Law Commons^™

Imposing A Deadline On The Irs: Artificial Intelligence Tries To Beat 'Starcraft' While The Irs Tries To Regulate Virtual Currency, Paul C. Nylen

Akron Law Review

Virtual currencies demanded serious attention in 2017 due to public interest, media attention, and investor appetite. With this increased attention on virtual currencies comes significant business, legal, and tax risks. This article serves as a launching pad for those tax risks, and attempts to predict how the IRS will react. By focusing on the IRS’s treatment of virtual currency as property, as well as discussing other tax issues like Foreign Bank Account Reporting (FBAR) compliance and like-kind exchanges under Internal Revenue Code section 1031, this article highlights the difficulty the IRS will have in regulating the ever-expanding world of virtual …

Getting Back To The "Grassroots" Of Tax Administration: Because "We The People" Long For A Gathering Of American Eagles To Restore Trust In The Internal Revenue Service With A Rebuild Irs Initiative, Frank Wolpe

Akron Law Review

Like America, our Internal Revenue Service is a work in progress. Yet, for best results, it’s better to avoid thinking too much about what it is or is not! Instead, let’s think more about what the IRS ought to be! This Article thusly offers a realistic path forward with new choices for a local presence, which once again makes it taxpayer/customer-centric. For more effective tax administration, it also offers a return to something that inexcusably went missing in 1998: senior-executive “on-site oversight” of field operations.

If today’s Internal Revenue Service can be fairly described as an exploding volcano …

The Socio-Economics Of The Federal Estate Tax: Why Do So Many People Hate (Or Love) This Centenarian?, Richard Gershon

Akron Law Review

The federal estate tax has faced many detractors during its almost 100 years of existence. While the tax affects only a very small percentage of estates, many have called for its repeal. This Essay discusses the socio-economic reasons why the estate tax should be maintained. The tax is an important source of revenue, and it helps to rectify the growing issue of wealth and income inequality in the United States.

Employee Medical Reimbursement Plans In The Age Of Erisa, Robert D. Rosewater

Akron Law Review

THE EMPLOYEE MEDICAL reimbursement plan presents a new dimension in the spectrum of available corporate fringe benefits. Its attractiveness lies in the relative ease by which the plan may be adopted and administered as well as the favorable federal income tax consequences to both the corporation and its participating employees. These plans undoubtedly will proliferate as other traditional fringe benefits become less attractive due to changes in tax laws,2 as medical expenses continue to increase, and as the advantages of employee medical reimbursement plans become more widely known. The scope of this article is to discuss the purposes of these …

Employee Medical Reimbursement Plans In The Age Of Erisa, Robert D. Rosewater

Akron Law Review

THE EMPLOYEE MEDICAL reimbursement plan presents a new dimension in the spectrum of available corporate fringe benefits. Its attractiveness lies in the relative ease by which the plan may be adopted and administered as well as the favorable federal income tax consequences to both the corporation and its participating employees. These plans undoubtedly will proliferate as other traditional fringe benefits become less attractive due to changes in tax laws,2 as medical expenses continue to increase, and as the advantages of employee medical reimbursement plans become more widely known. The scope of this article is to discuss the purposes of these …

Trading With Related Foreign Entitites: Current American Tax Perspective, Mortimer Caplin

Akron Law Review

This article attempts to summarize existing United States tax law and government policy on arm's-length dealing, with the hope that it will illuminate the current perspective in this important and complex area

Nontaxpayer Suits: Seeking Injunctive And Declaratory Relief Against Irs Administrative Action, John A. Lynch

Akron Law Review

Who should be entitled to challenge Internal Revenue Service (IRS) tax policy decision making? Should the concerned citizen or the aggrieved competitor of a company receiving favorable treatment from the IRS be precluded from seeking review of allegedly illegal action when his own taxes are not specifically involved? ...

It is clear from an analysis of recent decisions that several federal courts have been unwilling to accept the proposition that the Anti-Injunction Act and the Declaratory Judgment Act exception insulate the IRS from judicial scrutiny even when judicial intervention would pose no threat to federal revenues. An analysis of the …

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.

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.

