Law Commons^™

The Inequity Of Informal Guidance, Joshua D. Blank, Leigh Osofsky

Vanderbilt Law Review

The coexistence of formal and informal law is a hallmark feature of the U.S. tax system. Congress and the Treasury enact formal law, such as statutes and regulations, while the Internal Revenue Service offers the public informal explanations and summaries, such as taxpayer publications, website frequently asked questions, virtual assistants, and other types of taxpayer guidance. Throughout the COVID-19 pandemic, the IRS increased its use of informal law to help taxpayers understand complex emergency relief rules implemented through the tax system.

In contrast to many other legal scholars who have examined important administrative law issues regarding informal tax guidance, in …

1988 Amendment To 26 U.S.C. Section 7430: Expanding Taxpayers' Rights To Recover Costs In Tax Controversies, Debra A. Chini

Vanderbilt Law Review

Bureaucratic mistakes at the Internal Revenue Service (IRS) forced Barbara and David Kaufman to seek a court-ordered injunction prohibiting the IRS from collecting a 14,380 dollar tax assessment for 1980. Even though the Kaufmans had notified the IRS office in Chicago of their new Maine address, the IRS mistakenly mailed the preliminary notice of deficiency to the Kaufmans' prior Illinois address. In addition, the Service mailed the statutory notice of deficiency to another couple also named Barbara and David Kaufman.' Because the Kaufmans never received notice of the proposed deficiency, they did not have an opportunity to contest the tax …

Recent Publications, Unidentified Author

Vanderbilt Law Review

Beating a Rap? Defendants Found Incompetent to Stand Trial

In this book, Henry Steadman, Director of the Special Projects Research Unit of the New York State Department of Mental Hygiene, addresses the common suspicion that defense attorneys enable their clients to escape criminal charges by having the clients declared incompetent to stand trial. Such suspicion, he argues, results both from public confusion over the legal and psychiatric issues in a competency hearing and from a lack of understanding (even among experts) about the practical results that flow from a determination of incompetency.

Law and Order in American History Edited by …

Taxation Of Sale And Leaseback Transactions - A General Review, Kenneth L. Stewart

Vanderbilt Law Review

This Note first discusses in detail the operation of a sale and leaseback transaction and delineates its various uses. The Note next points out the tax and financial advantages and disadvantages of the sale and leaseback, sets forth the possible avenues of attack on the transaction by the Internal Revenue Service (Service), and describes the consequences of a successful attack by the Service. The final section of the Note analyzes the judicial treatment of sale and leaseback transactions for tax purposes, focusing both on the traditional tests used by the courts and on changes in the law brought about by …

The Constitutionality Of The Multistate Tax Compact, Robert M. White

Vanderbilt Law Review

It is now firmly established that states have the constitutional power to tax multistate businesses on net income reasonably attributable to activity within the taxing state. Within this legal frame-work, limited only by Public Law 86-272, the states have fashioned separate and diverse rules for the taxation of multistate corporations.'The recently formed Multistate Tax Compact provides an efficient alternative to both the present disarray of state statutes and possible federal regulation of interstate taxation. The principal purposes of the Compact are to establish uniform rules for determining state tax liabilities of multistate taxpayers, to eliminate ineffective tax administration and the …

The Great Section 38 Property Muddle, J. A. Cragwall, Jr.

Vanderbilt Law Review

Twelve full years have elapsed since section 38 property made its first appearance on the stage of tax law. In those twelve years, a complicated, confusing, ad hoc, and often inconsistent body of rulings and judicial decisions has grown up around the definitional regulation; words and phrases have acquired strange new meanings and connotations in the lush overgrowth of legal reasoning clinging to that regulation. The paradoxes in the regulation (such as that addressed in Weirick) and, more often, the ambiguities resulting from an almost universal failure by the regulations to define, instead of simply illustrate, its terms (such as …

Alternative Gains Tax Treatments Of Decedents' Appreciated Capital Assets, D. Allen Grumbine

Vanderbilt Law Review

The present treatment of appreciated assets under section 1014' of the Code permits a great deal of accrued appreciation to escape the income tax. While decedents pay a greater estate tax because asset appreciation swells their estates, they pay no gains tax at death on this accrued appreciation. Moreover, the recipients of the decedent's property generally take a stepped-up basis for the property equal to its fair market value at the time of death. A great deal of criticism has been leveled at this system, and numerous proposals have been made for remedying the situation: imposition of a capital gains …

Real Property Depreciation Recapture: An Ineffectual Reform Of The Tax Laws, Charles S. Franklin

Vanderbilt Law Review

This note stems from a belief that an asymmetrical body of tax laws is a challenge to the legal profession which, by training, experience and tradition, is well situated to spur and guide reform. It is my intention to outline the story of but one section of the Internal Revenue Code: why it was proposed, what it sought to do, how it underwent modification by an unsympathetic congressional committee, and how it was finally enacted as a superficial compromise with the underlying asymmetry of our tax laws. In short, what follows is an appended bar in the organ theme entitled …

The Treasury Report On Foundations:Methods Of Enforcing Compliance, Thomas R. Allen

Vanderbilt Law Review

If Professor Sacks is correct in his cyclical view of the public concern over charitable foundations, the present period must surely be classed as one of maximum turbulence. At the moment both houses of Congress have had presented to them proposals for levying new restrictions on charitable foundations through the tax law, a flood of law review comments has appeared, and at the state level new legislation, partly directed to control of charitable foundations, has been proposed, and in some cases adopted...As this paper is concerned primarily with sanctions, only those proposals in the Treasury Report for which no sanctions …

