Tax Law Commons^™

Rev. Proc. 2005-24 And The Upc Elective Share, Lawrence W. Waggoner

Law & Economics Working Papers Archive: 2003-2009

This article discusses Revenue Procedure 2005-24, which came as a bombshell to the estate-planning bar. The Rev. Proc. requires a spousal waiver of elective-share rights in order for a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT) created on or after June 28, 2005, to qualify for a charitable deduction. The elective share is a statutory provision common to most probate codes in non-community-property states that protect a decedent’s surviving spouse against disinheritance.

The Rev. Proc. is primarily though apparently not exclusively addressed to the elective share of the Uniform Probate Code (UPC). Unfortunately, the Rev. Proc. …

Regulating Section 527 Organizations, Gregg D. Polsky, Guy-Uriel E. Charles

Scholarly Works

In this Essay, we consider whether the Federal Election Commission (FEC) has the authority to regulate independent 527 organizations (e.g., Swiftboat Veterans for Truth, Moveon.org, etc.) as political committees under the Federal Election Campaign Act. This issue, which was hotly debated during the last election cycle when it was considered and ultimately tabled by the FEC, is an extremely complex one that requires a deep understanding of election, tax, administrative, and constitutional law. After considering how these areas of law intersect, we conclude that the FEC lacks the authority to regulate independent 527 organizations as political committees.

A Foundation For International Taxation: The Institutional Competence Of Nations, Eric T. Laity

ExpressO

This Article proposes a conceptual foundation for the field of international tax law. The Article refers to this foundation as the institutional competence of nations in global economic development. A nation’s institutional competence is its discretion to make decisions in pursuit of our collective goal of global economic development, discretion that is subject to a number of standards and limitations.

The Article constructs the institutional competence of nations in global economic development from institutional economics, simple game theory, and the literature on social norms. The Article expresses the institutional competence of nations through standards and limitations that reduce the abuse …

Two Tweaks For The Taxation Of Social Security Benefits, Alan L. Feld

Faculty Scholarship

The ongoing public discussion of possible changes in the Social Security retirement system has largely ignored a small but significant aspect: The relationship between the retirement benefits paid and the federal income tax. Internal Revenue Code section 86 includes Social Security retirement benefits in the federal income tax base on a three-tier system. Individuals may exclude benefits from gross income, include them at 50 percent, or include them at 85 percent. Proposed legislation would repeal the top tier. Modification of section 86, to better accord with the proper measurement of income subject to tax, perhaps embodied in a larger "fix" …

Beating The 'Wrap': The Agency Effort To Control Wraparound Insurance Tax Shelters, Charlene Luke

UF Law Faculty Publications

The first wraparound insurance tax shelter was marketed in the mid-1960s as a means for contract owners to exploit the inconsistency arising from the difference in the tax treatment of investment returns earned inside variable insurance contracts and the economically similar returns available outside such contracts. Federal income tax is deferred (and in some cases eliminated) on the income accruing inside variable insurance products - called inside buildup. In the most recent iteration of the wraparound insurance gambit, insurance companies wrapped private-placement, hedge-fund interests inside variable insurance products in order to allow contract owners to defer tax on the ordinary …

To Praise The Amt Or To Bury It, Daniel S. Goldberg

Faculty Scholarship

The alternative minimum tax (AMT) has recently become a cause célèbre because many more taxpayers are now subject to it than originally envisioned at the time of its enactment in 1969 (and, indeed, than after any of its several modifications over the years). As such, it has been discussed and criticized in the press and by tax professionals and academics, most recently in Tax Notes by four former Internal Revenue Service commissioners who advocated scrapping it entirely. The criticism has questioned the wisdom of the inadvertent expansion of the AMT in coverage, that is, the number of taxpayers who will …

Criteria Of International Tax Policy, Herbert I. Lazerow

University of San Diego Law and Economics Research Paper Series

Professor Joseph Sneed a generation ago developed seven macro-criteria for evaluating income tax changes. This paper asks whether those criteria are useful in the general field of international income tax. I conclude that Adequacy, Practicality, Equity, and Free Market Compatibility are important internationally, as is a new criterion, Balance-of-payments Enhancement, while the criteria of Reduced Economic Inequality, Stability and Political Order do not figure prominently in international tax.

The Abolition Of Wealth Transfer Taxes: Lessons From Canada, Australia, And New Zealand, David G. Duff

ExpressO

When the United States acted to phase-out its estate tax by 2010, it joined a small but growing group of countries which have also repealed their wealth transfer taxes. In Canada, federal gift and estate taxes were repealed in 1972 and provincial wealth transfer taxes were abolished in the 1970s and 1980s. In Australia, State and Commonwealth wealth transfer taxes were repealed in the late 1970s and early 1980s. New Zealand followed suit in the 1990s, reducing estate tax rates to zero in 1992 and repealing the tax in 1999.

