Tax Law Commons^™

Analyzing The Schizoid Agency: Achieving The Proper Balance In Enforcing The Internal Revenue Code, Richard Lavoie

Akron Tax Journal

The purpose of this article is to examine the considerations that should influence the development of appropriate controversy position standards for the Service. In this regard it is crucial to understand the inherent duality in the Service's role. On one hand it is charged with enforcing the Internal Revenue Code (the "Code"), and as a result it attempts to maximize the collection of all legally owed taxes. On the other, the Service is charged with maintaining the efficient and fair operation of the tax system as a whole. The United States federal income tax system is premised on voluntary taxpayer …

Fairness And Taxation: The Law Of Deferred Income Recognition For The Members Of Agricultural Cooperatives, Kathryn J. Sedo, Mychal S. Brenden

Akron Tax Journal

This Article examines the application of the principles of income recognition and deferral to agricultural cooperatives and suggests a resolution to current inconsistencies in the law. Recent decisions have brought into question the ability of cooperative members to utilize both the ISA and deferred income agreements. This Article asserts that cooperative members can and should be able to take advantage of such options. Part I provides a general background on agricultural cooperatives and sets out the current legal framework for income recognition and deferral. Part II analyzes the current state of the law in regard to the treatment of cooperatives …

Only A Name? Trademark Royalties, Nexus, And Taxing That Which Enriches, Sheldon H. Laskin

Akron Tax Journal

This Article asserts that the correct constitutional nexus standard for state taxation of royalty income derived from the use of trademarks and tradenames is the well-established business situs rule for taxing intangibles. Pursuant to the business situs rule, a state may, consistent with federal constitutional requirements, levy an appropriately apportioned tax on the trademark royalty income of a business that has purposefully availed itself of the benefits and opportunities of doing business in that state. That is, intellectual property is presumed to have a taxing situs at any location where it is used to realize income. A state may therefore …

Repairing Facade Easements: Is This The Gift That Launched A Thousand Deductions?, Martha Jordan

Akron Tax Journal

This article explores the impact of such a covenant on the characterization for tax purposes of expenditures to maintain the façade. In particular this article explores the following question: Given that the charitable easement holder owns a nonpossessory interest in the façade, which imposes on the charity an obligation to repair and maintain the façade and entitles it to benefit from increases in the value of the façade, is a donor's assumption of the charity's obligation to repair the façade an additional charitable contribution to the charity? If a donor gratuitously makes improvements to property owned outright by a charity, …

Treble Damages In National Health Service Corps Contracts, Public Policy, And Hawronsky V. Commissioner, Richard C.E. Beck

Akron Tax Journal

The main thesis of this article is that Hawronsky v. Commissioner is erroneous and the deduction should be allowed because I.R.C. § 162(f) does not apply. The taxpayer did pay a "fine or similar penalty to the government," but he did not pay it "for the violation of any law," which is a necessary element of I.R.C. § 162(f). The taxpayer merely breached his NHSC contract. This crucial issue went completely unnoticed by the court and the parties. Because I.R.C. § 162(f) does not apply, the treble damages are (except for the original tax-free scholarship itself) a deductible business expense …

Crew 4 You, Inc. V. Wilkins: The Ohio Supreme Court Misapplies Statute And Precedent To Eliminate The Resale Exception To Sales Of Employment Services, Jon R. Stefanik Ii

Akron Tax Journal

This Note critically examines the Ohio Supreme Court's opinion in Crew 4 You. Part II examines the tax on retail sales, the resale exception and its application to services, and the significant Ohio Supreme Court cases applying the resale exception to transactions involving services. Part III provides a synopsis of the arguments and reasoning at each stage of the appeal in Crew 4 You, including the Tax Commissioner's assessment, his Final Determination, the decision of the Ohio Board of Tax Appeals ("BTA"), and the decision of the Ohio Supreme Court. Part IV analyzes the Ohio Supreme Court's reasoning …

Rethinking The Role Of The Judicial Step Transaction Principle And A Proposal For Codification, Yoram Keinana

Akron Tax Journal

Thus, as this article will conclude, the role of the step transaction doctrine has been diminishing over the years from a primary weapon against tax shelters into an alternative test. In order to revive its role, the step transaction principle could be codified. As opposed to the controversial proposed codification of the economic substance doctrine, in my view, the codification of the step transaction principle will be more acceptable. The last part of this article sets forth a basic proposal for such codification.

