Law Commons^™

Moonshine To Motorfuel: Tax Incentives For Fuel Ethanol, Roberta F. Mann, Mona L. Hymel

Roberta F Mann

Abstract: Biofuels have been embraced by supporters from President George W. Bush to the Natural Resources Defense Council. Before 1930, the U.S. Treasury focused on shutting down small alcohol producers. After 1978, U.S. energy policy sought to encourage ethanol production to reduce dependence on foreign oil. Federal and state incentives have been credited with increasing ethanol production from 175 million gallons in 1980 to 3.9 billion gallons in 2005. The Internal Revenue Code contains three income tax credits designed to encourage ethanol use: the alcohol mixture credit, the pure alcohol credit, and the small ethanol producer’s credit. The credits, together …

Why Do Venture Capital Funds Burn Research And Development Deductions?, Calvin H. Johnson

Calvin H. Johnson

Venture capital funds form a separate corporation for each venture that they support, within their portfolio of diverse ventures. The separate incorporation reduces the tax value that could be achieved from deducting research and development costs. The resulting taxes are draconian, sometimes confiscatory. If R&D deductions were used optimally, taxable investors could achieve a tax regime that does not reduce their pretax return, and taxable investors would drive tax-exempt investors out of the funds. If capital must come from tax-exempt investors, the funds should still be trying to use the R&D deductions against taxable income of the successful ventures. Tax …

Preventive Tax Policy: Chief Justice Roger J. Traynor's Tax Philosophy, Mirit Eyal-Cohen

Mirit Eyal-Cohen

Justice Roger J. Traynor is best known for his judicial innovations in the fields of conflict of laws, product liability, and civil procedure. However, few would trace Traynor’s roots to the field of tax law. In the late 1930’s Traynor collaborated with Stanley S. Surrey, our nation's foremost authorities on federal tax law, and together they called for a substantial transformation of existing mechanisms for settling tax disputes. At that crucial time in history, high marginal tax rates intensified the friction between taxpayers and the government, boosted litigation and multiplied the number of tax controversies. Traynor and Surrey developed the …

Economic Substance And The Supreme Court, Amandeep S. Grewal

Andy Grewal

If an individual seeks a benefit under a congressionally-enacted statute, is a court obliged to examine that statute to determine whether he qualifies for that benefit? To many district and circuit courts, the answer to that question is a firm 'no.' This article argues that that approach is inappropriate and, despite the lower courts' assertion to the contrary, flatly inconsistent with applicable Supreme Court precedent.

Faced with a taxpayer's argument that he qualifies for a tax benefit, the lower courts have often chosen to apply the so-called economic substance doctrine rather than the internal revenue laws. Under that doctrine, courts …

Trade Or Business Within The United States As N Interpretive Problem Under The Internal Revenue Code: Five Propositions, Anthony P. Polito

Anthony P Polito

Whether a particular set of activities constitute the conduct of a trade or business within the United States is an ongoing interpretive question affecting many foreign taxpayers. It controls what form of U.S. taxation, if any, applies to them. In the domestic context a trade or business entails profit-oriented non-investment activity that is regular, continuous and considerable. It is tempting, in the transition to the international context, to conclude that the conduct of a trade or business within the U.S. requires that the taxpayer’s U.S. activities must be regular continuous, and considerable, and the standard is often articulated in this …

Tax Malpractice Damages: A Comprehensive Review Of The Elements And The Issues, Jacob L. Todres

Jacob L. Todres

ABSTRACT & TABLE OF CONTENTS

Tax Malpractice Damages: A Comprehensive Review Of The Elements And The Issues

Suits to redress instances of tax malpractice may be framed either in tort or in contract. While some ancillary aspects of the litigation may differ, a professional must exercise reasonable competence and diligence to avoid malpractice liability under either approach. The same basic standards apply to attorneys and accountants. Typically the tort of negligence will be the key to any recovery, though other causes of action are also encountered.

