Tax Law Commons^™

Personal Foul…Roughing The Taxpayer: The Irs’ Triple Penalty On Hardship Distributions, Michael Flynn, Craig C. Minko

Fordham Journal of Corporate & Financial Law

Everyone knows of someone, a family member, a co-worker, a neighbor or just an acquaintance, who has been adversely affected by the downturn in the economy. For many, this means dipping into retirement accounts to help out others, to fund college tuition, to pay for unexpected medical bills or just to make ends meet. Then the surprise hits. The retirement account funds, filled with money that each participant paid in for reasons just like these, are not readily available. To the extent that they are available, the funds come at a steep price even though the participant is in desperate …

The Forgotten Taxation Landmine: Application Of The Accumulated Earnings Tax To Irc Sec. 831(B) Captive Insurance Companies, Beckett G. Cantley

Richmond Journal of Global Law & Business

No abstract provided.

What Do Courts Have To Do With It?: The Judiciary's Role In Making Federal Tax Law, Leandra Lederman

Articles by Maurer Faculty

The Internal Revenue Code is an important source of federal tax law, but it is not the only source. The U.S. Department of the Treasury and Internal Revenue Service issue important guidance, and federal courts interpret all of these authorities. This essay provides an overview of federal tax litigation, at both the trial and appellate levels, and discusses the interplay among Congress, the Treasury, and the judiciary in developing federal tax law.

Proposed 2009 Regulations Dealing With § 356 Nonrecognition Rules Should Be Given The Boot, Terri Guinn

San Diego Law Review

"Fire, Aim, Ready!" Could this be the approach taken by the Internal Revenue Service (the Service) in its attempt to finalize regulations, proposed more than two years ago, that would specify a new method for determining a shareholder's taxable gains and losses in certain reorganization transactions? Has the Service decided to elevate theory over practicality without thinking through all of the ramifications of these regulations? Finalizing these proposed regulations in their current form may have serious unintended consequences. As drafted, they miss their intended mark by inadvertently creating a loophole whereby some shareholders could take immediate losses on some of …

Recovery Of Interest On A Tax Underpayment Caused By A Tax Advisor's Negligence, Jacob L. Todres

Akron Tax Journal

In my view, this area is relatively straightforward. There are three views that have developed. Once the views are apprehended, it should be relatively easy for a court to choose which view to follow. By presenting and analyzing the three views, this area will be appropriately elucidated and subsequently given the thoughtful attention it warrants.

In Part II, I will focus upon each of the three views and explore the rationale for each view. In Part III, I will trace the development of each of the views, especially the minority view and more modem, intermediate view. The goal of this …

Recent Developments Concerning The Estate Tax Inclusion Of Transfers To A Family Limited Partnership, Brent B. Nicholson

Akron Tax Journal

After a brief examination of the statutory and regulatory background, this paper will summarize the significant cases prior to Shurtz, the significant cases in the last year, discuss the facts and holdings of Shurtz, and then outline the coordinates that have emerged to guide taxpayers

From The Great Depression To The Current Housing Crisis: What Code Section 108 Tells Us About Congress's Response To Economic Crisis, Monica D. Armstrong

Akron Tax Journal

This article will explore the development of section 108, using the three major economic crises mentioned above as a timeline. Part II discusses the judicial debate of whether gross income should include discharge of indebtedness. Part III discusses the development of the insolvency exception following the Supreme Court's decision in Kirby Lumber, which held that gross income includes discharge of indebtedness. More specifically, it provides a discussion of court decisions that carved out exceptions to Kirby Lumber to provide tax relief to struggling businesses impacted by the Great Depression. This part closes with a discussion of the codification of the …

Informal Claims For Refund - A Winding Road, William A. Neilson

Akron Tax Journal

In reviewing the manner in which courts have interpreted [the informal claim] doctrine, it appears that the doctrine can be more effective if steps are taken to create a definite set of rules for the doctrine's application, and if those rules are incorporated into the IRC or Treasury regulations. This Article, after briefly reviewing the history of the informal claim doctrine and its current form, will discuss the possibility of creating such rules.

