Law Commons^™

Tax Havens As Producers Of Corporate Law, William J. Moon

Michigan Law Review

A review of Christopher M. Bruner, Re-Imagining Offshore Finance: Market-Dominant Small Jurisdictions in a Globalizing Financial World.

Trump's "Big-League" Tax Reform: Assessing The Impact Of Corporate Tax Changes, Ryan J. Clements

Michigan Business & Entrepreneurial Law Review

This Article reviews and assesses corporate tax reforms advocated by President Donald Trump during his presidential campaign and signed into law since taking office (the Tax Cuts and Jobs Act of 2017), in light of economic theory and the Modigliani-Miller Irrelevance Theorem. The Ar-ticle argues that companies will adapt polcies in light of new taxation mea-sures, thereby impacting the effectiveness of reform. In support of this conclusion, the Article surveys two empirical studies—one in relation to the repatriation efforts of President Bush’s Homeland Investment Act and an-other in relation to unexpected changes to the taxation of Canadian income trusts—to highlight …

Hanging Together: A Multilateral Approach To Taxing Multinationals, Reuven S. Avi-Yonah

Michigan Business & Entrepreneurial Law Review

The recent revelation that many multinational enterprises (MNEs) pay very little tax to the countries they operate in has led to various proposals to change the ways they are taxed. Most of these proposals, however, do not address the fundamental flaws in the international tax regime that allow companies like Apple or Starbucks to legally avoid taxation. In particular, the Organization for Economic Co-operation and Development (OECD) has been working on a Base Erosion and Profit Shifting (BEPS) project and is supposed to make recommendations to the G20, but it is not clear yet whether this will result in a …

Formulary Appointment In The U.S. International Income Tax System: Putting Lipstick On A Pig?, J. Clifton Fleming Jr., Robert J. Peroni, Stephen E. Shay

Michigan Journal of International Law

An affiliated corporate group consists of two or more corporations linked by sufficient stock ownership to cause them to function as an economic unit instead of as independent economic actors. Thus, an affiliated corporate group engaged in international business is often referred to as a multinational enterprise (MNE), a term that we will use throughout this Article. When corporate members of an MNE engage in transactions among themselves, the prices they employ (transfer prices) will significantly affect the amount of overall MNE income that is allocated to each member and, hence, to the tax bases of the various countries in …

Corporate Taxation And International Charter Competition, Mitchell A. Kane, Edward B. Rock

Michigan Law Review

Corporate charter competition has become an increasingly international phenomenon. The thesis of this Article is that this development in corporate law requires a greater focus on corporate tax law. We first demonstrate how a tax system's capacity to distort the international charter market depends both upon its approach to determining corporate location and upon the extent to which it taxes foreign source corporate profits. We also show, however, that it is not possible to remove all distortions through modifications to the tax system alone. We present instead two alternative methods for preserving an international charter market. The first-best solution involves …

The Role Of Trade & Foreign Direct Investment In Development, Kevin A. Hassett

Michigan Journal of International Law

Foreign direct investment (FDI) has been a key component of trade for decades, and has been the focus of a tidal wave of academic research as well. Conceptually, FDI must have an important role in providing welfare gains associated with trade. One of the key differences between countries, after all, is the relative quantity of capital available to its citizens. In these remarks, the author intends to provide a bird's eye view of the literature on FDI with a focus on the developing country's perspective.

Tax Competition: Harmful To Whom?, Michael Littlewood

Michigan Journal of International Law

The aim of this paper is to examine the theory that it is both desirable and feasible to prevent less-developed countries from operating preferential tax regimes (that is, offering tax incentives) as a means of attracting foreign investment.

Distinguishing Between Capital Expenditures And Ordinary Business Expenses: A Proposal For A Universal Standard, Steven J. Greene

University of Michigan Journal of Law Reform

It is apparent from an examination of the various court decisions that there is no single, common standard used to distinguish between capital expenditures and ordinary business expenses. The courts are not completely to blame for this situation, however, because the Internal Revenue Code provides little guidance on the capital/ordinary distinction. This Note proposes an amendment to the Tax Code that would provide courts with a universal standard to apply in differentiating between the two types of expenditures and that best reflects the general purpose of the Code in matching income with its related expenses. Part I analyzes the historical …

A New Export Policy: The Foreign Sales Corporation And State Unitary Taxation Of Foreign Source Income, Reed D. Rubinstein

Michigan Journal of International Law

Part I of this note will examine the structure of the FSC, and analyze its potential benefits in light of the Domestic International Sales Corporation (DISC) tax incentive. Part II discusses the use of the unitary tax as a disincentive to direct foreign investment by U.S. corporations. Finally, Part III outlines the new export policy based upon a combination of the FSC export incentive and state unitary taxation of foreign-source income. If implemented, this policy would increase export production and discourage direct foreign investment, thereby making a substantial contribution to U.S. economic well-being.