This article will continue as follows. The first part discusses the fundamentals of the general principle of …

Personal And Political Bias In The Debate Over Federal Income Taxation Rates And Progressivity, Richard J. Kovach

Akron Tax Journal

Unlike the commentaries of flat tax proponents, this article will not attempt to dispel the notion of progressive taxation. Rather, this article will first question whether professors who write about tax policy can as a group reach unbiased conclusions about progressivity policy. Next, this article will address a few progressivity concepts that fuel taxation debates. Finally, this commentary will outline some ideas for structuring the federal income taxation system in ways that reduce political rancor and potentially create reasonable acceptance by tax producers, tax beneficiaries, and their respective advocates.

Taxation Of Below-Market Loans Under 7872: This Could Be A Lot Simpler!, John A. Lynch Jr.

Akron Tax Journal

This article will explore § 7872: what it is, why it was enacted, how it has developed judicially and administratively since its enactment, and how it might be improved - mostly by reducing its complexity. It shall be contended generally that the "reform" intended with respect to § 7872 in several instances overshot the mark and serves no useful purpose.

Bright Line, Dim Prospects: Grupo Dataflux V. Atlas Global Group, L.P. Reaffirms A Bright Line Barrier To Diversity Jurisdiction For Limited Partnerships And Other Unincorporated Entities, Amy Friedmann

Akron Tax Journal

This Note examines how these two policy decisions changed the landscape of diversity jurisdiction for limited partnerships and other unincorporated entities. It argues that, despite the Grupo majority's expressed rationale of adhering to time of filing precedent, a rule that requires complete diversity between parties to exist at the time of filing, the majority actually reaffirmed and clarified the scope of the Caterpillar exception to the time of filing rule. This Note further argues that the real impetus for the majority's decision was the fear that any tinkering with the bright-line rule of Carden, which requires courts to count the …

Attaining U.S. Effectively Connected Income In The Aftermath Of The American Jobs Creation Act Of 2004 And Its Aim To Repeal Extraterritorial Income Exclusion, David Lebron

Akron Tax Journal

This paper seeks to propose the construction of ways to facilitate investment in the United States, a suggested mapping, if you will. To that point where U.S. source income is created, it becomes imperative to effect some balance and accomplish an offset regarding the projected decrease in federal revenues resulting from the provisions within the Act, estimated at net $14.5 billion through year 2009, $5.7 billion accounted for in 2005 alone.

Anaylyzing Subpart F In Light Of Check-The-Box, Cynthia Ram Sweitzer

Akron Tax Journal

This article explains the history of the Subpart F compromise and of the CTB regime that beleaguers its application. The paper then evaluates whether Subpart F as an independent system is capable of affecting the policy goals behind its creation. Subsequently, this paper analyzes what is the most prudent and economically sound course of action for healing the U.S. international taxation system. Namely, at issue is whether additional regulation, in the form of a re-vamped Subpart F or a scaled-down CTB, would solve the ailments, or whether the complete revocation of existing policies, such as the U.S. semi-worldwide taxation system …

Can You Hear Me Now? Good. The Nextwave Of Options For The Fcc, In Light Of Fcc V. Nextwave Personal Communications, Inc., Susan K. Slam

Akron Tax Journal

This Note examines the competing interests involved when a company has personal communications services (PCS) and spectrum licenses granted by the FCC and reorganizes under Chapter 11 of the Bankruptcy Code. Part II provides a framework of the FCC's distribution of spectrum and PCS licenses, the relevant provisions of the Bankruptcy Code, an analysis of the FCC's actions as both a regulator and creditor, and an overview of leading cases that have been decided in this area. Part III provides a statement of facts, including the procedural history and the Supreme Court's decision in FCC v. NextWave Personal Communications, Inc. …

Congress Giveth And Congress Taketh Away: The Slow Death Of The Sesop, Beckett G. Cantley

Akron Tax Journal

This article discusses in detail each of the S Corp. Employee Stock Ownership Plan (SESOP) skirmishes mentioned above and outlines the practical effect of the outcome of each of them.

