Tax Law Commons^™

Recent Cases, Author Unidentified

Vanderbilt Law Review

Civil Procedure--Service of Process--California Long-Arm Statutes Abrogate State's Immunity Doctrine

Seeking recovery of money owed him by defendant European corporations;' plaintiff brought suit in a California state court.While attending federal district court in Florida for the sole purpose of giving a deposition in a trademark infringement suit instituted by one of the corporations, defendants' representative was personally served with process in the California action on behalf of himself and the defendant corporations. Defendants moved to quash service of process on the ground that the immunity rule prohibited service of civil process upon a witness in attendance in a court outside …

Public Law 86-272: Legislative Ambiguities And Judicial Difficulties, John S. Bryant

Vanderbilt Law Review

Expanding concepts of the services that state governments should perform for their citizens have prompted within recent years entry by the states into fields of endeavor formerly left to private enterprise. Coupled with the upward spiral of the cost of goods and services, expanded responsibilities undertaken by the states have increased greatly the pressure on state taxing authorities to produce revenues sufficient to cover expenses of government. Beset by fiscal problems, the states have attempted to take maximum advantage of existing revenue sources and to tap new ones. Although sales and use taxes have been the primary source of state …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Remedies--Fair Labor Standards Act--Private Damage Suit Unavailable to Redress Violations of Child Labor Provisions of the Fair Labor Standards Act

=====================

Securities Regulation--Commercial Paper-Promissory Notes with Maturity Not Exceeding Nine Months but Offered to Public as Investment Are "Securities" Within Section 3(a)(10) of the 1934 Act

=====================

Securities Regulation-Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5-- A Reorganization in the Form of a Tripartite Merger in Which There Is No Change in the Total Assets Represented by a Share of Stock Does Not Involve a"Purchase or Sale" Within the Meaning of Section 10(b)of The Securities Exchange …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Injunctions--Contempt Power--Citation Proper Against Nonparty Who Violates Court Order in School Desegregation Case

Whether an injunction or other order binds one not a party to the underlying suit or proceeding so that he may be held in contempt for violation is a question that always has troubled the courts. Some early cases purported to announce a sweeping and apparently absolute rule--that an injunction or other order does not bind nonparties. The principle underlying this rule is that due process forbids a court to adjudicate the legal rights and relationships of a person who has not had the opportunity to be …

Charitable Remainder Trusts--A Need For Further Reform?, R. Frank Murphy, Ii

Vanderbilt Law Review

The proposals offered in this Note are meant to suggest that are turn to some form of the flexible, well understood charitable remainder trust of pre-1969 days would prove most satisfactory to the needs of donors, charities, and attorneys. With modifications similar to those recommended above, the familiar concept of traditional income and remainder interests could be reinstated, with its weaknesses eliminated. If reversion to an improved form of the old law is deemed unacceptable,it nevertheless appears that a revision of the tripartite structure of the 1969 Act is mandatory. The complexity and lack of flexibility inherent in the new …

The Impact Of The Tax Reform Act Of 1969 On The Supply Of Adequate Housing, Kenneth J. Guido, Jr.

Vanderbilt Law Review

Hidden by the storm surrounding the more controversial changes in the Tax Reform Act of 1969 are subtle alterations in the tax structure that may significantly affect the rate and nature of real estate development. The Tax Reform Act amended provisions of the Internal Revenue Code directly applicable to real estate investments,' purposefully redesigning them in the hope of stimulating the construction and rehabilitation of rental housing, particularly low-income housing. The changes in the basic tax structure relative to real estate investments are an attempt to continue a national policy established in 1949, that of providing a "decent home and …

Section 355'S Active Business Rule--An Outdated Inefficacy, John A. Stemmler

Vanderbilt Law Review

In order to delineate the problems inherent in the active business rule, this Note first will examine the legislative history of tax-free separations, isolating the primary purpose and policy of section 355. Regulatory and judicial interpretations of section 355 will also be analyzed to determine their propriety in light of the statute's purpose and to illustrate the confusion that exists in the area. This, in turn, will lead to a suggested approach for dealing with section 355 transactions in the future.

