Tax Law Commons^™

The Constitutional Nature Of The United States Tax Court, Brant J. Hellwig

Scholarly Articles

Is the United States Tax Court part of the Executive Branch of government? One would expect that question would be capable of being definitively answered without considerable difficulty. And as recently expressed by the Court of Appeals for the District of Columbia Circuit, that indeed is the case. In the course of addressing a challenge to the President's ability to remove a judge of the Tax Court for cause on separation of powers grounds, the D.C. Circuit rejected the premise that the removal power implicates two branches of government: "the Tax Court exercises Executive authority as part of the Executive …

Joint Winners, Separate Losers: Proposals To Ease The Sting For Married Taxpayers Filing Separately, Michelle Lyon Drumbl

Scholarly Articles

A taxpayer who is “considered as married” according to the Internal Revenue Code’s definition must file either a joint income tax return or an individual return using the “married filing separately” filing status. Those married taxpayers who file a separate, rather than a joint, income tax return are denied valuable benefits and subjected to a host of other unfavorable limitations. Low-income taxpayers, in particular, are hurt by these limitations. Certain married taxpayers, including victims of domestic violence and abandoned spouses, may have no choice but to file using the married filing separately status. Low-income taxpayers are denied tremendous benefits, such …

The Future Of American Tax Administration: Conceptual Alternatives And Political Realities, Steve R. Johnson

Scholarly Publications

No abstract provided.

Art For Irs’ Sake: Hobby Loss Rules And Artistic Endeavors, Maria Pirrone, Deborah Kliener

Journal of International & Interdisciplinary Business Research (2014-2019)

In Crile v. Commissioner, T. C. Memo. 2014-202 (Oct. 2, 2014), the United States Tax Court recently ruled that a tenured art professor’s artistic endeavors constituted a “business” rather than a “hobby.” Internal Revenue Code Section 183 limits taxpayers’ deductions to the extent of income earned if the activity is not engaged in for profit, i.e. a hobby, rather than a business. In this presentation, we examine the nine factors considered by the court in distinguishing between businesses and hobbies and discuss how the facts and circumstances of the taxpayer in this case prompted the court to decide in her …

International Taxation In China : A Contextual Analysis, Jinyan Li

Books

Chinese tax law affects corporations engaged in cross-border transactions with China. It may also impact the development of the international tax regime as China is increasingly engaged in international tax reform efforts, such as the G20/OECD BEPS Project. Chinese tax law is thus important to taxpayers, tax professionals and policymakers worldwide. However, it is a challenge to find comprehensive information and insightful analysis of Chinese tax law in English. International Taxation in China: A Contextualized Analysis meets that challenge. This book deals with the Chinese international tax regime, focusing on the enterprise income tax and tax treaties. First, it covers …

Sales Suppression: The International Dimension, Richard Thompson Ainsworth

American University Law Review

No abstract provided.

Irs Reform: Politics As Usual?, Leandra Lederman

Articles by Maurer Faculty

The IRS is still reeling from accusations that it "targeted" Tea Party and other non-profit organizations. Although multiple government investigations found no politically motivated behavior-only mismanagement-Congressional hearings were quite inflammatory. Congress recently followed up those hearings with a set of IRS reforms. Congress's approach is reminiscent of the late 1990s, when highly publicized Congressional hearings regarding alleged abuses by the IRS resulted in a major IRS reform and restructuring, although the allegations subsequently were largely debunked. This Article argues that the recent allegations against the IRS also were overblown. It looks to the aftermath of the 1998 IRS reform, which …

Tax Cannibalization And State Government Tax Incentive Programs, David Gamage, Darien Shanske

Articles by Maurer Faculty

States and localities offer businesses an enormous amount of tax incentives to locate within their jurisdictions despite: 1) the mass of evidence that suggests that these incentives are not particularly effective and, 2) substantial doubts about their constitutionality.