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, …

Failing Corporate Tax Transparency And The Immediate Need To Reduce Overburdening Duplicative Tax Reporting Requirements, Ilya A. Lipin

Akron Tax Journal

The benefits to corporate taxpayers from the continuing additions to disclosure requirements have not been obvious. Despite expenditures by corporate taxpayers on compliance, there is evidence that the Service has not been using all of the information it receives from additional disclosure forms.28 Duplicative disclosures of the same or similar tax information that lead to additional costs are of immediate concern to the corporate taxpayer.29 The estimated corporate taxpayers’ compliance tax burden is summarized in Appendix 1. Part II of this article describes in detail key existing reporting requirements such as reportable transaction disclosure statement and Form 8886, disclosure statements …

Achieving Meaningful Civil Tax Penalty Reform And Making It Stick, Jeremiah Coder

Akron Tax Journal

This essay examines the historical use of penalties within the tax code, reviews a number of reports that led to the last round of significant penalty reform legislation, and considers existing problems of penalty administration. Several proposals are outlined to ensure that if and when Congress acts to simplify and revise the penalty regime, the reforms will have lasting impact. Part II covers the growth of penalties in the tax system from its original simple form through its significant expansion to the time that the IRS and Congress worked to cut back the complexity of the civil tax penalty regime …

Recent Developments Concerning The Estate Tax Inclusion Of Transfers To A Family Limited Partnership, Brent B. Nicholson

Akron Tax Journal

After a brief examination of the statutory and regulatory background, this paper will summarize the significant cases prior to Shurtz, the significant cases in the last year, discuss the facts and holdings of Shurtz, and then outline the coordinates that have emerged to guide taxpayers

Recovery Of Interest On A Tax Underpayment Caused By A Tax Advisor's Negligence, Jacob L. Todres

Akron Tax Journal

In my view, this area is relatively straightforward. There are three views that have developed. Once the views are apprehended, it should be relatively easy for a court to choose which view to follow. By presenting and analyzing the three views, this area will be appropriately elucidated and subsequently given the thoughtful attention it warrants.

In Part II, I will focus upon each of the three views and explore the rationale for each view. In Part III, I will trace the development of each of the views, especially the minority view and more modem, intermediate view. The goal of this …

Shifting The Paradigm By Bringing Tax Arbitrage To The Lower Income Separated Family: Why Should The Middle To Upper Class Family Have All The Fun?, Reginald Mombrun

Akron Tax Journal

The background for this article is, of course, the duty of parents to provide sustenance for their children, a duty that necessarily survives the break-up of the family. In this article, I continue to address the problems of the child support system, and I continue to take a holistic view of the problem. A fundamental concept of family law is that the system must do what is in the best interests of the child. Few people will disagree with the soundness of this fundamental concept. However, the problem lies with its application. Although counterintuitive, focusing solely on the child to …

Informal Claims For Refund - A Winding Road, William A. Neilson

Akron Tax Journal

In reviewing the manner in which courts have interpreted [the informal claim] doctrine, it appears that the doctrine can be more effective if steps are taken to create a definite set of rules for the doctrine's application, and if those rules are incorporated into the IRC or Treasury regulations. This Article, after briefly reviewing the history of the informal claim doctrine and its current form, will discuss the possibility of creating such rules.

From The Great Depression To The Current Housing Crisis: What Code Section 108 Tells Us About Congress's Response To Economic Crisis, Monica D. Armstrong

Akron Tax Journal

This article will explore the development of section 108, using the three major economic crises mentioned above as a timeline. Part II discusses the judicial debate of whether gross income should include discharge of indebtedness. Part III discusses the development of the insolvency exception following the Supreme Court's decision in Kirby Lumber, which held that gross income includes discharge of indebtedness. More specifically, it provides a discussion of court decisions that carved out exceptions to Kirby Lumber to provide tax relief to struggling businesses impacted by the Great Depression. This part closes with a discussion of the codification of the …

Deconstructing The Rules Of Corporate Tax, Rachelle Y. Holmes

Akron Tax Journal

While academics, practitioners, and the White House have proposed any number of reform measures to deal with the problems plaguing the U.S. corporate tax regime, their solutions involve varying structural and statutory changes, which are in fact extrinsic to the form of the underlying rules themselves. In contrast, this Article argues for an innate form of change to the U.S. corporate tax rules, which would fundamentally affect the way in which tax lawmakers actually draft tax rules and regulations. In particular, it argues that a systemic focus and commitment by lawmakers to a more principles-based approach to regulation would significantly …