The Taxation Of Stock Dividends And The Tax Reform Act Of 1969--Foreboding Implications And Constitutional Uncertainties, John A. Pickens

Vanderbilt Law Review

Federal income taxation of stock dividends has followed a diverse course. Since the introduction of a federal income tax on all stock dividends in 1916, five major changes have occurred in this area. The most recent of these changes is embodied in section 421 of the Tax Reform Act of 1969, which amends section 305 of the Internal Revenue Code of 1954. When the 1969 Amendments are compared with the treatment of stock dividends under the Internal Revenue Code of 1954, they can be viewed, in conjunction with the regulations issued in 1969 under the 1954 Code, as initiating a …

State Taxation Of Interstate Business-Looking Toward Federal-State Cooperation, Joseph W. Mathews

Vanderbilt Law Review

This note will review the historical setting of state taxation of interstate commerce and examine the problems created by the diversity of state tax laws. It will further discuss the two different approaches toward solving these problems, investigate the constitutional issues involved in the proposed solutions, analyze their inadequacy, and recommend a federal-state cooperative approach.

Private Annuities: Revenue Ruling 69-74-Its Significance,Effect,' And Validity, Robert A. Sams

Vanderbilt Law Review

The private or noncommercial annuity may be defined as the transfer of property from an annuitant-transfer or to a person or organization (referred to as the transferee or obligor) that has not"from time to time"' issued annuity contracts, in exchange for the transferee's unsecured promise to make periodic payments of money for a fixed time or for the life of the annuitant-transferor. Prior to the issuance of Revenue Ruling 69-74,3 both the Internal Revenue Service and the courts had given the private annuity transaction favorable income tax treatment, making it an extremely useful estate planning device. In J. Darsie Lloyd, …

Income Tax Deductions For Estate Planning Fees, Stephen E. Gilhuley

Vanderbilt Law Review

The need to engage the services of a lawyer may arise in a variety of situations, and the possibility of deducting the fees for a lawyer's services from the client's personal taxable income will ultimately depend on which one of several competing policies of the tax law is properly applicable under the particular circumstances. Taxpayers and their attorneys should be aware of the deductibility of expenses incurred for legal services rendered in connection with the planning of the taxpayer's estate. Such estate planning services include the drafting of a will, the arrangement of inter vivos and testamentary gifts, the creation …

An Evaluation Of Municipal Income Taxation, Joe G. Davis, Jr., Arthur J. Ranson, Iii

Vanderbilt Law Review

In order to delineate the perspective of this Note, two observations must be made. First, the term "municipal income tax" encompasses many variations from city to city in the legal nomenclature used to identify the tax. For example, "wage taxes," "payroll taxes,""earnings taxes," and "occupational license taxes" are widely used terms which simply disguise the presence of a municipal income tax. Secondly, in relation to the traditional municipal property and sales taxes, the municipal income tax is normally supplemental rather than substitutional. An increased utilization of the municipal income tax, however, should partially relieve the burden now imposed on these …

Multiple Trusts And Income Tax Avoidance, James H. Oeser

Vanderbilt Law Review

Since the Revenue Act of 1916, the trust has been deemed a separate entity for income taxation purposes. Congress has thus sanctioned the use of the trust as a tax savings device. Under present law, a grantor may place cash or other income producing property in trust, thereby excluding the resulting income from his own tax liability. If the income is currently distributed to the beneficiary, the trust is treated as a conduit, and the beneficiary is taxed in the year of distribution. But where the income is accumulated, the tax is payable by the trust? When this "accumulation trust" …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Corporations--Equity--Specific Performance of Stock Option Granted Because of Tax Advantage Feature of Option

=============================

Property--Landlord-Tenant--Rabbinical Court Establishes Far-Reaching Standard of Landlords' Obligations to Tenants

==============================

Taxation--Federal Estate Taxation--Under Treasury Regulation Section 20.2031-8(b), Value of Shares in Mutual Funds Is Public Offering Price on Date of Death Rather Than Redemption Price

===============================

Taxation--Mineral Rights--Carried Interest Loses Deduction for Depletion, Depreciation, and Intangible Drilling Costs During Recoupment

The Tax Benefit Rule, Claim Of Right Restorations, And Annual Accounting: A Cure For The Inconsistencies, John G. Corlew

Vanderbilt Law Review

The Internal Revenue Code is premised on an annual accounting concept which requires the taxpayer to count up his transactions at the end of the year and remit to the Government taxes based on the occurrences of that particular year. In theory this requires disregarding the factors of prior or subsequent taxable years, despite the irrelation to events of the tax year in question. In most instances, annual accounting poses no special problem. When applied to certain items whose tax impact transcends more than a single taxable year,however, inconsistencies and inequities may result. Two instances in which inconsistent tax treatment …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Conflict of Laws--Torts--Law of Jurisdiction with Predominant Interest in Resolution of Issue Applied

