Tax Law Commons^™

Federal Limitations On State And Local Taxation, William R. Anderson

Vanderbilt Law Review

Federal Limitations on State and Local Taxation presents a central question about how usefully and how legitimately courts have dealt with the issues of state taxing powers. The United States Supreme Court has assumed a role as the principal architect of this component of federalism. State legislatures and tax officials have, of course, played roles, but they have always operated under the shadow of judicial doctrine. While Congress has not been wholly inactive, its role has been derivative, interstitial, and hesitant. Perhaps Congress' fact-finding role has been larger than its legislative role.'

The Uniform Gifts To Minors Act:A Patent Ambiguity, Margaret M. Mahoney

Vanderbilt Law Review

The current treatment of uniform gifts as creating interests in only one person for gift tax purposes, and as creating interests in others as well for income and estate tax purposes, is inappropriate. Resolution of the underlying ambiguity within the Uniform Gifts to Minors Act would produce a more uniform tax treatment. If section 4(b) were modified to state clearly that the custodian is not empowered to use the fund to discharge parental support duties,no change would occur in the gift tax treatment. Income tax liability would be incurred by only the minor donee, the result presumably desired by most …

Motor Carrier Act Of 1980: Toward Compensating Trucking Companies For The Loss Of The Monopolistic Value Of Their Operating Rights, Mary H. Leech

Vanderbilt Law Review

This Note examines the historical background and nature of the operating rights acquired by the trucking companies, with emphasis on those rights issued to a common carrier by the ICC and represented by a certificate of public convenience and necessity(certificate). The Note then examines and analyzes the tax law and the judicial response to attempts by taxpayers to deduct from gross income the loss of a monopolistic right. Finally, the Note explores alternate theories for compensating trucking companies for their losses and concludes with a recommendation of the most equitable method of compensation.

Corporate Borrowing For Investment In Equity Securities: Tax Advantages Via The Interest Deduction And Dividends Received Deduction, Thomas D. Moore, Jr.

Vanderbilt Law Review

By borrowing money and purchasing preferred stocks with an average yield greater than 58% of the interest rate on the debt, a corporation at the maximum marginal tax rate can reduce its federal income tax liability. In evaluating the potential benefit of this practice, the corporation must consider transactions costs and its ability either to tie the debt to the equities or to have a sufficiently distant maturity on the debt to weather interest rate cycles that depress preferred stock prices. A small to medium-sized corporation probably is in a better position to obtain appropriate debt and to purchase enough …

Nonmutual Collateral Estoppel In Federal Tax Litigation, Samuel E. Long, Jr.

Vanderbilt Law Review

First, the Note briefly traces the demise of the mutuality rule in nontax cases. Second, the Note discusses the cases examining the rule in tax disputes and argues that courts should not require mutuality as an absolute rule before collateral estoppel can apply.Finally, the Note proposes a framework within which courts should analyze nonmutual estoppel claims in federal tax cases...

This Note has argued that the Supreme Court's decision in Parklane Hosiery and the Ninth Circuit's decision in Starker v. United States have sounded the death knell for the mutuality rule in its final stronghold-federal tax litigation. Courts can apply …

Open Space Taxation And State Constitutions, David A. Myers

Vanderbilt Law Review

this Article will first examine the theoretical function and form of state constitutions. This analysis can in turn be used to develop criteria for evaluating the content of these open space amendments. These criteria can then be used to suggest alternative methods of constitutional change that will allow state governments to respond most effectively to contemporary problems in the taxation of real property.

... This Article has been concerned with the various justifications for putting open space taxation provisions in state constitutions. It should be noted, however, that these amendments can have important negative effects on state constitutional law. Because …

Let Them Be Judged: The Judicial Integration Of The Deep South / Federal Taxation Of Trusts, Grantors And Beneficiaries/, Steven F. Lawson, John H. Martin

Vanderbilt Law Review

Let Them be Judged: The Judicial Integration of the Deep South Frank T. Read and Lucy S. McGough