Book Reviews, Estes Kefauver, Senator, Stanley D. Rose, W. Edward Sell, Harold G. Wren, Robert N. Covington

Vanderbilt Law Review

Congress and the Court By Walter F. Murphy. Chicago: The University of Chicago Press, 1962. Pp. xi, 308. $6.95. (judicial power)

reviewer: Senator Estes Kefauver

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Interstate Apportionment of Business Income for State Income Tax Purposes By Charles E. Ratliff, Jr. Chapel Hill: The University of North Carolina Press, 1962. Pp. xi, 132. $4.00. (tax law)

reviewer: Stanley D. Rose

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Expulsion or Oppression of Business Associates By F. Hodge O'Neal and Jordan Derwin. Durham, N.C.: Duke University Press,1961. Pp. vii, 263. $10.00. (business organizations)

reviewer: W. EDWARD SELL

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The Ideologies of Taxation By Louis Eisenstein. New York: The …

Characterization Of An Income Tax For The Purpose Of The Foreign Tax Credit, Stanley L. Ruby

Vanderbilt Law Review

Perhaps the best reconciliation of the many conflicting policies underlying the foreign tax credit would be to give preferential treatment by tax treaties to investment income from those areas where our foreign policy dictates that investment should be encouraged, whereas taxes imposed on income from other areas should be handled by the deduction approach. Thus the loss of revenue through investment in heavily industrialized areas (with stable governments and relatively little risk-taking) with high tax rates would end, but there would exist the flexibility, through treaties, to encourage investment in underdeveloped areas.

State Taxation Of Corporate Income From A Multistate Business, Paul J. Hartman

Vanderbilt Law Review

So long as we have a federal system of government, a continuing problem, and certainly one of the most pressing, is that of an effective coordination of taxes. That problem has achieved paramount impor- tance in late years. Because of new and expanding conceptions as to what governments should do for people, our state governments are continually confronted with ever-increasing demands that they provide additional governmental functions and supply more governmental services. The resulting increase in governmental activities and extension of benefits mean urgent needs for additional revenue. As prices have spiraled under the increasing pressure of meeting our domestic …

The Tax Treatment Of Collapsible Corporations, Boris I. Bittker

Vanderbilt Law Review

Introductory.-Section 331 (a) (1) of the Internal Revenue Code provides that a complete liquidation of a corporation is to be treated by the shareholder as a sale of his stock, which will ordinarily produce capital gain or loss, and section 334 (a) provides that the shareholders' basis for property acquired on the liquidation is its fair market value at the time of distribution. These rules, which are of long standing, led to the tax avoidance device known as the "collapsible corporation," which in its turn led,in 1950, to the enactment of what is now section 341. As will be seen, …

Subchapter S And Its Effect On The Capitalization Of Corporations, Mortimer M. Caplin

Vanderbilt Law Review

Our federal tax laws encourage the creation of complex capital structures. "Thinning" capitalizations by issuing corporate indebtedness offers well known tax advantages to both shareholder and corporation.' Also, since 1954, issuing preferred stock on incorporation is a standard procedure for side-stepping the "bail-out" prohibitions of code section 306. A "good" capitalization from a tax viewpoint, therefore, will often involve a small base of common stock, a heavier layer of preferred stock and as much debt as the tax adviser believes will be given tax recognition.

Tax Considerations In Selecting A Form Of Foreign Business Organization, Walter W. Brudno

Vanderbilt Law Review

The provisions of the Internal Revenue Code which are of particular relevance to the planning of foreign operations are few in number and are generally deceptively simple in phraseology. The substantive provisions consist of those sections which specify rules for determining the source of income, for calculating the credit for foreign taxes paid in respect of foreign source income, and for allowance of concessional treatment accorded Western Hemisphere Trade Corporations, United States Possessions Corporations, and China Trade Act Corporations. Measures designed to prevent tax avoidance which are of particular relevance are those which relate to acquisition of corporate control for …

Administration And Collection Problems, Dixwell L. Pierce

Vanderbilt Law Review

"In the field of revenue administration, there is no longer such a thing as a simple tax law. Complex problems require complex laws, and complex laws are made to protect all taxpayers alike."

When a state or local government provides for a general sales and use tax, it is assuming a heavy administrative responsibility. Such tax laws are deceptively simple. They are not easy to administer. Failure to recognize these facts has resulted all too often in disappointing revenue yields and widespread dissatisfaction among retailers and their customers.

No one really enjoys paying taxes. What may be merely mild distaste …

Life Insurance, The Forbidden Fruit, William J. Rowe

Vanderbilt Law Review

Until recently life insurance has represented the most impenetrable stronghold of the professional tax avoider and his advisors. As a vehicle for the transmission of wealth to future generations with minimum tax levies, it stood unrivaled. During a policyholder's life the value of his policy for gift tax purposes was and is measured by replacement cost.' Under applicable regulations during the thirties, when insurance was transferred by way of inter vivos gift the tremendous increase in value of the policy that came with death escaped gift tax, income tax, and estate tax. But since 1941 the situation has been reversed …

A Planner's Primer, William M. Reynolds

Vanderbilt Law Review

Anyone undertaking an assignment to write within a few pages under this comprehensive title must limit his coverage. This general article on a subject as intangible as estate planning omits entirely or gives short treatment to many considerations which may be of great importance to the conscientious planning of relatively complicated estate situations., Emphasis will be placed on the tax aspects of estate planning, particularly federal taxes, but consideration will be given to other aspects which may be of equal or even greater importance. This deliberate emphasis is certainly not intended to add to the misleading impression, too frequently held, …