==========================

Constitutional Law--Owner of Private Subdivision May Refuse To Sell to Negroes

==========================

Eminent Domain--Compensation for Substantial Impairment of Riparian Owners' Right of Access Denied

===========================

Taxation--Professional Service Corporations--Kintner Regulations Held Invalid

===========================

Taxation--Recovered Charitable Contributions, Previously Claimed as Deductions, Are Gross Income In Year of Receipt

Tax Problems In Sales To Controlled Corporations, Brian C. Ellis

Vanderbilt Law Review

Mr. Ellis examines the tax consequences arising when a taxpayer sells appreciated property to a controlled corporation in order to realize a capital gain for himself as well as to increase the basis of the property. He points out the dangers inherent in such a transaction and suggests precautions which should be taken to obtain favorable tax treatment. The author concludes that a taxpayer transferring appreciated property to a controlled corporation may achieve substantial tax benefits because of the relative ineffectiveness of sections 351 and 1239; however, it will be almost impossible for a taxpayer to recognize a loss on …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Antitrust--Agency Franchise Agreements Are Reasonable Trade Restraints Under Sherman Act While Restraints Following Sale Are Per Se Unlawful

==========================

Antitrust--Product Extension Merger in Violation of Section 7 of the Clayton Act

==========================

Constitutional Law--Reapportionment-Principle of "One Man, One Vote" Not Applicable to Appointed County School Board Performing Administrative Function

==========================

Labor Law--Union Empowered To Expel Member for Failure To Exhaust Union Appellate Remedies

==========================

Taxation--Federal Estate Taxation-State Trial Court Judgments on Property Rights Not Conclusive on Federal Courts Adjudicating Federal Tax Consequences

==========================

Taxation--Federal Income Tax--Effect of Close Corporation Voting Trust on Right to Subchapter S Election

Federal Tax Rulings: Procedure And Policy, Saul C. Belz

Vanderbilt Law Review

The rulings program of the Internal Revenue Service was designed to meet the need for predictability of the tax consequences of any given financial transaction. Though the rulings program is not particularly important to the average taxpayer, it has become increasingly crucial both to the financial community and to the Service itself. As the tax laws become more complex, and tax risks become increasingly important to the success of business ventures, the need for confirmation before entering into a transaction is intensified. Thus parties to a transaction will generally request a ruling...

"whenever the answer is uncertain or when the …

Burden Of Proof And Choice Of Forum In Tax Litigation, George L. Whitfield, Charles E. Mccallum

Vanderbilt Law Review

Since the burden of proof may be a decisive factor in tax litigation, it is important that the taxpayer be aware of the different rules in the various forums to which he may take a tax controversy, and it is essential that those rules operate fairly and consistently to enable the taxpayer to choose his forum intelligently. It is the purpose of this article to examine the burden of proof in tax litigation as it affects the choice of forum problem.

Recent Cases, Law Review Staff

Vanderbilt Law Review

Civil Rights--Exclusion of Wage Earners as a Class from Jury Service in State Courts Violates

============================

International Law and Trademark Infringement--Rights of Former Owners of Confiscated Cuban Businesses Under Hickenlooper Amendment

============================

Jurisdiction--Minimum" Contacts--First Amendment Requires a Greater Showing of Contact in a Libel Action To Satisfy Due Process Than Is Necessary in Other Types of Actions

============================

Labor Law--Attorney Undertaking Persuader Activity on Behalf of Employer Must Report Such Activity Under LMRDA

============================

Labor Law--Employer Must Bargain About an Economically Motivated Decision To Close a Portion of Its Operations

============================

Labor Law--Employer's Duty To Bargain When Authorization Cards Are …

Recent Cases, Law Review Staff

Vanderbilt Law Review

Civil Rights--Federal Criminal Code Protects Rights Secured by Fourteenth Amendment

==========================

Civil Rights--Removal--Strict Interpretation of Federal Removal Statute Affirmed

===========================

Labor Law--Judicial Review of Arbitrator's Authority To Imply Contractual Condition

===========================

Labor Relations--Federal Preemption of Defamation Suits Arising in Course of Organizational Campaign

===========================

State and Local Taxation--Economic Exploitation Sufficient Connection To Require Non-Resident Seller To Collect Use Tax