Damages are normally recoverable for all injuries proximately caused by the malpractice, consequential as …

Charitable Deductions For Rail-Trail Conversions: Reconciling The Partial Interest Rule And The National Trails System Act, Danaya C. Wright

Danaya C. Wright

Abstract: This article examines an undeveloped legal topic at the intersection of tax law and real property law: charitable deductions from income tax liability for donations of railroad corridors to be converted into recreational trails. The very popular rails-to-trails program assists in the conversion of abandoned railroad corridors into hiking and biking trails. But the legal questions surrounding the property rights of these corridors have been complex and highly litigated. In 1983, Congress amended the National Trails System Act to provide a mechanism for facilitating these conversions, a process called railbanking. In essence, a railroad transfers its real property interests …

The Fortunes & Foibles Of Exchange-Traded Funds, William A. Birdthistle

William Birdthistle

One of the most dynamic and complex new investment vehicles on the market today is the exchange-traded fund, a security that provides the diversification of a mutual fund but trades on an exchange like a stock. In just over a decade, the number of ETFs has proliferated to well over 500, attracting almost half a trillion dollars in investment. Most of that growth has occurred in just the past two years, and ETFs are projected to continue growing at a pace far faster than hedge funds and mutual funds in the coming years. Yet for all this extraordinary growth, legal …

Virtual World Taxation: Theories Of Income Taxation Applied To The Second Life Virtual Economy, Timothy J. Miano

Timothy J Miano

A virtual world is a computer simulated environment in which users interact with each other via graphical representations of themselves. Second Life is one such virtual world released by Linden Lab in 2003. One of the most important and interesting aspects of virtual worlds is the depth and sophistication of the economies that develop among the users. In fact, some virtual worlds, including Second Life, have currency exchanges where users can trade real-world currencies for virtual-world currency and vice versa. This means that the currency, goods, and services within the virtual-world marketplace have a corresponding real-world monetary value. The implication …

“Hands Off My Taxes!”: A Comparative Analysis Of Direct Democracy And Taxation, Amleto Cattarin

Amleto Cattarin

Abstract

The purpose of the article is to analyse the phenomenon of direct democracy related to fiscal matters. This research will be based on the experience of a number of European countries compared to one U.S. state, California, which was chosen due to Proposition 13, one of the classic examples of conflict between a state organization and its citizens. Failing a trustworthy relation that legitimates taxation, beyond the employment of rough power, common rhetoric shows the value of direct democracy against and at the expense of representative democracy. Politicians of several European countries have established, somewhat paternalistic legal systems in …

Review: A New Understanding Of Tax, Charles E. Mcwilliams

Charles E. McWilliams Jr.

This article is a review of Edward McCaffery's "A New Understanding of Tax." I originally wrote this paper as a final exam for Tax Policy with Professor Chorvat at the George Mason University School of Law, and while I cannot claim to have a particularly novel or enlightening view of this subject matter I do hope that this can serve as an acceptable primer for anyone interested in studying a progressive post-paid consumption tax system.

Freakonomics And The Tax Gap: An Applied Perspective, Leslie Book

Leslie Book

Over the past thirty years, a significant amount of research from a variety of social science disciplines has considered tax compliance. Economists, psychologists, and sociologists have contributed to the discussion, offering research and, at times, conflicting explanations regarding whether a person is likely to comply with his obligation to file an accurate tax return. The unifying theme among this research is a search for explanatory reasons which are the factors that lead to non-compliance. In broad terms, the economic models of tax compliance assume rational behavior, and that people will coldly consider compliance from the perspective as to whether the …

Vague Concepts And Uncertainty In Tax Law: The Case Of Comparative Tax Judicial Review, Roberto P. Vasconcellos

Roberto P. Vasconcellos

What causes uncertainty in tax judicial review jurisprudence? Why is uncertainty a common problem to many different legal systems? Can we blame the changing jurisprudence or the unclear legal concepts found in courts decisions? Many schools of thought and intellectual traditions are almost identical in different countries. However, even among identical thinking it is not difficult to find cultural reasons for legal systems choosing a certain school of thought. Therefore, this Article takes familiar legal concepts such as public law, public interest and legitimate expectations and studies how they are applied, as well as how they should be applied by …

Patenting Tax-Related Legal Advice: A Step In The Wrong Direction, Yonatan Heisler

Yonatan Heisler

The patenting of tax planning strategies has started to attract a great deal of attention recently as an issue that carries with it important and far-reaching social policy and tax implications. The issue, however, is not just of interest to tax practitioners; it has also attracted the attention of Congress. In July of 2006, the House Committee on Ways and Means held a hearing to discuss whether tax planning strategies ought to be granted patent protection. Those testifying before the committee included IRS Commissioner Mark Everson, and General Counsel of the United States Patent and Trademark Office (USPTO), James Toupin. …

Patenting Tax-Related Legal Advice: A Step In The Wrong Direction, Yonatan Heisler