The manner in which federal judges in the South both retarded and promoted first-class citizenship rights for Black Americans is the topic of Frank Read's and Lucy McGough's 1978 work Let Them Be Judged: The Judicial Integration of the Deep South. The authors, law professors at the University of Tulsa and Emory University respectively, review in great detail the operation of the United States Court of Appeals for the Fifth Circuit in adjudicating the rapidly increasing volume of civil rights litigation after …

Income And Gift Tax Treatment Of A Waiver Of Rights To Future, Undeclared Dividends By A Corporate Shareholder, Cornelia H. Boozman

Vanderbilt Law Review

This Note will attempt to set forth and analyze the present state of the law concerning dividend waivers.After determining that this law gives taxpayers few standards for determining the proper tax characterization of a dividend waiver, the Note concludes that analogous areas of tax law must be examined for guidance. Finally, the Note identifies and discusses several analogies that might be helpful to a taxpayer faced with a dividend waiver problem.

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 Negative Commerce Clause And State Environmental Legislation-Externalities Suggest Application Of The Tax Standard To Environmental Regulations, Douglas K. Stewart

Vanderbilt Law Review

This Note advocates judicial application of this tax analysis not only to tax environmental legislation, but also to regulatory environmental legislation. The theoretical justification for this thesis is provided by the economic concept of externalities. Externalities are elements used in the production of a marketed item without cost to the producer, but at a cost to others. The term "externality"stems from the fact that the use of the element of production is not included in the market price of the item. Undesirable environmental impact has been recognized as an externality -- a cost to those people adversely affected by it …

The Changing Meaning Of "Gift": An Analysis Of The Tax Court's Decision In Carson V. Commissioner, Jeffrey Schoenblum

Vanderbilt Law Review

This Article will focus on the Carson case in an effort to identify the emerging meaning, if any, of gift. Following a consideration of the factual background of the case in Part II, Part HI will analyze critically and in-depth each of the five Carson opinions in an effort to decipher the various currents at play and any common ground that may still be shared by a majority of the court. Finally, Part IV will consider the decision's likely consequences and the long-term prospects for a settled meaning for gift, one that is not only workable, as is the case …

Proposed Legislative Solutions To Tax Shelter Partnership Abuses - The End Of The Aggregate Concept?, Thomas E. Settles

Vanderbilt Law Review

This Note first will set forth the Treasury Department's perception of the present abuses of tax shelter partnerships and will analyze existing procedural rules, the Treasury Department's proposed amendments, and the House of Representatives' proposed amendments in light of these abuses. Next, the Note will examine the substantive law of Subchapter K and will attempt to point out the probable effects of the proposed amendments on the aggregate concept of partnerships, on substantive partnership tax law, and on the viability of the partnership form of business. Finally, this Note will propose a solution to the problem of tax shelter partnership …

Section 243 And Bootstrap Sales: The Dilemma Of The Corporate Shareholder, Don B. Cannada

Vanderbilt Law Review

The differences in the tax treatment of dividends and redemptions, the tax goals of individual and corporate shareholders, and the characterizations given corporate distributions by the Internal Revenue Service and the courts have combined to create over-whelming confusion for corporate bootstrap sales. The purpose of this Note is to formulate a rational, consistent approach to the tax treatment of corporate bootstrap sales. Accordingly, this Note initially will discuss various lines of cases governing the possible tax treatment of the seller in a bootstrap acquisition. Special emphasis will be placed on the recent line of cases that deny section 243 intercorporate …

Recent Cases, Alan W. Duncan, Elton G. Snowden, William A. Holby, Joseph W. Gibbs

Vanderbilt Law Review

Constitutional Law -- Newsperson's Privilege - The First Amendment Guarantee of a Free Press Protects Against Compelled Disclosure of a Journalist's Exercise of Editorial Control and Judgment

Plaintiff, a former army officer who had achieved national prominence by claiming that his superiors ignored his reports of atrocities by American forces in Vietnam,' brought a libel suit against defendant television producer, reporter, and network for broadcasting a program that cast doubt upon plaintiff's allegations. Contending that defendant did not present available information corroborating plaintiff's claims, plaintiff sought discovery of the producer's beliefs, opinions, intent, and conclusions in preparing the program.