In this essay, we develop a new critical perspective on state tax incentives. We argue that offering these incentives permits states to offer lower taxes to more mobile businesses while keeping their overall corporate tax rates high. This is arguably not the best choice for the states, but it is definitely not the best choice for the federal government. Because the states …

Cross-Deductions In The Net Investment Income Tax Imposed On A Trust Or Estate With Separate Shares, Michael T. Yu

Faculty Scholarship

Part I of this article first provides a general overview of §§ 1411 and 663(c) and the interaction between them and the respective regulations thereunder and then proposes a revised regulation to clarify the relationship between and among the two sections and their regulations. Part II discusses the possibility of certain cross-deductions under § 1411, in conjunction with §§ 661, 662, and 663(c). Finally, Part III presents and discusses a proposed calculation and allocation, to the separate shares of a trust or estate, of income and deduction items entering into the computation of NII and DNI of the trust or …

Branding Taxation, Jeffrey A. Maine, Xuan-Thao Nguyen

Faculty Publications

Branding is important not only to businesses,but also to the economy. The intellectual property laws and tax laws should thus further the legitimate goals of encouraging and protecting brand investments while maintaining a sound tax base. Intellectual property protections for branding depend on advertisement and enforcement, both of which demand significant amounts of private investment by firms. Although one would expect similar tax treatments of both categories of investment, the categories are actually treated as vastly different for federal income tax purposes. Additionally, tax distinctions also exist within each category. The result is that some branding investments are expensed and …

Permitting Abused Spouses To Claim The Earned Income Tax Credit In Separate Returns, Fred B. Brown

All Faculty Scholarship

The earned income tax credit (EITC) is a refundable tax credit for federal income tax purposes that is generally available to lowincome taxpayers who have income from either employment or selfemployment. The EITC is currently the largest government program providing aid to low-income individuals. The subsidy provided by the EITC is of particular importance to individuals subjected to domestic abuse, given that such individuals are often impoverished, and the EITC can provide them with the financial resources necessary to improve, endure, or leave an abusive relationship.

Despite the importance of the EITC, married individuals subjected to domestic abuse face serious …

An Argument In Support Of Tax-Free Per-Cap Distribution Payments Derived From Native American Nations Gaming Sources, 37 N. Ill. U. L. Rev. 66 (2016), Arthur Acevedo

UIC Law Open Access Faculty Scholarship

Gaming activities play important social, cultural, and economic roles for many Native American tribes. During the 1970s and 1980s, gaming activities spread throughout the country, and became more accessible to nonnative individuals. This growth in gaming activities drew the attention of state and local officials who sought to limit and regulate Native American gaming. In California v. Cabazon Band of Mission Indians, the State of California, arguing before the Supreme Court, asserted that it could exercise jurisdiction over Native American gaming activities. In a stunning defeat, the Supreme Court ruled against the State of California when it announced its decision …

Reconciling The Premium Tax Credit: Painful Complications For Lower And Middle-Income Taxpayers, Francine J. Lipman, James E. Williamson

Scholarly Works

The Patient Protection and Affordable Care Act (ACA) makes available to certain middle and lower-income individuals a refundable tax credit, the Premium Tax Credit (PTC), designed to help them pay the premiums on their qualified health care plans. To achieve Congress’s goal of making health insurance affordable, the PTC is most often provided directly to an individual’s insurance provider each month in advance of actually claiming the PTC on the individual’s year-end annual tax return. Of the almost twelve million individuals who have enrolled in health insurance through the federal and state health exchanges in 2015, 85% of these individuals …

Master Limited Partnerships : A Pipeline To Renewable Energy Development, E. Cabell Massey

University of Colorado Law Review

Master Limited Partnerships (MLPs) are partnership entities that can be publicly traded on a national stock exchange if they meet certain criteria in the Internal Revenue Code. These criteria include a qualifying income test where most of the partnership's income must be derived from nonrenewable natural resources. These partnerships have become very popular since their creation in the 1980s and have allowed for cast amounts of capital to be spent on infrastructure for non-renewable natural resource extraction and transportation in the United States. First, this Comment explores the history of the MLP and how MLPs currently are structured. Second, this …

Branding Taxation, Xuan-Thao Nguyen, Jeffrey A. Maine

Articles

Branding is important not only to businesses,but also to the economy. The intellectual property laws and tax laws should thus further the legitimate goals of encouraging and protecting brand investments while maintaining a sound tax base. Intellectual property protections for branding depend on advertisement and enforcement, both of which demand significant amounts of private investment by firms. Although one would expect similar tax treatments of both categories of investment, the categories are actually treated as vastly different for federal income tax purposes. Additionally, tax distinctions also exist within each category. The result is that some branding investments are expensed and …