Challenging The Finality Of Tax Court Judgments: When Is Final Not Really Final?, Stephen C. Gara

Akron Tax Journal

The present article reviews this statutory finality rule and the development of equitable exceptions to it, particularly the application of the fraud upon the court doctrine. The next section provides an overview of the Tax Court, followed by a discussion of judgment finality and section 7481. Part four discusses the fraud upon the court doctrine and its applicability in reviewing final judgments. The development of other exceptions to section 7481 is analyzed next. The article concludes with an assessment of the current state of the Tax Court's authority to make exceptions to section 7481.

The Tax Treatment Of International Philanthropy And Public Policy, Robert Paine

Akron Tax Journal

This paper concerns the tax treatment of charitable contributions made to foreign organizations. Specifically, it discusses the current tax structure that governs contributions made by United States taxpayers to charitable organizations located outside the U.S. and its possessions.

Rethinking The Jurisdiction Of Bankruptcy Courts Over Post-Confirmation Federal Tax Liabilities: Towards A New Jurisprudence Of 11 U.S.C. 505, Shu-Yi Oei

Akron Tax Journal

This paper argues that the current approach that bankruptcy courts have taken in circumscribing the reach of § 505 over liabilities that may arise after the plan has been confirmed and discharged is unsatisfactory. Instead of turning to jurisdictional and constitutional sources external to § 505, the reach of § 505(a) should be determined through imposing a bright line limitation internal to § 505 itself. It is the contention of this paper that based on the location of § 505 in the Bankruptcy Code, the overall structure of the Code, and the legislative history of the provision, the authority contained …

Rush Prudential Hmo, Inc. V. Moran: 21 Or Bust! Does Erisa Preemption Give Hmos The Power To Gamble With Our Health?, Stephanie Reinhart

Akron Tax Journal

Section II, Part A of this Note will discuss the history of ERISA law, including a look at what Congress intended to achieve in enacting such a broadly preemptive doctrine. Parts B and C will explain the complicated and highly technical provisions that make up ERISA as it pertains to health care benefits law. Finally, Part D will navigate several key cases leading up to the Rush decision and explain how each case contributed to the Court's decision. Following the background of ERISA law, Section III will discuss the facts of the Rush case, charting the journey that brought this …

The New Dividend Tax Cut; Bush's Prescription For Rescuing The Economy, Beckett G. Cantley

Akron Tax Journal

The purpose of this paper is to cover the Act as passed by Congress and signed by President Bush, discussing each of the major provisions contained within the Jobs and Growth Tax Relief Reconciliation Act and examining the differing views as to whether it will succeed.

Educational Opportunities For Taxpayers, George Salimbas

Akron Tax Journal

Part II is a definitional section for the phrases and terms that are repeatedly used throughout this article. Unless otherwise stated, each phrase and term is defined as listed in this part.

Part III contains a detailed examination of the law for each opportunity. Examples are employed to determine the tax utility of each opportunity, and also provide suggestions for improvement. These results are listed in Appendices One through Five and Ten.

Part IV first determines which taxpayers qualify for the various opportunities by looking solely to the income limitations set forth in each opportunity. Next, it employs a control …

The Internal Revenue Service Collects From An Innocent Spouse In United States V. Craft: Could Business Associates Be Next?, Wade M. Fisher

Akron Tax Journal

Part II of this Note discusses tenancy by the entirety, the history of the federal tax lien statute, and how federal courts have interpreted the federal tax lien statute. Part III discusses the events leading up to the Craft lawsuit, considers the Craft lawsuit itself, and examines the subsequent court decisions. Finally, Part IV analyzes whether entrepreneurs carrying on as unincorporated businesses and closely held corporations have sufficiently similar rights to tenants by the entirety to allow the Craft holding to be applied in the business setting.

The New Tax Shelter Opinion Letter Regulations: Cutting Back On A Client's Ability To Rely On The Advice Of His Counsel, Beckett G. Cantley

Akron Tax Journal

The main question this article will discuss is whether the inability of a client to rely on a client's counsel on such complicated matters as tax shelters is good public policy.

