Law Commons^™

Justifying The Exclusion Of Insurance, Jeffrey H. Kahn

Scholarly Publications

No abstract provided.

Alimony Treatment For A Single Payment, Douglas A. Kahn

Articles

Before 1942 alimony paid to a former spouse was not included in the spouse’s gross income. In 1942 Congress adopted the antecedent to section 71. Although an alimony recipient must recognize gross income, section 215 provides the payer with a nonitemized deduction for the payment. Therefore, the alimony tax provisions provide a congressionally approved income-splitting arrangement which can benefit the parties by shifting income from a high-bracket taxpayer to one in a lower tax bracket. The parties can divide the resulting savings between them by altering the amount paid to the former spouse.

Related Party Like-Kind Exchanges: Teruya Brothers And Beyond, Bradley T. Borden, Kelly E. Alton, Alan S. Lederman

Bradley T. Borden

The Ninth Circuit recently held that the non-tax-avoidance exception of Section 1031(f) generally will be unavailable where the taxpayer defers tax through a related-party exchange and cannot establish that the related party will incur a higher "tax price." This article examines this new addition to the body of law governing related-party exchanges and discusses planning approaches that exist after the ruling.

Risky Ventures: The Impact Of Irs Health Care Joint Venture Policy, Roger P. Meyers

University of Michigan Journal of Law Reform

IRS oversight of joint ventures between exempt and for-profit organizations has undergone substantial change over the past thirty years. This change has important consequences for the health care industry, where joint ventures have grown increasingly common. In the face of unclear guidance and aggressive enforcement of exemption-policing tools such as the private benefit doctrine and the control test, a hospital risks revocation of its tax-exempt status, or liability for unrelated business income tax, when it engages in a joint venture directly. It may be able to eliminate this risk by operating the same joint venture through a for-profit subsidiary; however, …

No Tax For "Phantom Income": How Congress Failed To Encourage Responsible Housing Consumption With Its Recent Tax Legislation, Rue Toland

Chicago-Kent Law Review

In the midst of the recent housing crisis, Congress passed two key pieces of federal tax legislation in an attempt to stem the tide of foreclosures and prevent further economic collapse. These two bills, the Mortgage Forgiveness Debt Relief Act in 2007 and the Housing and Economic Recovery Act in 2008, both sought competing goals: lessening the harm to existing homeowners, and encouraging purchases by new homebuyers. However, neither bill adequately addressed one of the root causes of the housing crisis, namely homeowners obtaining mortgages that, for whatever reason, they could not afford. Indeed, the tax incentives these bills created …

Linton Family Llc And The Step Transaction Doctrine, Wendy G. Gerzog

All Faculty Scholarship

This article discusses Linton, a district court decision about a family limited liability company, indirect gifts, and the step transaction doctrine.

Viewpoints: Collection Due Process Hearings Should Be Expedited, T. Keith Fogg, Carlton M. Smith

T. Keith Fogg

In this article, the authors argue that the collection due process hearings have failed in their objective of expediting cases and recommend creating stricter time-frame guidelines for CDP hearings.

Considering Tax Expenditures In State Budget Deliberations, Brad Borden

Bradley T. Borden

This is the manuscript of a talk given at a public forum on tax expenditures in Topeka, Kansas. It explains how tax expenditures erode tax bases and diminish the state's ability to raise revenue, and it suggests that states should treat tax expenditures like direct expenditures in budget deliberations. Finally, the talk demonstrates how tax expenditures can be unfair. Although the comments are specific to the state of Kansas, the principles apply to all governments. A video recording of the proceedings is available at http://tinyurl.com/y85j3w8.

Washington Tax Legislative Update: Weathering The Gathering Storm, Jonathan Talisman

William & Mary Annual Tax Conference

No abstract provided.

Recent Developments In Federal Income Taxation, Ira B. Shepard

William & Mary Annual Tax Conference

No abstract provided.

The Virginia Historic Tax Credit Funds Case And The Uncertain Federal Income Tax Treatment Of State Tax Credits, William F. Machen

William & Mary Annual Tax Conference

No abstract provided.

Allocations Made In Accordance With Partners' Interests In The Partnership, Brad Borden

Bradley T. Borden

Tax law allocates partnership tax items in accordance with the partners' interests in the partnership if the allocations do not have substantial economic effect. Tax law also uses the partners' interests in the partnership to test whether certain allocations satisfy the test for substantiality. These rules that rely upon partners' interests in a partnership are at the heart of partneship taxation. Nonteless, tax law does a poor job of defining partners' interests in a partnership. This article illustrates the problems that arise because of that inadequate definition. It also recommends a few changes that could help remedy the existing shortcomings.