From Avoiding ‘Double Taxation’ Yesterday To Avoiding ‘Double Non-Taxation’ Today: The Urgent Need For An International Tax Regime Based On Unitary Tax Principles, Zachée Pouga Tinhaga

SJD Dissertations

The purpose of this Dissertation is to analyze the current ills of the international tax system with a special focus on developing countries, and to structure and present a Unitary Taxation System (“UT”) as a solution to the legitimate and multifaceted complaints about current international taxation of multinational companies (“MNEs”). The research aims at presenting a UT that would restore credibility in the international tax arena by providing fiscal predictability and certainty to MNEs, and ensuring appropriate taxation by all countries (specifically developing nations) of all “real” economic activity within their borders. Although this issue has been previously explored, there …

Six Degrees Of Graduation: Law And Economics Of Variable Sanctions, Alex Raskolnikov

Faculty Scholarship

From parking tickets to tax fines and punitive damages, legal sanctions matter in people's lives. Yet neither the legal nor the economics literature offers a comprehensive treatment of sanctions. Their practical complexity is not well understood, and their theoretical analysis is fragmented. This Essay addresses both limitations using tax law as a primary example. Sanctions are complex because they vary along at least six different dimensions: aggressiveness, magnitude, culpability, effort to comply, likelihood of detection, and offense history. These six degrees of sanction graduation are distinct, and potentially independent, but often intertwined in obscure and perplexing ways. After clarifying the …

"Death Tax" Politics, Michael J. Graetz

Faculty Scholarship

In his Keynote Address "Death Tax" Politics at the October 2, 2015 Boston College Law School and American College of Trust and Estate Counsel Symposium, The Centennial of the Estate and Gift Tax: Perspectives and Recommendations, Michael Graetz describes the fight over the repeal of the estate tax and its current diminished state. Graetz argues that the political battle over the repeal of the estate tax reflects a fundamental challenge to our nation's progressive tax system. This Address concludes that a revitalized estate tax is important for managing the national debt and reducing massive inequalities in wealth.

Bringing International Tax Policy Into The 21st Century, Michael J. Graetz

Faculty Scholarship

Michael J. Graetz delivered the following remarks at the Tax Policy Center's "A Corporate Tax for the 21st Century" conference on July 14 in Washington. These remarks are substantially taken from his April 2015 Ross Parsons Lecture at the University of Sydney Law School.

Integration Of Corporate And Shareholder Taxes, Michael J. Graetz, Alvin C. Warren

Faculty Scholarship

Integration of the corporate and individual income taxes can be achieved by providing shareholders a credit for corporate taxes paid with respect to corporate earnings distributed as dividends. When such integration was previously considered in the U.S., proponents emphasized that it could reduce or eliminate many of the familiar distortions of a classical corporate income tax. Integration would also provide a framework for addressing current concerns for tax incentives for U.S. companies to shift income to foreign affiliates in lower-taxed countries or to expatriate in "inversion" transactions. A recent Congressional proposal for a corporate dividend deduction coupled with withholding on …

Provisions Denying A Deduction For Illegal Expenses And Expenses Of An Illegal Business Should Be Repealed, Douglas A. Kahn, Howard Bromberg

Articles

Currently, the tax law denies a deduction for business expenses that violate a federal or state law (but only if the state law is generally enforced). In addition, losses, including business losses, cannot be deducted if they arise out of an illegal activity. For example, medical expenses are denied a deduction if they are illegal. Kickbacks, bribes, and rebates given in connection with the Medicaid or Medicare program are nondeductible. Any expenses, legal or not, incurred in connection with the conduct of a business of selling a controlled substance that is prohibited by federal law (or by the law of …

Royal Uncertainty: An In-Depth Analysis Of The Potential Affects Of Brexit On The U.K. Art Market, Ashley Solmer

MA Projects

The United Kingdom, most notably London, has been known on the international commerce scene as a pivotal trade center for many centuries acting as a stepping stone from Europe to the Western World. Even though the economic importance of London can be dated back to early times, the inherent popularity of its art market only began flourishing in the late eighteenth century, riding on the back of the already established, but restrictive, art epicenter in Paris. The rise and prominence of Paris’ art market from 17^th to 19^th century eventually came to an end at the heels of …

