Business Organizations Law Commons^™

Unwinding The Ceiling Rule, Leigh Osofsky

Articles

This article closely examines the unwinding of the ceiling rule. Congress and partnership tax experts historically have assumed perfect unwinding of the ceiling rule on liquidation or sale of a partnership interest. However, this assumption glosses over a significantly more complicated reality. This article closely examines the history of section 704(c) and the interaction between the ceiling rule and the rules regarding sales and liquidations of partnership interests to reveal the extent to which the assumption does not hold. By debunking long-held assumptions about the perfect unwinding of the ceiling rule, this article displays that there is no reasonable justification …

Climate Change And Business Law In The United States: Using Procurement, Pay, And Policy Changes To Influence Corporate Behavior, Marcia Narine

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No abstract provided.

Territoriality: For And Against, Reuven S. Avi-Yonah

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The tax on dividends from the active income of controlled foreign corporations meets the criteria for a bad tax: It raises little revenue but significantly affects taxpayer behavior in undesirable ways.

Arguments For And Against Territoriality, Reuven S. Avi-Yonah

Articles

The tax on dividends from the active income of controlled foreign corporations meets the criteria for a bad tax: It raises little revenue but significantly affects taxpayer behavior in undesirable ways.

Should The Us Dictate World Tax Policy? Reflections On Ppl, Reuven S. Avi-Yonah

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The U.S. Supreme Court’s decision to grant certiorari in PPL offers it a unique opportunity to change the law regarding foreign tax credits that has significantly impeded the ability of other countries to engage in meaningful tax reform. In 1938 the Court said in dicta that to qualify for the FTC a tax had to be an income or excess profits tax (or a tax imposed in lieu thereof) under U.S. tax principles. This statement has led to an elaborate set of regulations defining what is an income tax, which has significantly hampered the ability of foreign countries to adopt …

Private Regulation Of Insider Trading In The Shadow Of Lax Public Enforcement: Evidence From Canadian Firms, Laura Nyantung Beny, Anita Anand

Articles

Like firms in the United States, many Canadian firms voluntarily restrict trading by corporate insiders beyond the requirements of insider trading laws (i.e., super-compliance). Thus, we aim to understand the determinants of firms’ private insider trading policies (ITPs), which are quasi-contractual devices. Based on the assumption that firms that face greater costs from insider trading (or greater benefits from restricting insider trading) ought to be more inclined than other firms to adopt more stringent ITPs, we develop several testable hypotheses. We test our hypotheses using data from a sample of firms included in the Toronto Stock Exchange/Standard and Poor’s (TSX/S&P) …

Corporate And International Tax Reform: Proposals For The Second Obama Administration (And Beyond), Reuven S. Avi-Yonah

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The passage of the American Taxpayer Relief Act of 2012 (ATRA) offers an opportune moment to consider proposals for corporate and international tax reform. With the debate over individual tax rates for the income and estate tax settled for the present, the President and Congress are free to consider broader reforms. Few observers doubt that such reforms are sorely needed, for several reasons. First, the long-term budgetary outlook is unsustainable. Second, the U.S. corporate tax rate is the highest in the Organisation for Economic Co-Operation and Development (OECD). Third, the current system raises relatively little revenue and large amounts of …

Revisiting 'Truth In Securities Revisited': Abolishing Ipos And Harnessing Private Markets In The Public Good, Adam C. Pritchard

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My thesis is that the transition between private- and public-company status could be less bumpy if we unify the public-private dividing line under the Securities Act and Exchange Act. The insight builds on Cohen's thought experiment where Congress first enacted the Exchange Act. My proposed public-private standard would take the company-registration model to its logical conclusion. The customary path to public-company status is through an IPO, typically with simultaneous listing of the shares on an exchange. There is nothing about public offerings, however, that makes them inherently antecedent to public-company status. What if companies became public, with required periodic disclosures …

Back To The Future, Sergio J. Campos

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No abstract provided.

Accelerating The Growth Of The Next Generation Of Innovators, Dana Thompson

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In a recent study on the best practices of business incubators that contribute to the success of startups, one of the best practices asserted is to include a business lawyer on the advisory board of business incubators, who may suggest necessary legal issues for startups to address and connect the incubator startups with legal assistance. Although many college and university incubators may have access to experienced attorneys who are able to provide advice, and who are able to represent student-led ventures, most do not have access to a university law clinic established to provide pro bono, direct legal representation and …

Deferred Prosecution And Non-Prosecution Agreements And The Erosion Of Corporate Criminal Liability, David M. Uhlmann

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On April 5, 2010, a massive explosion killed twenty-nine miners at Massey Energy's Upper Big Branch mine near Montcoal, West Virginia. Following the explosion, President Barack Obama vowed that the U.S. Department of Labor would conduct "the most thorough and comprehensive investigation possible" and work with the U.S. Department of Justice ("Justice Department" or the "Department") to address any criminal violations. Later in the month, the President and Vice President flew to West Virginia to eulogize the victims and comfort their families. It was the nation's worst coal mining disaster in forty years. The tragic loss of life at the …

From Kansas To The Congo: Why Naming And Shaming Corporations Through The Dodd-Frank Act's Corporate Governance Disclosure Won't Solve A Human Rights Crisis, Marcia Narine

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No abstract provided.

