefit Into A Handicap"?, Douglas Edwards

Akron Law Review

This Note analyzes the Court's decision in Lundy. Part II examines the relevant statutory provisions concerning the power granted to the Tax Court and federal district court. Part III addresses the facts, procedural history, and holding of the Court." Part IV(A) analyzes the holding of the case. Part IV(B) addresses several dissenting arguments, and contends that the Court could have clarified this murky area of the law by adopting the holding of Miller v. United States.

Taxation Of Prepaid Tuition Plans And The 1997 Tax Provisions - Middle Class Panacea Or Placebo? Continuing Problems And Variations On A Theme, Eric A. Lustig

Akron Law Review

This article addresses the continuing tax issues and policies attendant to one form of financing the costs of higher education -- prepaid tuition plans. These plans generally allow one to purchase tuition in advance for future use. One attraction of such a plan is that the purchaser can lock in tuition at present rates, thus protecting against inflation and other tuition hikes. Moreover, favorable tax treatment exists as the build up of benefits is generally tax-free to the purchaser, which provides a significant advantage over other savings programs. Although prepaid tuition plans have been in existence for a number of …

Taxation Expatrition: Will The Fast Act Stop Wealthy Americans From Leaving The United States?, Beckett G. Cantley

Akron Law Review

In the wake of September 11, 2001, several influential lawmakers have sought to pass tax legislation that would reduce the tax benefits that may result from an American citizen expatriating to a foreign nation. According to these congressional critics, certain wealthy American citizens are willing to relinquish their United States citizenship to save taxes (“tax expatriates”). The last major attempt to prevent tax expatriation was undertaken in 1995 when Internal Revenue Code (“I.R.C.”) § 877 was enacted. Several congressional critics have charged that I.R.C. § 877 is being easily circumvented by tax expatriates and their advisors. To stem the tide …

Standing In The Mud: Hein V.Freedom From Religion Foundation, Inc.

Akron Law Review

In 1968, in Flast v. Cohen, the Supreme Court first set forth the requirements that a plaintiff must satisfy to have standing to challenge a government action in federal court solely based on his or her status as a taxpayer. The subsequent history of taxpayer standing is littered with precedents supported by unclear reasoning. Hein v. Freedom from Religion Foundation, Inc. represents the Supreme Court’s latest effort to address the limits of taxpayer standing in an Establishment Clause challenge. Unfortunately, the Court in Hein maintained its tradition of providing perplexing decisions in taxpayer standing cases. In Hein, a plurality of …

Realsim Over Formalism And The Presumption Of Constitutionality: Chief Justice Roberts' Opinion Upholding The Individual Mandate, Wilson Huhn

Akron Law Review

In National Federation of Independent Business v. Sebelius, Chief Justice John Roberts cast the deciding vote to uphold the individual mandate of the Affordable Care Act. Speaking for the Court in Part IIIC of his opinion, Roberts found that the individual mandate was properly enacted pursuant to the General Welfare Clause. Two aspects of his opinion in particular drove this result. In deciding whether the individual mandate constitutes a “tax” within the meaning of the Constitution, the Chief Justice engaged in realistic analysis rather than legal formalism. In addition, Roberts reasoned that, if fairly possible, the statute had to be …

Why Congress Adopted The Church Audit Procedures Act And What Must Be Done Now To Restore The Law For Churches And The Irs, J. Michael Martin

Akron Tax Journal

This Article explores the significant policy purposes achieved by CAPA through the lens of the law's history and present challenges. Part II reviews the historical context and events leading to the adoption of CAPA in 1984. Part III then describes the present challenges associated with the law due to the failure of Congress and the Treasury Department to rectify the issue of who is an appropriate high-level Treasury official under CAPA. Finally, Part IV concludes with recommended solutions for restoring the law consistent with congressional intent in adopting CAPA-solutions that could easily be achieved through a simple amendment to the …

Helvering V. Gregory: All The Perspectives From Which Learned Hand Was Wrong, Anthony P. Polito

Akron Tax Journal

At a fundamental level, this Article is about interpretation. The best way for a court to remain faithful to a complicated statute reflecting a delicate legislative compromise is to enforce its language literally without introducing extraneous tests or elements that cannot be found in the statutory language. Yet, it is important to be clear that it approaches the question from an ex ante perspective, from where things stood before Learned Hand's famous opinion.

This Article is not a call for the judicial reversal of Hand's opinion. Given the value of the predictability of established expectations as to statutory meaning, stare …

Pfics Gone Wild!, Monica Gianni

Akron Tax Journal

This Article begins in Part II with a discussion of what constitutes a passive foreign investment company ("PFIC") and follows in Part III with the tax rules applicable to PFICs. Part IV begins with a general explanation of the goal of tax deferral, with discussion of several anti-deferral tax regimes enacted prior to the PFIC provisions, i.e., Personal Holding Companies ("PHCs"), Foreign Personal Holding Companies ("FPHCs"), Subpart F income of CFCs, Foreign Investment Companies ("FICs"), and Regulated Investment Companies ("RICs"). An understanding of these regimes is necessary to appreciate the genesis of the PFIC rules. Part V analyzes the policy …

What's Mine Is Mine: Taxing Pre-Contribution Gains, Rodney P. Mock, Jeffrey Tolin