Religiously-Based Social Security Exemptions: Who Is Eligible, How Did They Develop, And Are The Exemptions Consistent With The Religion Clauses And The Religious Freedom Restoration Act (Rfra)?, James Glenn Harwood

Akron Tax Journal

There are parallels to this biblical example in the current regime of religiously-based social security exemptions. Ministers, members of religious orders, Christian Science practitioners and members of certain religious faiths may receive an exemption from social security taxes based on a religious or conscientious objection. This article will first review the current law granting exemption for these groups. It will next review the historical development of these exemptions in light of the overall expansion of the social security program to show the ad hoc approach Congress took in granting these religiously-based exemptions. It will then analyze the constitutionality of the …

Dana Corporation V. United States: The Deductibility Of Legal Retainer Fees Used To Acquire A Corporation, Alexander F. Kennedy

Akron Tax Journal

This Note discusses the Federal Circuit's holding in Dana Corp. Part II details the important history of the deductibility of legal fees leading up to Dana Corp. Part III provides the factual background of Dana Corp. Part IV explains the court's reasoning in Dana Corp. Part V analyzes the court's holding in Dana Corp. and explains why it is ultimately correct.

Challenging The Treasury: United Dominion Industries, Inc. V. United States, Christina I. Smith

Akron Tax Journal

This note will try to make some sense of the United Dominion case and its implications on PLLs/SLLs in the consolidated corporate tax arena by analyzing some of the more difficult questions about PLLs/SLLs.

Part II explores the background and application of both carrybacks, generally, and PLL/SLL carrybacks, specifically, as well as the two prominent cases in the PLL/SLL controversy prior to United Dominion -- Intermet Corp. v. Commissioner (hereinafter "Intermet") and United Dominion Indus. Inc. v. United States (hereinafter "United Dominion"). Part III looks at United Dominion specifically, including a statement of the facts, procedural history, and reasoning of …

An Error In Methodology: Inclusion Of External Costs Of Sales In Property Valuations, Joel L. Terwilliger

Akron Tax Journal

Ironically, courts have upheld the protectionist policies behind the counterpart to the sales tax-the use tax. The application of the use tax serves the dual purpose of preventing the out of state migration of purchases of tangible personal property and to ensure a steady flow of revenue to the state treasury coffers. This dual purpose is based on a primary goal: to prevent avoidance of the sales tax. However, unlike sales taxes, use taxes paid on items of tangible personal property are not added to the value of the property for property tax assessments. This dichotomy presents serious problems for …

United States V. Cleveland Indians: Fica And Futa Taxes V. The Social Security Act - Why Have Different Definitions For Identical Language?, Jeffrey C. Honaker

Akron Tax Journal

This Note examines the issue of whether FICA and FUTA taxes are assessed at the time wages should have been paid, or at the time the wages are actually paid. Part II examines the background of this issue by parsing the applicable case law. Part III contains a statement of the facts, the procedural history, and the United States Supreme Court's decision in Cleveland Indians. Part IV analyzes the Cleveland Indians decision.

Dominion Resources: Powering Section 1341 Toward Equity?, Edward J. Schnee

Akron Tax Journal

Administrative concerns occasionally override other aspects of tax policy. One example is the imposition of an annual reporting cycle which leads taxpayers to make assumptions about future events so that items can be reported on regularly scheduled returns. This can result in reporting items as income that are not actually earned by the taxpayer. For example, under the claim of right doctrine, created because of the annual reporting requirement, taxpayers must report certain receipts as income even though they are later required to return these amounts to the payor. In most cases they are permitted a deduction in the year …

The Proposed Federal Taxation Of Frequent Flyer Miles Received From Employers: Good Tax Policy But Bad Politics, Dominic L. Daher

Akron Tax Journal

The purpose of this article is to dissect the plausibility of taxing frequent flyer miles that were earned by employees on employer-paid travel and later used for personal travel. The first issue for resolution is whether the accrual and utilization of frequent flyer miles earned by an employee while on company-paid travel constitutes compensation for services, and hence gross income, within the meaning of I.R.C. § 61(a)(1). The second issue for resolution is whether the accrual and utilization of frequent flyer miles earned by an employee while on company-paid travel constitutes a taxable fringe benefit, and hence gross income, within …

International Tax Competition: An Efficient Or Inefficient Phenomenon?, Mitchell B. Weiss

Akron Tax Journal

This Article examines the legal and economic implications of this globalization phenomenon. Part I discusses the allocative effect an income tax system has on a particular country's resources. This first part, while focusing only on domestic tax policy, is intended to throw some light on the international issues that are the central focus of this article. So with this background in mind, Part II turns to the international scene, analyzing the efficiency effect international integration is having on the world's income tax systems in general and the U.S.'s income tax system in particular. Finally, Part III considers what the Organisation …