Yonatan Heisler

The patenting of tax planning strategies has started to attract a great deal of attention recently as an issue that carries with it important and far-reaching social policy and tax implications. The issue, however, is not just of interest to tax practitioners; it has also attracted the attention of Congress. In July of 2006, the House Committee on Ways and Means held a hearing to discuss whether tax planning strategies ought to be granted patent protection. Those testifying before the committee included IRS Commissioner Mark Everson, and General Counsel of the United States Patent and Trademark Office (USPTO), James Toupin. …

The Play's The Thing: A Theory Of Taxing Virtual Worlds, Bryan T. Camp

Bryan T Camp

The Play’s The Thing: A Theory of Taxing Virtual Worlds: Bryan T. Camp Abstract Taxation is shadow life. As our culture monetizes more and more life activities, the shadow grows. This article looks at the potential tax issues arising from a new life activity: online role-playing games in virtual worlds. Currently, some 12 million people regularly play such games and the number is growing. Exploring the reach of the Tax Code into virtual world transactions not only responds to the potentially practical needs of millions of U.S. taxpayers, it also permits a reevaluation of core principles of income tax as …

Loving Couples, Split Interests: A Call For Tax Planning In The Fight To Recognize Same Sex Marriage, Anthony A. Rickey

Anthony A. Rickey

A fundamental tension exists between the Defense of Marriage Act, which forbids the Internal Revenue Service and the federal judiciary from recognizing same-sex marriages, and the Internal Revenue Code, which uses marital status to identify parties likely to collude in order to minimize their collective tax burden. Homosexual couples married under state law are arguably exempt from anti-abuse rules promulgated over fifteen years ago to eliminate tax shelter strategies employed by heterosexual couples. This essay suggests that homosexual rights advocates can exploit this tension through the use of relatively simple tax planning devices, as part of a campaign to repeal …

The Case For For-Profit Charities, Anup Malani, Eric Posner

Anup Malani

Nonprofit firms may earn profits, but they may not distribute them to any affiliated persons. If a nonprofit firm has a “charitable” purpose under § 501(c)(3) of the tax code, the firm receives numerous tax advantages. For example, donors may deduct their donations to the firm from their taxable personal income. For-profit firms may distribute profits to affiliated persons, but receives no tax advantages for engaging in “charitable” activities. We argue that the law should not link tax benefits to corporate form in this way. There may be good arguments for recognizing the nonprofit form and good arguments for providing …

Reinterpreting The Role Of Special Trial Judges Through Standards Of Review, Christopher M. Pietruszkiewicz

Christopher M. Pietruszkiewicz

Standards of review define the scope of power between judicial actors by dictating the level of discretion given to an original trier of fact. In the articulation of a standard of review, language is an insufficient source for defining a standard because of the inability of specific terminology to produce objective certainty. It is because words are not susceptible to objective certainty that the language used in defining a standard of review could be considered irrelevant and indistinguishable.

While the words may be indistinguishable, it is the uniformity of terms that promotes consistency in application. It may be impossible to …

Come Hell And High Water: Can The Tax Code Solve The Post-Katrina Insurance Crisis?, Christine L. Agnew

Christine L. Agnew

Abstract As Americans struggle to appreciate the full extent of the damage and destruction caused by Hurricane Katrina, a terrifying question resonates with a shell-shocked nation: what is next? Forecasters have been quick to respond with a laundry list of the most unimaginable disasters with price tags ranging from $50-$400 billion dollars apiece. Imagine what would happen if these catastrophes occurred back-to-back like they did in 2004 and 2005. Prior to Katrina, the thought of having to shoulder a triple digit loss was unfathomable. Today, it is considered inevitable and the only question that remains is who will bear the …

From The Dead Hand To The Living Dead: The Conundrum Of Charitable Donor Standing (Symposium), Evelyn Brody

Evelyn Brody

No abstract provided.

Time To Step Up: Modeling The African American Ethnivestor For Self Help Entrepreneurship In Urban America, Roger M. Groves

Roger M. Groves

Almost $6 billion in taxes paid by the American people have been rather ubiquitously placed in the hands of a federal subsidy program for investors in low income communities. The subsidy is in the form of a tax credit. The program is entitled the New Markets Tax Credit (“NMTC”) initiative. Under the program, the tax credit is used to lure investors to provide equity capital into low income areas, urban and/or rural (i.e. a new market for equity funding). According to my companion law review article (Florida Tax Review, Spring, 2007; The Florida Tax Review was ranked 1st among tax …