Akron Tax Journal

This article conducts an analysis of the Internal Revenue Code's varied income tax treatment between depreciated property and appreciated property transferred into C corporations by shareholders in nonrecognition transactions.7 It is at the entry point of the non-recognition transaction where the lobster pot unfairly doubles up on unrecognized gains at both the corporate and shareholder level notwithstanding that unrecognized losses generally remain singular at either level. The authors call into question this long-standing practice of artificial gain duplication upon corporate entry under Subchapter C. From a tax policy perspective, such disparate treatment makes little sense - particularly when the duplicated …

Reconciling Intentions With Outcomes: A Critical Examination Of The Mortgage Interest Deduction, David Frederick

Akron Tax Journal

This article will work to answer the question: What effect has the mortgage interest deduction had on the American mortgage market? The main examination proceeds in two ways. First, this article recounts the interrelated histories of the American mortgage market and the deduction of interest from taxable income throughout the twentieth century, giving special attention to the Tax Reform Act of 1986 and the events that led to the codification of the current mortgage interest deduction. Second, this article analyzes several sets of time series data and numerous pieces of qualitative evidence on mortgage consumption in and around the 1980s …

"Are You Ready For Some (Political) Football?" How Section 501(C)(3) Organizations Get Their Playing Time During Campaign Seasons, Daniel C. Willingham

Akron Tax Journal

The purpose of this Article is to analyze the ways in which Section 501(c)(3) organizations take part in lobbying activities while still maintaining their tax-exempt status. This topic is crucial as we revisit these same issues at all levels of government every election season.

This Article examines the Tax Code, treasury regulations, revenue rulings, case law, and scholarly research. Its purpose is to provide a detailed analysis of the current law and how exempt organizations can apply it in practice. To achieve this goal, this Article is broken down into seven parts. Section II provides the statutory framework under which …

Challenges To Federal Income Tax Exemption Of The Clergy And Government Support Of Sectarian Schools Through Tax Credits Device And The Unresolved Questions After Arizona V. Winn: Is The U.S. Supreme Court Standing In The Way Of Taxpayer Standing To Seek Meritorious Redress?, Gabriel O. Aitsebaomo

Akron Tax Journal

Part II of the article begins with a critical examination of the parsonage exemption Act as was originally conceived at inception, the expansion and modification of the Act over the years, and the current statutory framework of the exemption under the Internal Revenue Code ("Code"). Part III evaluates who is considered a minister of the gospel within the meaning of the Code, and whether a minister of the gospel may obtain a parsonage exemption for more than one home at a time. Part IV discusses the various attempts to rid the Code of the parsonage exemption. In this part, the …

Give Taxpayers A Break: Putting The Reliance Element Back Into The Reasonable Reliance And Good Faith Defense, Ronald Z. Domsky

Akron Tax Journal

This Article considers the present law regarding the accuracy related penalties pursuant to I.R.C § 6662 and the reasonable reliance and good faith defense provided for in I.R.C § 6664 using Canal as a prime example of how the courts have treated and penalized taxpayers for relying on tax advisors in planning proposed transactions and in taking positions on returns and proposes a new analysis of a taxpayer's good faith and reasonable reliance. Section II of this Article discusses the current state of the law regarding the Section 6662 penalties, the function and regulations imposed on tax attorneys in advising …

Constructive Dividend Doctrine From An Integrationist Perspective, Anthony P. Polito

Akron Tax Journal

A long standing feature of U.S. corporate taxation is a group of doctrinal devices serving to prevent taxpayer attempts to avoid double taxation of corporate earnings. This Article refers to these devices collectively as the constructive dividend doctrine (hereinafter “CDD”) and analyzes the extent to which the CDD ought to be set aside as counterproductive.

This analysis is grounded in contrasting views of the normative tax treatment of corporate enterprise. On the one hand is the perspective in which the double income taxation of corporate income is normative (the “Double Tax Perspective”). The Double Tax Perspective calls for taxation of …

I.R.C. Section 1014(E) And Gifted Property Reconveyed In Trust, Mark R. Siegel

Akron Tax Journal

The taxpayer’s method of property acquisition is significant in determining the proper income tax or adjusted basis in the property. Distinct adjusted basis rules apply to the transferee of property acquired by purchase, gift, and inheritance. A buyer who purchases property for cash receives an adjusted basis in the property acquired equal to its cost. For property acquired by gift, the general rule is that the donee’s adjusted basis equals the donor’s adjusted basis immediately prior to the transfer. A third income tax basis regime applies to the taxpayer who happens to acquire property by inheritance upon the death of …

Penalty Protection Opinions And Advisor Conflicts Of Interest, David T. Moldenhauer

Akron Tax Journal

This article has five parts. The second part describes the statutory and regulatory standards for taxpayers seeking to rely on tax advice to avoid penalties. The third part describes the cases where a taxpayer has sought to rely on the opinion of a tax advisor with a conflict of interest. Those cases involve three types of situations: (1) tax advisors acting as promoters or brokers of a tax shelter; (2) tax advisors with referral arrangements with tax shelter promoters; and (3) tax advisors that are developers or implementers of a tax strategy. Typically, in the first two types of situations, …