State Income Taxation Of Multijurisdictional Corporations, Part Ii: Reflections On Asarco And Woolworth, Walter Hellerstein

Michigan Law Review

The first part of this Article, State Income Taxation of Multijurisdictional Corporations: Reflections on Mobil, Exxon, and H.R. 5076, did not contemplate a sequel. The Supreme Court's decisions last term in two state corporate income tax cases, however, created an irresistible opportunity to write one. The Court's opinions in ASARCO and Woolworth picked up where its opinions in Mobil and Exxon left off. Yet the direction taken by these more recent decisions veers sharply from the course ostensibly set by their predecessors. This Article will consider the Court's latest pronouncements in this area in a continuing if quixotic effort to …

Tax Treatment Of Previously Expensed Assets In Corporate Liquidations, Michigan Law Review

Michigan Law Review

This Note argues that although the Tennessee-Carolina majority adopts overbroad language and ignores established tax principles, a more careful refinement of its theory will yield the same proper result, without, in most situations, departing from accepted principles. The proper inquiry must focus first on whether the corporation has received any benefit, and then on whether that gain should be exempted by the nonrecognition provisions of section 336, or on any other basis. Part I of this Note examines these questions from a theoretical perspective, and concludes that expensed assets remaining at the time of liquidation give rise to corporate income, …

State Income Taxation Of Multijurisdictional Corporations: Reflections On Mobil, Exxon, And H.R. 5076, Walter Hellerstein

Michigan Law Review

The purpose of this Article is twofold: first, to analyze the Mobil and Exxon decisions; second, to consider the congressional reaction they may engender. Because the terrain that this Article covers may be unfamiliar to some readers, a few further words of introduction may be appropriate.

Taken together, the Mobil and Exxon decisions dealt with the three methods of dividing a multijurisdictional corporation's income among the states - specific allocation, separate accounting and apportionment by formula. Each method provides a different solution to the problem of determining the portion of the income of multistate businesses that should be taxable by …

The Judicial Public Policy Doctrine In Tax Litigation, Michigan Law Review

Michigan Law Review

This Note evaluates the merits of Revenue Ruling 74-323. First, it asserts that, while not arbitrary, the Service's resolution of the preemption issue was not mandated by the language of amended section 162 or by the relevant legislative history. Second, it maintains that it is both appropriate and procedurally feasible to apply the judicial public policy doctrine to violations of federal civil rights laws that impose no fine, imprisonment, loss of license, or other criminal penalty. The denial of a deduction in this situation would extend the public policy doctrine beyond both section 162(c)(2) and the judicial doctrine as it …

Basic Corporate Taxation, Stefan F. Tucker

Michigan Law Review

A Review of Basic Corporate Taxation, 2d Ed. by Douglas A. Kahn

Kahn: Basic Corporate Taxation, John C. Chommie

Michigan Law Review

A Review of Basic Corporate Taxation by Douglas A. Kahn

Income Tax: Corporations--Incorporated Professional Service Organization Taxable As A Corporation; Kintner Regulations Held Invalid--Empey V. United States, Michigan Law Review

Michigan Law Review

Lawrence G. Empey, a lawyer, was employed by the Drexler and Wald Professional Company, an association of attorneys that had incorporated in 1961 pursuant to the Colorado Corporation Code and rule 265 of the Colorado Rules of Civil Procedure. Empey began his employment with Drexler and Wald in March 1965, and in November of the same year he acquired ten shares (ten per cent) of the outstanding capital stock of the corporation. On his 1965 federal income tax return, he reported income consisting of his salary as an employee of the company for ten months and ten per cent of …

(F) Reorganizations And Proposed Alternate Routes For Post-Reorganization Net Operating Loss Carrybacks, Michigan Law Review

Michigan Law Review

Section 368(a)(l)(F) of the Internal Revenue Code (Code) defines the least complex of all corporate reorganizations-commonly known as the (F) reorganization-as "a mere change in identity, form, or place of organization, however effected." Since 1921, when the (F) reorganization first appeared in a Revenue Act, a significant amount of judicial gloss has been appended to this simple definition. To qualify as an (F) reorganization, a reorganization must result in neither a change of shareholders nor a shift in proprietary interest, and there must be a continuation of the business in the pre-organization fields of activity, using essentially the same operating …

Impact Of Recent Tax Stimulants On Modest Enterprises, L. Hart Wright, Jerome B. Libin

Michigan Law Review

The recession year 1958 found Congress in a mood to "aid and encourage small business" through more favorable tax treatment. The thrust of the ensuing legislation touched in varying degrees the whole life span of a modest enterprise, from organization through liquidation. The focus here, however, will be confined to a consideration of the practical impact of the recent statutory changes on the organizational and ordinary operational phases of such a business.

Domestic Corporate Tangible And Intangible Invested Capital, Frederick M. Thulin

Michigan Law Review

With a tax law on the statute books that fixes a moderate flat rate of taxation on business income, no question of invested capital need be considered. The income tax laws of 1913 and 1916 and the flat rate or normal tax section of the 1917 law and the proposed 1918 law bear out this statement.

Corporate Earnings As Gains Profits And Income As Depending Upon The Time Of Their Accrual, Robert M. Drysdale, Maurice C. Mcgiffin

Michigan Law Review

The discussion here has to do with the earnings of corporations as taxable income, whether such earnings remain in the hands of the corporation accumulating them, or are distributed to the stockholders as dividends, the inquiry being limited, however, to the question of the time of their accrual as affecting their taxability.