Alan …

Current Problems Facing The Executor Taking The Section 2053 Estate Tax Deduction, Jay D. Christiansen

Vanderbilt Law Review

Section 2053 of the Internal Revenue Code allows the executor to deduct from the gross estate amounts attributable to expenses, indebtedness, and taxes. This Note will examine problems currently confronting an executor who is attempting to utilize the 2053 deduction. The first problem examined in this Note is the conflict in the federal courts of appeals regarding the deductibility of expenses incurred as a result of a sale of decedent's property. The statute,cases, and regulations in this area will be examined, and a suggested approach for the executor encountering this problem will be provided. The second problem considered is the …

Recent Cases, Sara P. Walsh, Don B. Cannada, Frances L. Adams, William T. Luedke, Iv

Vanderbilt Law Review

Civil Procedure - Appellate Jurisdiction - Orders Denying Disqualification of Counsel on Ethical Grounds Are Not Final Decisions Subject to Immediate Review Under 28 U.S.C. § 1291

Sara Porter Walsh

Petitioner,' an applicant for a Federal Communications Commission (FCC) broadcasting license, sought interlocutory review of a Commission order' denying a motion to disqualify the law firm that had represented competitor RKO for thirty years. Petitioner alleged that participation by the firm, which included an attorney who was chairman of the FCC while RKO's application was under consideration, constituted a violation of Canons Five and Nine' of the ABA Code of …

The Educational Benefit Trust:Loophole Or Sinkhole?, John L. Van Cleave

Vanderbilt Law Review

This Note indicates clearly that the likelihood of the court's upholding the tax advantages claimed to be available under EBTs is far from certain. More than an "element of risk" is involved in recommending that a client adopt an educational benefit trust, but does this require an attorney to avoid such arrangements? On the other hand, does an attorney owe an obligation to the legal process and to society to challenge the Service whenever it, in his opinion,has taken a position more favorable to the Treasury than intended by Congress in enacting the legislation underlying the matter in controversy? While …

Out-Of-State Collection Of State And Local Taxes, Robert A. Leflar

Vanderbilt Law Review

Validly due and payable state and local taxes often go unpaid because the absent tax debtor chooses not to pay voluntarily and has no assets from which the tax debt can be collected in the taxing state. He often has assets elsewhere, but they may be difficult for the tax creditor to discover and to reach.

Only a few years ago out-of-state assets could not be reached at all, nor could the tax debtor himself be reached except within the taxing state, in its own courts, and by its own legal processes. Formerly, no state would use its law or …

Interstate Corporate Income Taxation-Recent Revolutions And A Modern Response, Eugene F. Corrigan

Vanderbilt Law Review

In recent years significant technical advances have enabled large corporations to sell into states from great distances and with a minimum of contact in those states. Nevertheless, the states and their political subdivisions are confronted with the claims of corporations that jurisdictional barriers to corporate income taxes should be raised, that improved enforcement techniques should be prohibited, and that certain classes of income should be immunized completely from state taxation. These revolutionary technical advances have created both major tax administration problems and tax administration opportunities for the states. Some of the latter, however, remain unexploited. This article examines the ramifications …

Paul J. Hartman And The Literature Of State And Local Taxation-An Appreciation, William R. Andersen

Vanderbilt Law Review

The editors of this symposium have asked me for a brief account of the contributions of Professor Hartman's published writings in the field of state and local taxation. In fairness, those contributions cannot be accounted in brief; what follows is more of a bibliography, and an appreciation...

As a final example of Hartman's concern for institutional relationships in tax policy, mention should be made of the 1959 piece on municipal income taxation.' Here, Hartman has changed lenses on his microscope and examines not the relationship between the nation and the states but that between the states and the cities. His …

Recent Cases, Walter S. Weems, Mary M. Schaffner, Ronald G. Harris

Vanderbilt Law Review

Constitutional Law-State and Local Tax-- Nondiscriminatory Ad Valorem Property Tax on Imports Stored in Warehouse Pending Sale Is Not Prohibited by Import-Export Clause

The framers of the Constitution enacted the import-export clause with the apparent intent that it remedy shortcomings of the Articles of Confederation and achieve specified national goals. Since the Articles of Confederation allowed individual states to regulate commerce as they saw fit, the seaboard stales, through whose ports goods in foreign commerce had to pass, were able to impose duties on imports destined for inland states. One reason for the import-export clause was to preserve harmony among …

