Law Commons^™

Crypto Assets And The Problem Of Tax Classifications, Eric D. Chason

Faculty Publications

To date, Internal Revenue Service (I.R.S.) guidance on cryptocurrencies has been thin. When the I.R.S. has issued guidance, it occasionally mishandles the technical details (such as confusing air drops and hard forks). More personnel (and personnel with greater technical expertise) would allow the I.R.S. to keep pace with the explosive growth of cryptocurrency. Nevertheless, the I.R.S. could better leverage its existing resources by focusing on select issues and seeking enabling legislation from Congress. Specifically, the I.R.S. should focus on crypto issues occurring on a system-wide basis and not requiring taxpayer-specific considerations.

For example, determining whether Bitcoin is a “security” under …

A Tax On The Clones: The Strange Case Of Bitcoin Cash, Eric D. Chason

Faculty Publications

No abstract provided.

Attacking Innovation, Jeffrey A. Maine

Faculty Publications

Economists generally agree that innovation is important to economic growth and that government support for innovation is necessary. Historically, the U.S. government has supported innovation in a variety of ways: (1) a strong legal system for patents; (2) direct support through research performed by government agencies, grants, loans, and loan guarantees; and (3) indirect support through various tax incentives for private firms. In recent years, however, we have seen a weakening of the U.S. patent system, a decline in direct funding of research, and a weakening of tax policy tools used to encourage new innovation. These disruptive changes threaten the …

Cryptocurrency Hard Forks And Revenue Ruling 2019-24, Eric D. Chason

Faculty Publications

No abstract provided.

Community Development Finance And Economic Justice, Peter R. Pitegoff

Faculty Publications

This chapter reflects on the history of community economic development, community development financial institutions, and their relationship with law and legal scholarship. It describes the robust use of complex legal and financial tools in community development practice today and presents Maine-based Coastal Enterprises Inc. (CEI) as a window into the evolution of the field over the last four decades. Part II traces the wider history and context of community development finance and of the dramatic expansion in tax credit financing. Part III explores the implications of this trend for sustainability and local accountability, underscoring the distinction between community organizing and …

Graduate Education And The Taxation Of Tuition Reductions, Erik M. Jensen

Faculty Publications

While the legislation popularly (or unpopularly) known as the Tax Cuts and Jobs Act of 2017 was working its way through Congress, many colleges and universities were afraid that the repeal of Internal Revenue Code section 117(d), as provided in the House version of the bill, would have catastrophic effects on American graduate education. The concern was that, after repeal, graduate teaching and research assistants would be taxed on their tuition reductions, and the measure of the income would be determined using the stated tuition figure—the sticker price—for the academic institution. Section 117(d) survived, but it could come under challenge …

In Search Of Smarter Homeowner Subsidies, Matthew Rossman

Faculty Publications

Critics have long assailed the federal tax code’s principal homeowner subsidies as lucrative tax breaks for upper income households that are essentially worthless to those financially constrained from purchasing a home. This article examines the subsidies through a different lens and reveals another serious flaw. It demonstrates how the homeowner subsidies, which represent a massive federal investment in homeownership, do very little to contain and instead probably increase costs on others that result from certain types of housing choices and that other federal policies seek to remedy. These negative housing externalities include: (i) blight, deterioration, and public health risks in …

The Power To Tax, Erik M. Jensen

Faculty Publications

The Power to Tax, chapter 1 in The Powers of the U.S. Congress: Where Constitutional Authority Begins and Ends, Brien Hallett, editor: Copyright © 2016 by ABC-CLIO LLC

This is a chapter in a book intended largely for an undergraduate audience. The chapter outlines the key terms necessary for understanding the congressional power to tax under the U.S. Constitution; the history and development of our understanding of that power; and the limitations (or possible limitations) on the power.