Taxing State-Owned Enterprises: Understanding A Basic Institution Of State Capitalism, Wei Cui

Osgoode Legal Studies Research Paper Series

State-owned enterprises (SOEs) have become active investors in global markets in the last decade, challenging policymakers in Canada and other OECD countries to confront the logic of “state capitalism.” This article develops a novel theory of the income taxation of SOEs. Many countries subject their SOEs to the income tax, but economists tend to dismiss SOE taxation as superfluous. A contrary, popular belief holds that SOE taxation is necessary to ensure fair competition. This article shows that both views are mistaken and explains SOE taxation in terms of the agency problem for dividend policy. Because typical devices to give private …

Beyond Quill And Congress: The Necessity Of Sales Tax Enforcement And The Invention Of A New Approach, Lila Disque, Helen Hecht

American University Law Review

No abstract provided.

Treaties In The Aftermath Of Beps, Yariv Brauner

UF Law Faculty Publications

The article argues that, despite the fanfare around it, the outcome of the BEPS project is unlikely to be dramatic, at least in the short term. Beyond a period of increased legal uncertainty and aggressive enforcement by some countries, it expects little substantive change in tax treaties. The challenges to the dominance of the OECD and the richest countries would likely be assuaged with marginal concessions, most or all of which not be affecting tax treaties. Yet, the article sees a silver lining in the non-substantive, structural, and instrumental outcomes of the BEPS project. It argues that even if unintended, …

Unilateral Responses To Tax Treaty Abuse: A Functional Approach, Omri Y. Marian

UF Law Faculty Publications

Recent years have seen a dramatic increase in the attention given to abusive tax schemes that take advantage of bilateral tax treaties. The ensuing discourse tends to view potential responses to treaty abuses as a hierarchical set of options, gradually escalating, in which treaty termination is a last resort option. This article argues that the hierarchical view of unilateral responses to treaty abuse is misguided. Unilateral responses to treaty-based abuse are not hierarchically ordered. Rather, the approach to treaty abuse is (and should be) functional, adopting specific types of unilateral responses based on the type of treaty abuse at issue. …

Constructive Unilateralism: U.S. Leadership And International Taxation, Reuven S. Avi-Yonah

Articles

In recent years, various U.S. international tax proposals have been advanced on the basis that we should follow the lead of our major trading partners. For example, it has been argued that we should adopt a "territorial" tax system (really, an exemption for dividends by controlled subsidiaries of U.S. multinationals) because most of our trading partners have done so. Other voices have called for the United States to adopt a "patent box" because the United Kingdom and other EU jurisdictions have one.

Cancellation Of Debt And Related Transactions, Jeffrey H. Kahn

Scholarly Publications

No abstract provided.

The Foreign Account Tax Compliance Act: The Solution Or The Problem?, Sophie S. Chou

CMC Senior Theses

Tax evasion has been happening for decades, but after the highly publicized cases with two foreign banks, LGT and UBS, the United States (US) is cracking down on tax evaders. The latest addition to the Internal Revenue Service (IRS)’s repertoire of enforcement tools is the Foreign Account Tax Compliance Act, otherwise known as FATCA. The Act was enacted to incentivize tax information release by foreign financial institutions (FFIs) who would otherwise face a 30% withholding tax on any US source income. The question was whether or not the design of the Act and its implementation successfully met this goal.

This …

Carrying On The Tradition: Justice Rothstein's Contribution To Canadian Tax Law, William Neil Brooks, Kim Brooks

Articles, Book Chapters, & Popular Press

In this article, we review a selection of Justice Rothstein’s tax judgments with the object of making two observations about his contribution to Canadian tax law. First, Justice Rothstein, who was appointed to the Supreme Court two years after Justice Iacobucci retired, and in many ways stepped into his shoes as the Court’s tax judge, continued Justice Iacobucci’s formalist tradition. We provide evidence of Justice Rothstein’s formalist approach by examining one case he rendered while serving on the Federal Court Trial Division, Neuman; and two cases that were decided when he sat on the Federal Court of Appeal, Singleton and …