Tax Law Commons^™

Managers, Shareholders, And The Corporate Double Tax, Michael Doran

Georgetown Law Faculty Publications and Other Works

The United States generally imposes two levels of federal income tax on corporate profits. The first level taxes income to the corporation; the second level taxes dividends to the shareholders. Academics and policymakers have long considered this double tax to be "unusual, unfair, and inefficient." Legislators from both political parties have proposed integration of the corporate and individual income taxes on many occasions, but the proposals consistently fail. Prior academic analyses have struggled to explain the failure of integration. This paper demonstrates how certain managers, shareholders, and collateral interests rationally favor certain integration proposals and oppose other integration proposals, while …

Does Brummeria Sweep Clean? A U.S. Tax-Law Perspective, Stephen B. Cohen

Georgetown Law Faculty Publications and Other Works

The title of this article draws on the sixteenth-century Irish proverb, 'a new broom sweeps clean'. It asks whether the recent judgment in Commissioner for the South African Revenue Service v Bruinmeria Renaissance Ltd sweeps clean in the sense of improving the income tax.

The taxpayer, Brummeria Renaissance Ltd, operated a retirement village. A resident of the village would provide a loan to the company interest-free, that is, with zero stated interest. In return, the company would provide the resident with the right to occupy housing in the retirement village. When the resident vacated the housing, the company was obligated …

Whom Do You Trust? A Reply To Prof. Kahn, Stephen B. Cohen

Georgetown Law Faculty Publications and Other Works

In his 2008 opinion in Knight v. Commissioner, Chief Justice John Roberts harshly criticized then Court of Appeals Judge Sonia Sotomayor, writing that her approach to the Internal Revenue Code “flies in the face of the statute.” In the August 3 issue of Tax Notes, I argued that Roberts’ criticism of Sotomayor was “logically flawed and unwarranted.” In the September 21 issue of Tax Notes, Prof. Douglas Kahn defended Robert’s criticism of Sotomayor as “persuasive and accurate” and attacked Sotomayor’s opinion in the case and my defense of what she wrote. I believe that Prof. Kahn’s arguments in defense of …

Judge Sonia Sotomayor’S Tax Opinions, Stephen B. Cohen

Georgetown Law Faculty Publications and Other Works

Judge Sonia Sotomayor has written three published opinions on federal taxation, one as a District Court judge and two as a Court of Appeals judge. Two of the opinions deal with routine matters and are unremarkable in the sense that it is difficult to imagine the cases coming out any other way. Her third opinion, however, in William L. Rudkin Testamentary Trust v. Commissioner, 467 F.3d 149 (2d Cir. 2006), aff'd sub nom. Knight v. Commissioner, 552 U.S. 181, 128 S. Ct. 782 (2008), generated a sharp difference of opinion with Chief Justice Roberts. Although Chief Justice Roberts, writing for …

Elimination Of The Deduction For Business Entertainment Expenses, Richard L. Schmalbeck, Jay A. Soled

Faculty Scholarship

The proposal is offered as a part of the Shelf Project, a collaboration by tax professionals to develop and perfect proposals to help Congress when it needs to raise revenue. Shelf Project proposals are intended to raise revenue without raising tax rates because the best systems have taxes that are unavoidable to reach the lowest feasible tax rates.

This proposal would deny deductions for all business entertainment expenses. Also, the definition of the term ‘‘entertainment’’ would be narrowed so that expenses that are incurred in a clear business setting and are deeply rooted in producing immediate income or in mining …

Cancellation-Of-Indebtedness Income And Transactional Accounting, Lawrence A. Zelenak

Faculty Scholarship

More than three-quarters of a century after the Supreme Court’s decision in United States v. Kirby Lumber established that the cancellation of a debt produces taxable income, there is still uncertainty - both in the courts and among commentators - concerning the rationale for the taxation of cancellation-of-debt (COD) income. Is the taxation of COD income based on the simple fact that the cancellation of a debt improves the taxpayer’s balance sheet, thus increasing the taxpayer’s net worth in the year of cancellation? Or is it based on a multi-year perspective, in which inclusion of the cancelled debt in income …

Aggregate-Plus Theory Of Partnership Taxation, Bradley T. Borden

Georgia Law Review

This Article presents a theory of partnership taxation. To provide context for the presentation,the Article examines the history and status of partnerships.That examination reveals humans have a natural tendency to form partnerships and partnerships create a significant challenge for lawmakers. The challenge is determining whether partnerships are entities separate from their members or aggregates of the members. After decades of debate and consideration,many lawmakers and commentators now view partnerships as entities. Tax law has not, however, adopted that view. Partnershipsare subject to an aggregate tax regime that contains entity components. Economic theory justifies tax law deviating from the legal view …

Immortal Fame: Publicity Rights, Taxation, And The Power Of Testation, Joshua C. Tate

Georgia Law Review

Several states now recognize survivable publicity rights, allowing the heirs of a deceased celebrity to inherit the rights to her image and likeness. Under the default U.S. rule of testamentary freedom, a celebrity could also freely devise such survivable rights to persons of his or her choosing. Nevertheless, some scholars have recently proposed the adoption of state statues under which survivable publicity rights would pass automatically to specified statutory heirs regardless of the celebrity's wishes. This Article concludes that no such interference with testamentary freedom is warranted. There is admittedly some historical precedent for protecting the interests of surviving family …