Did The Sixteenth Amendment Ever Matter? Does It Matter Today?, Erik M. Jensen

Faculty Publications

This article, prepared for a symposium on the centennial of the ratification of the Sixteenth Amendment, argues that the Amendment was legally and politically necessary in 1913, if there was going to be a modern income tax, and that it remains significant today. The Amendment provides that “taxes on incomes” need not be apportioned among the states on the basis of population, as would otherwise be required for direct taxes. An apportioned income tax would be an absurdity, and, if there were no Amendment, Congress could not enact an unapportioned tax on income from property, the sort of tax that …

The Tiley Trilogy And U.S. Anti-Avoidance Law, Erik M. Jensen

Faculty Publications

This article examines an influential set of articles, written by Professor John Tiley in the late 1980s, about anti-avoidance doctrines developed by US courts. The trilogy of articles was written for a British audience, as part of Tiley’s efforts to resist importation of US doctrines (“bleeding chunks of alien doctrine,” as he put it) into the UK, but his ideas remain relevant to tax theorists in all countries, including the US. The article also examines the work of the Aaronson Committee, of which Tiley was a member, which successfully recommended in 2011 that the UK adopt a general anti-avoidance rule …

Extending The Taxation-Of-Risk Model To Timing Options And Marked-To-Market Taxes, Eric D. Chason

Faculty Publications

No abstract provided.

The Individual Mandate And The Taxing Power, Erik M. Jensen

Faculty Publications

This article, prepared for a symposium at the Salmon P. Chase College of Law, Northern Kentucky University, considers whether the Taxing Clause provides an alternative constitutional basis, as some have recently argued, for the individual mandate in the Patient Protection and Affordable Care Act of 21 - the requirement, going into effect in 214, that most individuals acquire satisfactory health insurance or pay a penalty. The article concludes that the Taxing Clause arguments are misguided. At best, the Clause can provide authority for the penalty, not for the mandate as a whole. Furthermore, the article questions whether the penalty will …

The Post-Tarp Movement To Regulate Banker Pay, Eric D. Chason

Faculty Publications

No abstract provided.

A Tax Or Not A Tax: That Is The Question, Erik M. Jensen

Faculty Publications

This piece is part of the author’s probably misguided effort to take seriously the Sixteenth Amendment phrase “taxes on incomes.” The piece (in form a letter to the editor, but complete with footnotes!) responds to a reader who had noted that, because of a cap, the basic Social Security “tax” does not reach higher levels of income. Because the author had earlier argued that a tax “on” incomes should result in higher tax liability for higher-income persons, it might seem that the Social Security levy is unconstitutional (or the author just wrong). This piece makes several points: (1) The Social …

Quirky Constitutional Provisions Matter: The Tonnage Clause, Polar Tankers, And State Taxation Of Commerce, Erik M. Jensen

Faculty Publications

In Polar Tankers, Inc. v. City of Valdez, the Supreme Court in 29 struck down a City of Valdez levy that was in form a personal-property tax, but that primarily reached oil tankers using Valdez’s ports, on the ground that the levy violated the Tonnage Clause of the Constitution (“No State, shall, without the consent of Congress, lay any Duty of Tonnage”). The Tonnage Clause, part of the constitutional structure intended to ensure federal primacy in regulating commerce, was once a staple of litigation, but Polar Tankers was the first Supreme Court case decided under the Clause since 1935. Polar …

Executive Compensation And Tax Neutrality: Taxing The Investment Component Of Deferred Compensation, Eric D. Chason

Faculty Publications

No abstract provided.

Murphy V. Internal Revenue Service, The Meaning Of 'Income,' And Sky-Is-Falling Tax Commentary, Erik M. Jensen

Faculty Publications

This article examines the widely noted D.C. Circuit case, Murphy v. Internal Revenue Service, where a panel twice got itself hopelessly entangled in the relationship between the meaning of “income” in the Internal Revenue Code and its meaning in the Sixteenth Amendment. At issue was whether a whistle-blower's recovery for emotional distress could be reached by the income tax. The first time around, the panel concluded that the recovery could not be taxed constitutionally because it was not income. The second time, apparently after having visited another planet, the very same panel concluded that the recovery could be taxed whether …

Quantifying The Tax Advantage Of Deferred Compensation, Eric D. Chason

Faculty Publications

No abstract provided.