State Finance In Times Of Crisis, Brian Galle, Jonathan Klick

All Faculty Scholarship

As recent events illustrate, state finances are pro-cyclical: during recessions, state revenues crash, worsening the effects of economic downturns. This problem is well-known, yet persistent. We argue here that, in light of predictable federalism and political economy dynamics, states will be unable to change this situation on their own. Additionally, we note that many possible federal remedies may result in worse problems, such as creating moral hazard that would induce states to take on excessively risky policy, both fiscal and otherwise. Thus, we argue that policy makers should consider so-called “automatic” stabilizers, such as are found in the federal tax …

The Sixth Amendment And Expert Witnesses In Criminal Tax Cases, Steve R. Johnson

Scholarly Publications

Recently, in the Baxter case, a federal district court vacated the sentence imposed as a result of a guilty plea in a criminal tax case. The court held that the failure of defense counsel to retain the services of an expert in tax crimes sentencing violated the defendant’s Sixth Amendment right to effective representation.

This installment of the Tax Crimes column explores Baxter. Part A briefly notes the civil and criminal tax contexts in which tax experts are used. Part B describes Baxter and its holding. Part C asks whether defense counsel in criminal tax cases should always retain a …

Easterday And The Erosion Of The Financial Inability Defense, Steve R. Johnson

Scholarly Publications

Several tax crimes in the code involve failure to pay known or assessed tax liabilities. For generations, there has been controversy over whether a taxpayer’s lack of funds from which to make payment should preclude conviction for those crimes. The potency of the financial inability defense1 has waned over the years. The recent decision of a divided Ninth Circuit panel in Easterday continues that trend, but the defense should still have life in some situations and some courts.

Part I of this report describes the tax crimes to which a financial inability defense may be relevant. Part II discusses Easterday. …

Misguided Relief: The Real Property Tax Addition To The Standard Deduction, Alan L. Feld

Faculty Scholarship

The push to use federal money for benevolent purposes occasionally produces more cost than benefit, particularly when the outlay comes in the form of taxes forgiven. The Housing Assistance Tax Act of 2008 added a supplement to the basic standard deduction. A nonitemizing taxpayer may claim a deduction for real property taxes paid, up to $500, $1,000 in the case of a joint return. Initially, the change applied only to 2008, but subsequent legislation extended its life through 2009, and pending legislation would make it a permanent part of the Code. Although well intentioned, the real property tax provision makes …

Like-Kind Exchanges And Qualified Intermediaries, Brad Borden, Paul L.B. Mckenney, David Shechtman

Bradley T. Borden

The economic downturn has depressed the real estate market, a significant component of the section 1031 industry. In its wake, the industry witnessed three major qualified intermediary failures. QI failures deprive exchangers of exchange proceeds and also create potential tax and legal liabilities for exchangers. This article analyzes those potential liablities and also discusses the cause of QI failures and actions that exchangers and QIs may consider to help safeguard exchange proceeds.

Families For Tax Purposes: What About The Steps, Wendy G. Gerzog

All Faculty Scholarship

At least 4.4 million families in the U.S. are blended ones that include step-children and step-parents. For tax purposes, these steps receive preferential treatment for their status because they are on the one hand included as family members for many income tax benefit sections, but on the other hand excluded as family members for business entity attribution purposes and for gift and estate tax anti-abuse provisions. In the interests of fairness and uniformity, steps should be treated as family members for all tax purposes where steps have in fact voluntarily acted as their biological or adoptive counterparts, both when such …

Xilinx And The Arm's-Length Standard, Reuven S. Avi-Yonah

Articles

On May 7 the Ninth Circuit decided Xilinx v. Commissioner. By a 2-1 majority, the panel reversed the Tax Court and held that costs of employee stock options must be included in the pool of costs subject to a tax-sharing agreement. The Xilinx decision is important for three reasons. First, cost sharing is probably the key element in current transfer pricing law because it is the principal way in which profits from intangibles get shifted from the United States to low-tax jurisdictions. Moreover, informed observers agree that the allocation of income from intangibles is the most important problem in transfer …

Cuarto Congreso Nacional De Organismos Públicos Autónomos, Bruno L. Costantini García

Bruno L. Costantini García

Memorias del Cuarto Congreso Nacional de Organismos Públicos Autónomos

"El papel de los Organismos Públicos Autónomos en la Consolidación de la Democracia"

Flying Above The Law And Below The Radar: Instilling A Taxpaying Ethos In Those Playing By Their Own Rules, Richard Lavoie

Pace Law Review

No abstract provided.

Seventy-Eight Percent Of Working Rural Families To Receive Full Making Work Pay Tax Credit, Marybeth J. Mattingly

The Carsey School of Public Policy at the Scholars' Repository

The Making Work Pay Tax Credit provides eligible U.S. workers with additional money in each paycheck throughout the year. The fact sheet shows that 78 percent of rural working families will receive the full amount of the credit, while an additional 10 percent of families will receive a partial credit due to low earnings or high earnings. These tax credits, along with the expansion to the Child Tax Credit, are an important financial boost to families in rural America, particularly low-income working families.