This paper reviews the abolition of wealth transfer taxes in …

12th Biennial Judge Joe Lee Bankruptcy Institute, Office Of Continuing Legal Education At The University Of Kentucky College Of Law

Continuing Legal Education Materials

Materials from the 12th Biennial Judge Joe Lee Bankruptcy Institute held May 2005.

Stormwater Utility Fees: Considerations & Options For Interlocal Stormwater Working Group (Iswg), New England Environmental Finance Center

Economics and Finance

Stormwater utilities are a concept whose time seems to have arrived. Established by relatively few communities in the 1970s as a method of funding flood control measures, stormwater utilities now exist in over 400 municipalities and counties throughout the United States. During the next 10 years, their numbers are expected to swell dramatically – by one estimate to over 2,000 by the year 2014.

The reasons for this growth are multifold. Federal stormwater regulations passed in the 1980s (Phase I of the National Pollutant Discharge Elimination System Program, or NPDES), motivated many larger communities to seek alternative funding sources and …

International Income Allocation In The Twenty-First Century: The Case For Formulary Apportionment, Walter Hellerstein

Scholarly Works

From an international perspective, formulary apportionment has traditionally been viewed as little more than transfer pricing’s “poor relation” as a division-of-income methodology. It receives only grudging recognition as a method of attributing the profits to a permanent establishment under Article 7 of the OECD Model Tax Convention; it receives no mention at all in Article 9 as a method for distributing the profits of associated enterprises among the contracting states in which they conduct their activities; and it was assailed by the international business community and by the EU Member States as out of step with internationally excepted norms in …

Computing Interest On Overpayments And Underpayments: How Difficult Can It Be? Very!, Mary A. Mcnulty, David H. Boucher, Joseph M. Incorvaia, Robert D. Probasco

Faculty Scholarship

Taxpayers often assume that the difficult part of a tax dispute is resolving the tax liability and penalties, while interest computation is fairly straightforward. In the authors' experience, however, interest determinations are as subject to controversy and prone to error as tax liability determinations. The Article explores some of the areas that taxpayers should review carefully in the process of finalizing interest computations.

- Frequent Errors. The Article reviews twelve areas in which, even though the law is settled and the facts are usually clear, the Service's interest computations frequently include mistakes. Taxpayers need to be aware of these provisions, …

The High School Attainment Credit: A Tax Credit Encouraging Students To Graduate From High School, David Richard Hansen

ExpressO

High school dropouts are a serious problem facing America today. High school dropouts are more likely to be unemployed, earn less money when employed, place a larger burden on the government by requiring public assistance (welfare), and are more likely to be prone to a life of crime and violence than high school completers. While government at all levels continues to focus on schools and teachers in solving the dropout problem, this paper shows how parents are where the focus should lie. This paper proposes a revolutionary tax credit, the High School Attainment Credit (“HSAC”), which would cost-effectively eradicate the …

Taxing The Promise To Pay, Brant J. Hellwig, Gregg D. Polsky

Scholarly Articles

The IRS recently disclosed that it has identified more than 100 executives at 42 leading public corporations that participated in a tax shelter designed to defer the recognition of income from the exercise of stock options. While the agency thus far has identified approximately $700 million in unreported gains from these shelters, it predicts that the revenue loss to the government will ultimately exceed $1 billion. Compared to most tax shelters, this particular transaction (commonly known as the "Executive Compensation Strategy" or "ECS") is remarkably simple. Rather than exercise the options individually, a participating executive instead transfers the options to …

Cars, Charity, Oprah, Depreciation And The Interest-Free Loan: Recent Developments Of Relevance In The Motor City, Stuart G. Lazar

Other Scholarship

No abstract provided.

Repairing Inside Basis Adjustments, Karen C. Burke

UF Law Faculty Publications

Optional basis adjustments under Subchapter K have come under increased scrutiny as a result of tax shelter abuses involving partnerships. Recent legislation requires mandatory adjustments under sections 734(b) and 743(b) upon certain distributions of partnership property and transfers of partnership interests. These amendments were targeted at situations in which the failure to make such adjustments potentially gave rise to duplication of losses. While preventing loss duplication may be particularly urgent, these anti-tax-shelter measures represent a retreat from broader proposals calling for mandatory section 734(b) adjustments for both current and liquidating distributions.

In a recent article, Professor Abrams criticizes the common …

Reconsidering The Nondelegation Doctrine: Universal Service, The Power To Tax, And The Ratification Doctrine, Ronald J. Krotoszynski Jr.