Why Pension Funding Matters, Eric D. Chason

Faculty Publications

No abstract provided.

Deferred Compensation Reform: Taxing The Fruit Of The Tree In Its Proper Season, Eric D. Chason

Faculty Publications

Executive pensions (or deferred compensation) grabbed headlines after Enron's collapse and fresh concerns over ever-increasing executive pay. They also grabbed the attention of Congress, which reformed executive pensions legislatively in 2004 with § 409A of the Internal Revenue Code. Section 409A merely tightens and clarifies the doctrines that had already governed executive pensions, leaving the basic economics of executive pensions unchanged. Executives can still defer taxation on current compensation until actual payment is made in the future. Deferral still comes at the same price to the employer, namely the deferral of its deduction for the compensation expense. Thus, the timing …

Class Warfare 1988-2005 Over Top Individual Income Tax Rates: Teeter-Totter From Soak-The-Rich To Robin-Hood-In-Reverse, John W. Lee

Faculty Publications

No abstract provided.

The Capital Gains "Sieve" And The "Farce" Of Progressivity 1921-1986, John W. Lee

Faculty Publications

No abstract provided.

An Obituary Of The Federal Estate Tax, M C. Mirow, Bruce A. Mcgovern

Faculty Publications

The authors adopt the genre of the obituary to discuss the development and present condition of the Federal Estate Tax. Using this form of descriptive narrative, the authors present a concise summary of the most important changes in the tax over the past eighty-five years.

Bad Drafting - A Case Study Of The Design And Implementation Of The Income Tax Subsidies For Education, Glenn E. Coven

Faculty Publications

No abstract provided.

News Flash: The Income Tax Remains Constitutional, Erik M. Jensen

Faculty Publications

No abstract provided.

International Comity And The Foreign Tax Credit: Crediting Nonconforming Taxes, Glenn E. Coven

Faculty Publications

No abstract provided.

Critique Of Current Congressional Capital Gains Contentions, John W. Lee

Faculty Publications

No abstract provided.

Capital Gains Myths, John W. Lee

Faculty Publications

This article is a summary of parts of Lee's forthcoming article "Critique of Current Congressional Capital Gains Contentions," 15 Va. Tax. L. Rev. 1 (1995). Professor Lee believes that the reasons given by the House Ways and Means Committee Report and capital gains cuts proponents in the recent hearings and the House floor debate in support of the CWATRA 50-percent individual generic capital gains cut are untrue in whole or in part. These stated reasons, reports Lee, are that a capital gains cut will (1) increase the personal savings rate, (2) encourage risk taking by entrepreneurs seeking new technologies and …

Partnership Profits Share For Services: An Aggregate Exegesis Of Revenue Procedure 93-27 (Part 2), John W. Lee

Faculty Publications

In this article, Professor Lee charts two alternative methods for implementing an aggregate solution to the problem of partnership profits share for services. The functional, or judicial, method is to handle (1) the exchange of partner-capacity services for a profit share subject to the risk f the venture with the Culbertson "common law relation of partnership," nonrealization event doctrine, implicitly contemplated by the 1984 legislative history to section 707(a)(2), (2) the classic Diamond transitory partner with a substance-over-form rule or step-transaction rule, and (3) a sale of the partnership interest in circumstances that would result in ordinary income in a …

'Death And Taxes' And Hypocrisy, John W. Lee

Faculty Publications

Professor Lee finds the "death and taxes" poem by Rep. Ewing hypocritical for several reasons. He notes that the poem is derived from a 1920s populist attack on Treasury Secretary Mellon for cutting taxes on the rich in the name of trickle-down economics while relying on regressive excise taxes on the masses -- an attack similar to that waged by then-Governor Clinton during the 1992 presidential campaign. Further, says Lee, the Bush administration displayed more of a preference for regressive excise taxes than the Clinton plan, whose reliance in part on consumption taxes appears a consequence of 25 years of …