Forty-Three Percent Of Eligible Rural Families Can Claim A Larger Credit With Eitc Expansion, Marybeth J. Mattingly

The Carsey School of Public Policy at the Scholars' Repository

This policy brief on the changes to the Earned Income Tax Credit in the ARRA also shows that families with three or more children and married couples will receive an increased refund under these new EITC rules for tax years 2009 and 2010. Many families in urban and suburban communities will also see increased benefits under these new provisions.

Obama's International Tax Plan: A Major Step Forward, Reuven S. Avi-Yonah

Articles

President Barack Obama last week personally introduced a set of proposals to reform U.S. international taxation that are the most significant advance toward preserving the income tax on cross-border transactions since the enactment of the subpart F rules by the Kennedy administration in 1962. (For prior coverage, see Doc 2009-10047 or 2009 TNT 84-1.) In essence, the Obama proposals introduce a 21stcentury version of the vision begun by Thomas Adams in 1918 and continued by Stanley Surrey in 1961: a world in which source and residence taxation are coordinated so as to achieve the underlying goals of the international tax …

Negron: Circuits Now Split 2-2, Wendy G. Gerzog

All Faculty Scholarship

The article discusses Negron and the circuit split on the issue of whether to value non-assignable lottery payments in a decedent's estate by means of the actuarial tables or whether that value needs to be discounted for non-marketability.

Close The Yield Exemption Loophole Created By Childs, Brant J. Hellwig, Gregg D. Polsky

Scholarly Articles

The proposal would reverse the holding of Childs v. Commissioner, 103 T.C. 634 (1994), and clarify that a contractual payment obligation received by a service provider is subject to immediate taxation under section 83 if the obligor is a person other than the recipient of the service provider’s services. As a result, the proposal would ensure the appropriate taxation of investment income in structured payment arrangements.

The proposal is based on a more comprehensive article by the authors, forthcoming in volume 51 of the Boston College Law Review, titled ‘‘Taxing Structured Settlements,’’ a draft of which is available at http://ssrn.com/abstract=1403248. …

Child Tax Credit Expansion Increases Number Of Families Eligible For A Refund, Marybeth J. Mattingly

The Carsey School of Public Policy at the Scholars' Repository

The analysis shows that more than 500,000 rural families, or almost 9 percent of rural families, will become newly eligible for the Child Tax Credit under the expansion included in the American Recovery and Reinvestment Act. Within these families are an estimated 900,000 rural children. The proportion of urban families benefiting from the expanded Child Tax Credit is slightly lower than in rural areas, but only 5 percent of suburban families are newly eligible for the credit.

Who's Afraid Of Redistribution? An Analysis Of The Earned Income Tax Credit, Jennifer Bird-Pollan

Law Faculty Scholarly Articles

In the 2008 Presidential campaign, the American public was reminded time and again of the differences in the economic policies of the nominees: John McCain would cut taxes, and Barack Obama would raise them, although only on those earning over $250,000. In the final days of the campaign, the McCain camp accused Obama of proposing “redistribution,” and the Obama camp quickly denied that description. So why do presidential candidates run so quickly from the r-word? McCain’s senior policy advisor equated redistribution with socialism, but redistribution, in the form of the federal income tax system, is a central tenet of American …

Integrating Subchapters K And S — Just Do It, Walter D. Schwidetzky

All Faculty Scholarship

The Code contains two “pass-through” tax regimes for business entities. One is contained in Subchapter K, which applies to partnerships, the other in Subchapter S, which, unsurprisingly, applies to S corporations. In the main, both Subchapters tax the owners of the entities rather than the entities themselves. Having two pass-through tax regimes creates obvious administrative and other inefficiencies. There was a time when S corporations served a valuable purpose, particularly when taxpayers needed a fairly simple and foolproof pass-through entity that provided a liability shield. But limited liability companies (LLCs), which are usually taxed as partnerships, 1 in most contexts …

Increasing Preparer Responsibility, Visibility And Competence, Leslie Book

Working Paper Series

The insights from the responsive regulation literature present an intriguing model for IRS interaction with preparers, and provide a theoretical context for a more nuanced approach that the IRS could adopt when considering its return preparer strategies. To some extent, the IRS’s current emphasis on preparer education, including the significant resources expended on tax forums and other general outreach programs, reflects IRS awareness that its interaction with preparers must take a varied approach. In this paper, I propose a more personal contact paradigm with preparers, with those contacts facilitated by heightened identification requirements and a more dedicated IRS effort to …