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Full-Text Articles in Law
Sophistry, Situational Ethics, And The Taxation Of The Carried Interest, Darryll K. Jones
Sophistry, Situational Ethics, And The Taxation Of The Carried Interest, Darryll K. Jones
Journal Publications
This Article is, in essence, a strident expression of indignation about what a majority of tax scholars and, indeed, legislators consider a glaring yet persistent inequity in the tax code. In short, sometimes extraordinarily well-paid fund managers receive compensation taxed at capital gains rates. All other, usually very much lower-compensated, service providers are taxed at ordinary rates. The result is clearly regressive and yet, as of late, even some respected and knowledgeable scholars-though still in the minority-have unabashedly set forth sophisticated-sounding justifications. Objections based on unfairness, real, or even merely perceived, are difficult to express without a tone of indignation, …
Third-Party Profit-Taking In Tax Exemption Jurisprudence, Darryll K. Jones
Third-Party Profit-Taking In Tax Exemption Jurisprudence, Darryll K. Jones
Journal Publications
Nothing is free, not even charity. In almost every case, a tax-exempt nonprofit organization must transact with profit-seekers to achieve the charitable goal for which the organization has been granted tax exemption. The organization will have to fund somebody's accession to wealth. It may be, for example, that a particular nonprofit organization need only hire one or two employees to deliver meals to elderly beneficiaries. Even in that circumstance, an organization must normally pay market rates for the labor necessary to achieve its charitable goal. Employees will profit; the law presumes as much, and we would be hard pressed to …
Taxation Of Profit Interests And The Reverse Mancur Olson Phenomenon, Darryll K. Jones
Taxation Of Profit Interests And The Reverse Mancur Olson Phenomenon, Darryll K. Jones
Journal Publications
The Article proceeds from this point through four acts, each of which highlights, largely without subjective judgment whenever possible, the rent-seeking and rent extraction motivations animating the outcomes. Indeed, the Article agrees with the idea that rent seeking and rent extractions are rational behaviors and indeed may even have a legitimate place in tax law. So, in Act I the Article describes the law as it came to be as a result of Diamond v. Commissioner, a relatively small dollar amount case that challenged the unstated political compromise theretofore existing. Diamond and its aftermath provide the first evidence of successful …
Towards Equity And Efficiency In Partnership Allocations, Darryll K. Jones
Towards Equity And Efficiency In Partnership Allocations, Darryll K. Jones
Journal Publications
The primary goal of any tax system is to raise sufficient revenue for government. More precisely, taxation is the means by which government supplies necessary things not available from the private market. Taxation allows society to cure distributional imperfections in the market. It is appropriate, therefore, only to the extent that the market cannot provide goods and services for which there is public demand; if private markets equitably supplied food, shelter, health care, education, and common defense, taxes could be greatly reduced if not completely eliminated. The revenue raising goal is thwarted to the extent the taxing system is either …
Special Allocations And Preferential Distributions In Joint Ventures Involving Taxable And Tax Exempt Entities, Darryll K. Jones
Special Allocations And Preferential Distributions In Joint Ventures Involving Taxable And Tax Exempt Entities, Darryll K. Jones
Journal Publications
Joint ventures involving taxable and tax-exempt organizations, referred to in this article as "taxable-tax exempt joint ventures," engender conflict between the doctrinal requirements pertaining to tax exemption and the flexibility afforded joint ventures in Subchapter K.' The nonprofit partner must exercise ultimate governing control over the joint venture so that charitable goals take precedence over profit-seeking goals if the nonprofit's share of income is to remain tax exempt. On the other hand, a for-profit partner is entitled and indeed expected to pursue profit but its lack of control over the joint venture exposes the for-profit partner to greater risk of …
The Neglected Role Of International Altruistic Investment In The Chinese Transition Economy, Darryll K. Jones
The Neglected Role Of International Altruistic Investment In The Chinese Transition Economy, Darryll K. Jones
Journal Publications