Time To Step Up: Modeling The African American Ethnivestor For Self Help Entrepreneurship In Urban America, Roger M. Groves

Roger M. Groves

Almost $6 billion in taxes paid by the American people have been rather ubiquitously placed in the hands of a federal subsidy program for investors in low income communities. The subsidy is in the form of a tax credit. The program is entitled the New Markets Tax Credit (“NMTC”) initiative. Under the program, the tax credit is used to lure investors to provide equity capital into low income areas, urban and/or rural (i.e. a new market for equity funding). According to my companion law review article (Florida Tax Review, Spring, 2007; The Florida Tax Review was ranked 1st among tax …

Good Hybrids/Bad Hybrids, Edward J. Mccaffery

Edward J McCaffery

Hybrid income-consumption taxes seek to tax some but not all savings, the treatment of savings being the principal difference between an income and a consumption tax. Some hybrids, however, simply move the tax system towards a prepaid consumption or wage tax; others, by allowing arbitrage, risk making all taxation voluntary. A consistent, progressive postpaid consumption tax, in contrast, gets matters just right, by design: it allows ordinary savings, for times of retirement or medical or educational needs, to lower the burden of taxation, while falling on the yield to savings when it is used to elevate lifestyles. It is, in …

A New Understanding Of Tax, Edward J. Mccaffery

Edward J McCaffery

A great deal and possibly all of the mind-numbing complexity of America’s largest and least popular tax follows from the decision to have a progressive personal income tax. Proponents wanted an individual income tax notwithstanding — indeed, in large part because of — such a tax’s “double taxation” of savings. This double-tax argument is an analytic point generally attributed to Mill’s classic 1848 treatise, Principles of Political Economy. Historically, much of the support for the Sixteenth Amendment, ratified in 1913, came from Southern and Midwestern, progressive, agricultural interests, who wanted, in general, to implement a redistributive tax and, in particular, …

Another Day Older And Deeper In Debt: How Tax Incentives Encourage Burning Coal And The Consequences For Global Warming, Roberta F. Mann

Roberta F Mann

Coal generates more than half of the electricity in the United States. Civilization has had a love-hate relationship with coal for centuries. Coal usage is both a blessing and a curse. Per unit of energy, coal appears to be the cheapest fuel. But while the nominal price we pay for coal-based energy reflects some of the cost of extracting, processing, transporting, and converting it to energy, it does not reflect the social and environmental costs of coal. Moreover, because coal is subject to tax subsidies, the price does not reflect the entire direct cost of coal. As long as coal …

E-Commerce Taxation And Cyberspace Law: The Integrative Adaptation Model, Rifat Azam Dr.

Rifat Azam Dr.

This article argues that the current debate on international taxation of e-commerce is totally tax oriented and ignores cyberspace law and that this separation is unjustified and harmful to the development of e-commerce taxation law. Mutual intellectual feeding and integrative debate that is open and interesting to the general legal scholarly community is necessary to improve ecommerce law. To begin a debate on e-commerce taxation as part of cyberspace law, the author describes and incorporates for the first time the primary cyberspace literature into the e-commerce taxation debate. The author draws lessons from judicial jurisdiction in cyberspace, criminal law in …

Tax And Terrorism: A New Partnership?, Michelle Gallant

Michelle Gallant

The global chase for terrorist assets has shed light on a link between tax and terrorism. Tax havens have been associated with terrorist finance, identified as potential centres for filtrating terrorist assets and for enabling the cross-border movement of the resources destined for terrorist enterprises. Complex multi-jurisdictional financial transactions have become the venues for the merger of terrorist finance with other mobile capital, its criminally ordained purpose hidden midst the convolutions of international tax and related transactions.

To many the mechanics of tax is an inaccessible subject. It consists of a complex matrix of laws best left to the professional …

Forcing Fairness In State Taxation, Randall Gingiss

Randall Gingiss

No abstract provided.

Time To Step Up: Modeling The African American Ethnivestor For Self Help Entrepreneurship In Urban America, Roger M. Groves

Roger M. Groves

Almost $6 billion in taxes paid by the American people have been rather ubiquitously placed in the hands of a federal subsidy program for investors in low income communities. The subsidy is in the form of a tax credit. The program is entitled the New Markets Tax Credit (“NMTC”) initiative. Under the program, the tax credit is used to lure investors to provide equity capital into low income areas, urban and/or rural (i.e. a new market for equity funding). According to my companion law review article (Florida Tax Review, Spring, 2007; The Florida Tax Review was ranked 1st among tax …