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 …

Taxation Of Income From Intangibles Of Multistate-Multinational Corporations, William D. Dexter

Vanderbilt Law Review

In determining whether income from intangible investments should be subject to general apportionment rules or assigned to the commercial domicile or elsewhere the challenge to the states currently is to ascertain the true facts surrounding large corporate investments in intangible properties. The distinctions in UDITPA between business and nonbusiness income mandate this kind of factual inquiry. It is questionable, however, whether this distinction should continue to be given any significant effect, since it lacks substance and leads to endless conflict between large multistate and multinational corporations and each state in which they do business. Furthermore, in determining the state income …

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 …

Tax Problems Associated With The Incorporation Of A Partnership: Revenue Ruling 70-239h, Peter Olsen

Vanderbilt Law Review

The publication of Revenue Ruling 70-239 creates concern with respect to the possible impact of the very broad language of the Ruling in areas not specifically covered. This concern relates to the availability of an ordinary loss deduction under section 1244; various personal holding company and "subchapter S" problems; the impact on section 357(c) and section 1239; the effect on basis computations and the control requirement of section 351; and holding period considerations under section 1223. This article will attempt to examine Revenue Ruling 70-239 with a view to (1) evaluating the accuracy of the conclusion that all three corporation …

Narcotics Offenders And The Internal Revenue Code: Sheathing The Section 6851 Sword, John M. Fite

Vanderbilt Law Review

This Note first will analyze the Internal Revenue Code provisions supporting the current crackdown by the IRS on suspected narcotics dealers. Secondly, it will examine the split in the federal circuit courts of appeal on the issues of the availability of Tax Court review of an assessment made pursuant to a section 6851 termination of a taxable year and the availability of equitable or statutory protections to prevent the seizure and sale of property belonging to the taxpayer. Lastly, a discussion of the propriety of such conduct by the IRS and its constitutionality in light of recent Supreme Court decisions …

The Taxation Of Interest -- Free Loans, James T. O'Hare

Vanderbilt Law Review

The dramatic rise in interest rates in the United States in the past few years has given added significance to the uncertain tax consequences of interest-free loans made between family members, between corporations and shareholders, and between affiliated corporations. Such loans can create a variety of tax problems depending on the relationship of the parties. An interest-free loan from one family member to another may constitute a gift equal in value to the use of the money loaned or even to the amount of the entire principal. A corporation that makes an interest-free loan to one of its shareholders not …

The Original Issue Discount Deduction In Bonds-For-Noncash Property Exchanges, Charles L. Almond

Vanderbilt Law Review

The first codification of the United States Internal Revenue laws gave a corporation a deduction from income of "[a]ll interest paid or accrued within the taxable year on its indebtedness. ...This same language is presently in force in the Internal Revenue Code of 1954. The statutory language authorizing the interest deduction has never dealt explicitly with the deductibility of discount arising upon a corporation's original issuance of bonds. Treasury Regulations promulgated pursuant to the interest deduction sections, however, have recognized continually that the statutory language embodies a deduction for original issue discount. 'The latest pre-1969 regulation, which limits itself to …

Recent Cases, Journal Staff

Vanderbilt Law Review

Antitrust Law--Robinson-Patman Act--To Satisfy the "In Commerce" Requirement of Section 2(a) at Least One of the Allegedly Discriminatory Sales in a Secondary-Line Case Must Cross a State Line

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Constitutional Law--Equal Protection--Exclusion of Pregnancy-Related Disabilities from State Salary Compensation Insurance Program Denies Equal Protection to Pregnant Employees

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Criminal Procedure--Grand Juries--Exclusionary Rule in Search and Seizure Cases Does Not Apply to Grand Jury Proceedings

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Securities Regulation-Rule 10b-5--Plaintiffs Who Are Neither Purchasers nor Sellers of Securities May Recover Under Rule 10b-5 if Injured in Their Capacity as Investors as a Direct Consequence of Fraud in Connection with a Securities Transaction …

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 …