This Article discusses the positive role of altruistic investment in any transition economy by making specific reference to altruistic investment in the Chinese economic transition. The Article discusses the social welfare hardships arising from the transition process and then discusses the U.S. and Chinese tax incentives and barriers to altruistic investment that would lessen that hardship. After that, the Article discusses the reasons why both countries might prefer to retain those barriers. Finally, the Article concludes that altruistic investment has more positive then negative consequences and makes a simple proposal to stimulate altruistic investment in China in a manner that …
First Bite And The Private Benefit Doctrine: A Comment On Temporary And Proposed Regulation 53.4958-4t(A)(3), Darryll K. Jones
First Bite And The Private Benefit Doctrine: A Comment On Temporary And Proposed Regulation 53.4958-4t(A)(3), Darryll K. Jones
Journal Publications
The purpose of this article, then, is first to show how the Service's concession to the first bite rule, without a corresponding restatement of the private benefit doctrine, renders the public powerless to prevent a charity's distribution of profit in certain significant circumstances. In the absence of corrective action, the more aggressive and savvy charities will quickly recognize and exploit the loophole. Second, the article discusses and refines a proposal I have previously made concerning a restatement of the private benefit doctrine in a manner that would close the loophole. Since the private benefit doctrine is very closely related to …
Advertisements And Sponsorships In Charitable Cyberspace: Virtual Reality Meets Legal Fiction, Darryll K. Jones
Advertisements And Sponsorships In Charitable Cyberspace: Virtual Reality Meets Legal Fiction, Darryll K. Jones
Journal Publications
By now, it is perhaps cliche to quote Sir Walter Scott's familiar refrain' when referring to communications occurring via the World Wide Web (the Web). And yet, that age-old wisdom comes readily to mind when one considers the unrelated business income tax (UBIT) as it relates to charities that, for consideration paid, participate in a profit-seeker's web-based marketing communications. That first lie, to be precise, is that a charity's payment-induced, unlimited public display of a profit-seeker's logo, slogan and product, when unaccompanied by "comparative or qualitative descriptions" or explicit requests to buy, results in no trade or business income for …
The Scintilla Of Individual Profit: In Search Of Private Inurement And Excess Benefit, Darryll K. Jones
The Scintilla Of Individual Profit: In Search Of Private Inurement And Excess Benefit, Darryll K. Jones
Journal Publications
Private inurement certainly manifests itself in "protean" ways, but regardless of form, the prohibition against private inurement must be rendered consistent with the generally accepted notion that exempt entities are singularly distinguishable from taxable entities by the act of forbearance with respect to individual profit, since that is the distinction the prohibition was originally intended to enforce. Rendering the prohibition consistent with the single notion underlying the existence and theories of tax-exemption will resolve much of its elasticity, elusiveness, and long-lasting evolution. Such a result is necessary and good not only because of the imposition of personal liability under section …
Tax Exemption Issues Facing Academic Health Centers In The Managed Care Environment, Darryll K. Jones
Tax Exemption Issues Facing Academic Health Centers In The Managed Care Environment, Darryll K. Jones
Journal Publications
A variation on an old adage states, "things aren't like they used to be and never were." The applicability of tax law to higher education is a subject to which the modified adage is apt. If there was ever a time when tax law was generally inapplicable to higher education, when higher education administrators and counsel could ignore the maddening and glorious detail of tax law, it is certainly not now and one would be hard pressed to prove that such a time ever existed. Indeed, many of modem tax law's prohibitions and allowances were motivated by or refined as …
The Lingering Demise Of Tax Exempt Mutual And Captive Insurance Companies, Darryll K. Jones
The Lingering Demise Of Tax Exempt Mutual And Captive Insurance Companies, Darryll K. Jones
Journal Publications
Prior to the enactment of IRC §501(m), the issue of whether a group self-insurance pool was tax exempt generally depended upon an analysis of the "substantial purpose" requirement contained in Treasury Regulation §1.501(c)(3)-1(c)(1) which denies tax exempt status to an entity or organization if "more than an insubstantial part of its activities is not in furtherance of an exempt purpose." In addition, Treas. Reg. §1.501(c)(3)-1(e)(1) allows an entity to operate a trade or business as a substantial part of its activities but only "if the operation of such trade or business is in furtherance of the organization's exempt purpose.... Thus, …