Killing Them With Kindness: Examining "Consumer-Friendly" Arbitration Clauses After At&T; Mobility V. Concepcion, Myriam E. Gilles

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The article focuses on the U.S. Supreme Court case AT&T Mobility LLC v. Concepcion, in which California's "Discover Bank rule" was struck by the Court under the Federal Arbitration Act, which was upheld by the California Supreme Court in the court case Discover Bank v. Superior Court. It provides information that the rule is a judge-made rule which depicts that class action waivers are unforceable in arbitration agreements if such agreements are mentioned in standard form consumer contracts.

Sales Between A Partnership And Non-Partners, Douglas A. Kahn

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The code denies a deduction for a loss recognized on a sale or exchange between certain related parties. Two of the principal code sections that deny a deduction in that circumstance are sections 267(a)(1) and 707(b)(1)(A). Two regulatory provisions promulgated under section 267 apply the denial of a loss deduction rule to partnerships — reg. section 1.267(b)-1(b) and temp. reg. section 1.267(a)-2T(c), Question 2. I conclude that to the extent reg. section 1.267(b)-1(b) applies to section 267(a)(1), it is invalid and has been invalid since 1986. Also, two of the questions and answers in the temporary regulation are invalid.

Contribution Of A Built-In Loss To A Partnership, Douglas A. Kahn

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Before 2004, it was possible to use the partnership tax provisions of the code to shift the benefit ofa loss deduction for a decline in property valuefrom the person who incurred it to another person.One method of accomplishing that goal involvedthe contribution of depreciated property to a partnership.

Vive La Petite Difference: Camp, Obama, And Territoriality Reconsidered, Reuven S. Avi-Yonah

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The recent tax reform proposals by House Ways and Means Committee Chair David Camp, R-Mich., and by President Obama seem to offer starkly contrasting visions of how to reform the taxation of foreign-source income earned by U.S.-based multinational enterprises.1 Both acknowledge the problem, which is that U.S.-based MNEs currently have more than $1 trillion of ‘‘permanently reinvested’’ income offshore, which they cannot bring back to the U.S. without incurring a 35 percent tax penalty. However, they seem to offer radically different solutions: Under the Camp proposal, a participation exemption will enable U.S.-based MNEs to bring back the income without paying …

Chevron, Greenwashing, And The Myth Of “Green Oil Companies”, Judd F. Sneirson

Articles

As green business practices grow in popularity, so does the temptation to “greenwash” one’s business to appear more environmentally and socially responsible than it actually is. We examined this phenomenon in an earlier paper, using BP and the Deepwater Horizon catastrophe as a case study and developing a framework for policing dubious claims of corporate social responsibility. This Article revisits these issues focusing on Chevron, an oil company that claims in its advertisements to care deeply about the environment and the communities in which it operates, even as it faces an $18 billion judgment for polluting the Ecuadorean Amazon and …

Whistleblowers And Rogues: An Urgent Call For An Affirmative Defense To Corporate Criminal Liability, Marcia Narine

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No abstract provided.

L3cs: An Innovative Choice For Urban Entrepreneurs And Urban Revitalization, Dana Thompson

Articles

Social enterprises offer fresh ways of addressing seemingly intractable social problems, such as high levels of unemployment and poverty in economically distressed urban areas in the United States. Indeed, although social enterprises have deep and longstanding roots, the recent iteration of the social enterprise movement is gaining momentum in the United States and globally. Though there is not a singularly accepted legal definition of social enterprises, they are popularly known as businesses that use forprofit business practices, principles, and discipline to accomplish socially beneficial goals. Social entrepreneurs, those who operate social enterprises, eschew a traditional notion of charity, which primarily …

Too Many Tiaras: Conflicting Fiduciary Duties In The Family-Owned Business Context, Karen E. Boxx

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Family-owned businesses have been called the "backbone of the U.S. economy," but passing control of a family business to the next generation is so complex that the majority of family businesses do not survive the transition. A common scenario that leads to problems is where owners want to leave the business to their children but only one child is interested in and capable of managing the business.

A popular solution is to leave the interested child an equal share of the business, together with management control, and leave the other children's interests in the business in trust, with the manager …

Symposium On International Taxation And Competitiveness: Introduction And Overview, Reuven S. Avi-Yonah, Nicola Sartori

Articles

In February, 2012, the Treasury and White House unveiled President Obama's Framework for Business Tax Reform. A major proposal was to abolish the deferral on income earned by foreign subsidiaries of U.S. corporations ("CFCs").