Book Reviews, Henry N. Wieman, Jerome Hall

Vanderbilt Law Review

The problem discussed by Professor Stumpf in his book Morality and the Law can be summarized by these questions: Do we have two kinds of prescribed conduct, one prescribed by morality independent of the government, the other prescribed by government independent of morality? Or is prescription by government necessarily moral because government is necessarily moral by reason of being the government? If not, under what conditions, if any, does prescription by government become a moral prescription? Under what conditions, if any, is government, by law, a matter of expedience, not to be confused with morality?

reviewer: Henry Nelson Wieman

============================== …

Real Property Depreciation Recapture: An Ineffectual Reform Of The Tax Laws, Charles S. Franklin

Vanderbilt Law Review

This note stems from a belief that an asymmetrical body of tax laws is a challenge to the legal profession which, by training, experience and tradition, is well situated to spur and guide reform. It is my intention to outline the story of but one section of the Internal Revenue Code: why it was proposed, what it sought to do, how it underwent modification by an unsympathetic congressional committee, and how it was finally enacted as a superficial compromise with the underlying asymmetry of our tax laws. In short, what follows is an appended bar in the organ theme entitled …

Income Splitting As A Means Of Avoiding Taxes, Allen T. Malone

Vanderbilt Law Review

The purpose of this note is to examine the present tax treatment of the three most popular income splitting devices used to avoid taxes: the family partnership, multiple trusts, and multiple corporations. In Part II, the various congressional and judicial limits and sanctions imposed upon these devices will be discussed along with recently proposed regulatory legislation. Part III will consist of an evaluation of the suggested limitations upon the use of income splitting devices. The ultimate concern of this note is to arrive at some conclusions as to the general approach and the specific methods best suited (1) to regulate …

The Treasury Report On Foundations:Methods Of Enforcing Compliance, Thomas R. Allen

Vanderbilt Law Review

If Professor Sacks is correct in his cyclical view of the public concern over charitable foundations, the present period must surely be classed as one of maximum turbulence. At the moment both houses of Congress have had presented to them proposals for levying new restrictions on charitable foundations through the tax law, a flood of law review comments has appeared, and at the state level new legislation, partly directed to control of charitable foundations, has been proposed, and in some cases adopted...As this paper is concerned primarily with sanctions, only those proposals in the Treasury Report for which no sanctions …

Legislation, Law Review Staff

Vanderbilt Law Review

An examination of the current status of state net income taxation on interstate business logically begins with the decision in Northwestern Portland Cement Co. v. Minnesota and its companion case Williams v. Stockham Valves & Fitting, Inc.' There the United States Supreme Court held that an apportioned, nondiscriminatory excise tax imposed by a state on the net income of a foreign corporation does not violate either the due process clause or the commerce clause of the federal constitution, even though the income is derived solely from interstate commerce. Mr. Justice Frankfurter, dissenting, warned that increased burdens of bookkeeping necessary to …

Inconsistent Taxation Of Grantor Powers, Leslie A. Nicholson, Iii

Vanderbilt Law Review

"Certainty," Lord Hardwicke declared in 1753, "is the mother of repose and therefore the law aims at certainty."' This note will explore the extent to which the law has missed the mark of certainty in the taxation of trust grantors. The heavy burden of federal income and estate taxation has prompted many persons to divest themselves of property during their lives. The property is usually given to a relative in order to shift the income from the property into a donee's lower tax bracket and to avoid the payment of an estate tax on the property by incurring an inter …

Condominium: A Reconciliation Of Competing Interests?, James C. Clark

Vanderbilt Law Review

This note will first examine some of the operative provisions of the condominium statutes. Particular emphasis will be placed upon those provisions which are basic to the creation, existence, and dissolution of this unique form of property ownership. The FHA Model Statute For Creation of Apartment Ownership will be the principal vehicle of analysis, for it is the basis of many of the state condominium statutes. State provisions which differ from the Model Act will then be examined to discover the best statutory answer to the needs of condominium housing. Finally, attention will be focused on the tax implications of …

When Will The Corporate Form Save Taxes?, Richard L. Strecker

Vanderbilt Law Review

While major emphasis will be placed upon the tax considerations involved in answering the question posed by the title, the broader problem is aptly stated in the familiar phrase, "Choice of Business Form."' It is not possible to consider this problem realistically without taking into account the context of the business and private law considerations which must enter into the decision, and may indeed be controlling over the tax factors. Therefore, the question, "When Will the Corporate Form Save Taxes?" will be discussed in the light of the full legal and business milieu.