Indiana Law Journal

No abstract provided.

Do Tax Expenditures Create Framing Effects? Volunteer Firefighters, Property Tax Exemptions, And The Paradox Of Tax Expenditure Analysis, Edward A. Zelinsky

Articles

No abstract provided.

A Devil Disguised As A Corporate Angel?: Questioning Corporate Charitable Contributions To "Independent" Directors' Organizations, Benjamin E. Ladd

William & Mary Law Review

No abstract provided.

Taxing The Promise To Pay, Gregg D. Polsky, Brant J. Hellwig

Scholarly Works

The IRS recently disclosed that it has identified more than 100 executives at 42 leading public corporations that participated in a tax shelter designed to defer the recognition of income from the exercise of stock options. While the agency thus far has identified approximately $700 million in unreported gains from these shelters, it predicts that the revenue loss to the government will ultimately exceed $1 billion. Compared to most tax shelters, this particular transaction (commonly known as the "Executive Compensation Strategy" or "ECS") is remarkably simple. Rather than exercise the options individually, a participating executive instead transfers the options to …

Tax Havens And Public International Law: The Case Of The Netherlands Antilles, Georges A. Cavalier

ExpressO

This paper identifies changes to tax havens’ legislation as a result of pressure from rich countries exercised through the OECD. It focuses on the specific situation of the Netherlands Antilles. The paper analyzes the response given by the Netherlands Antilles to the international community through the modification of its tax agreement with the mother country in Europe, and considers whether this is a solution for adoption by other tax havens. The paper then argues that such a model is not appropriate for use in a small economy which cannot rely on a supportive mother country nor on tourism as an …

Teaching Tax Stories, Ajay K. Mehrotra

Journal of Legal Education

No abstract provided.

Social Security, Generational Justice, And Long-Term Deficits, Neil H. Buchanan

Rutgers Law School (Newark) Faculty Papers

This paper assesses current methods for evaluating the long-term viability and desirability of government activities, especially Social Security and other big-ticket budget items. I reach four conclusions: (1) There are several simple ways to improve the current debate about fiscal policy by adjusting our crude deficit measures, improvements which ought not to be controversial, (2) Separately measuring Social Security’s long-term balance is inappropriate and misleading, (3) The methods available to measure very long-term government financing (Fiscal Gaps and their cousins, Generational Accounts) are of very limited value in setting public policy today, principally because there is no reliable baseline of …

Pierce The Privilege Or Give 'Em Shelter? The Applicability Of Privilege In Tax Shelter Cases, Shane Jasmine Young

Nevada Law Journal

No abstract provided.

Taxing Nonprofits Out Of Business, Diane L. Fahey

Washington and Lee Law Review

In the last twenty years, the number of nonprofit organizations has exploded; there are more than 1.2 million organizations registered with the Internal Revenue Service. Donations and government grants have decreased, while at the same time, nonprofits are facing increasing demands on their services. As a result, nonprofit organizations have been forced to devise new strategies for acquiring funds. Some nonprofit organizations have resorted to renting their mailing lists to businesses and other nonprofit organizations and have licensed their names and logos to be displayed on affinity credit cards offered by banks to consumers. Nonprofit organizations have argued that these …

A New Understanding Of Tax, Edward J. Mccaffery

Michigan Law Review

Perhaps we should blame it all on Mill. 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 …

Section 1014(B)(6) And The Boundaries Of Community Property, Jeremy T. Ware

Nevada Law Journal

No abstract provided.

Is The Contingent Legal Fee Tax Controversy Over?, Richard Mason

Nevada Law Journal

No abstract provided.

The Missing Preferred Return, Victor Fleischer

ExpressO

Managers of buyout funds typically offer their investors an 8% preferred return on their investment before they take a share of any additional profits. Venture capitalists, on the other hand, rarely offer a preferred return. Instead, VCs take their cut from the first dollar of nominal profits. This disparity between venture funds and buyout funds is especially striking because the contracts that determine fund organization and compensation are otherwise very similar. The missing preferred return might suggest that agency costs pose a larger problem in venture capital than previously thought. Is the missing preferred return evidence, perhaps, that VCs are …

Taxing Utility, Terrence Chorvat

George Mason University School of Law Working Papers Series

In order to assess the efficiency of a tax, we should examine its effect on the behavior of individuals. In general, the less a tax affects behavior, the more efficient it is thought to be. The standard example of a non-distorting tax is a lump-sum tax, which does not change with the behavior of the taxpayer. However, this article demonstrates that behavioral distortions can and do arise from a change in even a lump-sum tax. The only truly non-distortionary tax would be one based on utility itself. Utility, which has been used as a norm for distributional analysis, is also …