Facebook, The Jobs Act, And Abolishing Ipos, Adam C. Pritchard

Articles

Initial public offerings (IPOs)-the first sale of private firms' stock to the public-are a bellwether of investor sentiment. Investors must be bullish if they are putting their money into untested start-ups. IPOs are frequently cited in the business press as a key barometer of the health of financial markets. Politicians, too, see a steady flow of IPOs as an indicator that capital is fueling the entrepreneurial initiative that sustains the growth of new businesses. Growing businesses create jobs, so Republicans and Democrats can find common ground on the importance of promoting IPOs. That bipartisan consensus was on display this spring …

The Effective Tax Rate Of The Largest Us And Eu Multinationals, Reuven S. Avi-Yonah, Yaron Lahav

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The United States has the second highest statutory corporate tax rate in the Organization for Economic Co-Operation and Development (OECD) (after Japan).1 This has not always been the case. After the Tax Reform Act of 1986 lowered the U.S. rate from 46% to 34%,2 the United States had one of the lowest statutory corporate tax rates in the OECD.3 In the past twenty-five years, however, the U.S. rate has remained essentially unchanged (it was raised to 35% in 1993),4 while most other OECD countries reduced their statutory rate so that the OECD average statutory corporate tax rate is 25.1%.

Tribal Rituals Of The Mdl: A Comment On Williams, Lee, And Borden, Repeat Players In Multidistrict Litigation, Myriam E. Gilles

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No abstract provided.

Costing Financial Regulation, Caroline Bradley

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No abstract provided.

Money On The Table: Why The U.S. Should Tax Inbound Capital Gains, Reuven S. Avi-Yonah

Articles

On March 21, 2011, AT&T announced that it will buy T-Mobile from Deutsche Telekom for $39 billion. This transaction will be tax free to Deutsche Telekom (DT) not because it qualifies as a reorganization, but because DT is a foreign corporation and capital gains of nonresidents are generally not subject to U.S. taxation because they are deemed to be foreign source. Also, DT is protected from taxation by article 13(5) of the Germany-U.S. tax treaty, which provides that capital gains are generally taxable only by the country of residence.

Citizens United And The Corporate Form, Reuven S. Avi-Yonah

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In Citizens United vs. FEC, the Supreme Court struck down a Federal statute banning direct corporate expenditures on political campaigns. The decision has been widely criticized and praised as a matter of First Amendment law. But it is also interesting as another step in the evolution of our legal views of the corporation. This article argues that by viewing Citizens United through the prism of theories about the corporate form, it is possible to see that the majority and the dissent departed from previous Supreme Court jurisprudence on the First Amendment rights of corporations. It is also possible to then …

Formulary Apportionment: Myths And Prospects - Promoting Better International Policy And Utilizing The Misunderstood And Under-Theorized Formulary Alternative, Reuven S. Avi-Yonah, Ilan Benshalom

Articles

This article seeks to re-examine the formulary alternative to transfer pricing by inquiring whether partial integration of formulary concepts into current practices would offer a reasonable alternative to transfer pricing rules. We believe that the key to achieving an equitable and efficient allocation of MNE income is to solve the problem of the residual, i.e., how to allocate income generated from mobile assets and activities whose risks are borne collectively by the entire MNE group. These assets and activities generate most of the current transfer pricing compliance and administrative costs, as well as tax avoidance opportunities. A limited formulary tax …

Criminalizing Corporate Killing: The Irish Approach, Bruce Carolan

Articles

The debate on criminal corporate liability in the United States might benefit from a comparative perspective: How have other countries treated the criminal liability of corporate entities? This benefit might be enhanced by focusing on a country with a similar legal heritage to the United States—a country with a common law legal system inherited from the British. And, it would help if that country were concurrently examining the issue of criminal corporate liability. Interesting questions might include: What issues dominate the debate? How are issues of punishment, reparations, and rehabilitation handled? Is a legislative approach contemplated? The purpose of this …

The Attack On Nonprofit Status: A Charitable Assessment, James R. Hines Jr., Jill R. Horwitz, Austin Nichols

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American nonprofit organizations receive favorable tax treatment, including tax exemptions and tax-deductibility of contributions, in return for their devotion to charitable purposes and restrictions not to distribute profits. Recent efforts to extend some or all of these tax benefits to for-profit companies making social investments, including the creation of the new hybrid nonprofit/for-profit company form known as the Low-Profit Limited Liability Company, threaten to undermine the vitality of the nonprofit sector and the integrity of the tax system. Reform advocates maintain that the ability to compensate executives based on performance and to distribute profits when attractive investment opportunities are scarce …