Tax Law Commons^™

What We Talk About When We Talk About Tax Shelters, Lawrence A. Zelenak

Faculty Scholarship

This Response to Jonathan H. Choi’s recent Article, Beyond Purposivism in Tax Law, endorses Choi’s preference for purposivist approaches to the interpretation of tax statutes, but notes and explains three areas of disagreement. First, this Response proposes a different definition of a tax shelter, under which the “puzzle” motivating Choi’s analysis disappears. Second, this Response explains how an inductive approach to tax shelter analysis can produce important insights likely to be missed by Choi’s preferred deductive approach. Finally, this Response criticizes Choi’s conclusion that “the normative [policy] preferences of tax experts” should prevail over legislative intent; this Response instead urges …

The Income Tax, The Constitution, And The Unrealized Importance Of Helvering V. Griffiths, Lawrence Zelenak

Faculty Scholarship

The Supreme Court recently granted certiorari in Moore v. United States, for the purpose of deciding whether the realization doctrine remains a constitutional limitation on Congress's ability to impose an unapportioned income tax, as the Court held in its famous 1920 decision in Eisner v. Macomber. Although it is natural to look to 1920 and Macomber as the cause of today's uncertain scope of the congressional power to tax income, what did not happen in the Court's 1943 decision in Helvering v. Griffiths is as significant as what did happen in 1920. the presence of Moore on the Court's docket …

Unplugging Heartbeat Trades And Reforming The Taxation Of Etfs, Jeffrey M. Colon

Faculty Scholarship

The much-touted tax efficiency of equity exchange traded funds (ETFs) has historically been built upon portfolios that track indices with low turnover and the tax exemption for in-kind distributions of appreciated property.

This rule permits ETFs to distribute appreciated shares tax-free to redeeming authorized participants (APs) and reduce a fund’s future capital gains. ETFs and APs, working together, exploit this rule in so-called heartbeat trades in which an ETF distributes shares of a specific company or companies to a redeeming AP, instead of a pro rata basket of the ETF’s portfolio. The distributed securities are appreciated shares of companies that …

The Shifting Economic Allegiance Of Capital Gains, Amanda Parsons

Publications

Technological advances and the digitalization of the global economy have created an economic environment beyond the imagination of the original designers of the international tax system. Much scholarly attention has been paid to the question of how these economic transformations should affect which country is able to tax a multinational company's income. But which country should be able to tax capital gains income from the sale of that company's shares is an important and overlooked question.

This Article answers this question. It concludes that taxing authority over capital gains income must be reallocated to the countries in which companies conduct …