Shifting The Paradigm By Bringing Tax Arbitrage To The Lower Income Separated Family: Why Should The Middle To Upper Class Family Have All The Fun?, Reginald Mombrun

Akron Tax Journal

The background for this article is, of course, the duty of parents to provide sustenance for their children, a duty that necessarily survives the break-up of the family. In this article, I continue to address the problems of the child support system, and I continue to take a holistic view of the problem. A fundamental concept of family law is that the system must do what is in the best interests of the child. Few people will disagree with the soundness of this fundamental concept. However, the problem lies with its application. Although counterintuitive, focusing solely on the child to …

Free Rider: A Justification For Mandatory Medical Insurance Under Health Care Reform?, Jeffrey H. Kahn, Douglas A. Kahn

Scholarly Publications

Section 1501 of the Patient Protection and Affordable Care Act added section 5000A to the Internal Revenue Code to require most individuals in the United States, beginning in the year 2014, to purchase an established minimum level of medical insurance. This requirement, which is enforced by a penalty imposed on those who fail to comply, is sometimes referred to as the “individual mandate.” The individual mandate is one element of a vast change to the provision of medical care that Congress implemented in 2010. The individual mandate has proved to be controversial and has been the subject of a number …

Tefra-Partnership Refunds: Five Steps To Protect A Partner’S Rights, Mary A. Mcnulty, Robert D. Probasco, Carla C. Crapster

Faculty Scholarship

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) established a unified procedure for determining the tax treatment of partnership items at the partnership level rather than the partner level. The TEFRA-partnership refund procedures differ from the refund claim procedures that apply to other taxpayers. For a TEFRA partnership, a refund claim is an administrative adjustment request (AAF) and a notice of deficiency is a notice of final partnership administrative adjustment (FPAA). Procedures for the assessment of additional tax attributable to partnership items have received much attention in recent years, but the procedures concerning refunds are complex and full …

The Importance Of Being Interest: Why A State Cannot Impose Its Income Tax On Tribal Bonds, Scott A. Taylor

Akron Tax Journal

In order to provide the fullest consideration of these very complicated issues, I have divided my discussion into six parts. In the first part, I discuss specific state statutes to show how their application to the state income taxation of interest on tribal bonds is textually unclear. The primary purpose of this part of the discussion is to show that the analysis must start with the particular state income tax statute itself to see if it purports to tax the interest income generated by a tribal bond. In some instances, the more reasonable interpretation of the state statute may lead …

Deconstructing The Rules Of Corporate Tax, Rachelle Y. Holmes

Akron Tax Journal

While academics, practitioners, and the White House have proposed any number of reform measures to deal with the problems plaguing the U.S. corporate tax regime, their solutions involve varying structural and statutory changes, which are in fact extrinsic to the form of the underlying rules themselves. In contrast, this Article argues for an innate form of change to the U.S. corporate tax rules, which would fundamentally affect the way in which tax lawmakers actually draft tax rules and regulations. In particular, it argues that a systemic focus and commitment by lawmakers to a more principles-based approach to regulation would significantly …

Legislating In The Dark: How Congress Regulates Tax-Exempt Organizations In Ignorance, John F. Coverdale

University of Richmond Law Review

No abstract provided.

Stealth Preemption: The Irs's Nonprofit Corporate Governance Initiative, James J. Fishman

Elisabeth Haub School of Law Faculty Publications

The Internal Revenue Service, the primary federal regulator of charities, has initiated a corporate governance initiative. The intervention by the Internal Revenue Service into an area traditionally the preserve of state nonprofit corporate law has little relationship to issues of tax compliance. This corporate governance initiative has been accomplished in the face of IRS acknowledgement that it has no statutory authority relating to these issues. Yet, the power of the Service to recognize tax exempt status and the method it has used to ensure it vision of correct corporate governance practices through a series of questions when an organization applies …

Much Uncertainty About Uncertain Tax Positions, Robert D. Probasco

Faculty Scholarship

The Internal Revenue Service (IRS) announced in January 2010 a new initiative to require certain businesses to report “uncertain tax positions” on a new schedule filed with their annual tax returns. Draft schedules and instructions issued in April 2010 clarified some of the mechanical aspects of the new requirement but left many open issues and questions. The IRS proposal built on requirements by the Financial Accounting Standards Board (FASB) in FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”). The standard requires companies, in their financial statements, to reserve some of the benefits from any position taken …

Regulating Charities In The Twenty-First Century: An Institutional Choice Analysis, Lloyd Hitoshi Mayer, Brendan M. Wilson

Journal Articles

For more than fifty years scholars, practitioners, and government officials have debated whether the federal government, the state governments, or the charitable sector itself can best ensure that charity leaders fulfill their fiduciary duties. The dramatic growth of this sector, recent highly publicized governance scandals, and a push in Congress and the IRS for more federal involvement in this area have now brought this issue to a head. This article lays a foundation for resolving the dispute by developing an institutional choice framework for considering and comparing the various available options. Applying that framework, the article concludes that the best …

Honorary Board Membership, Real Tax Liability: Limits To Tax-Exempt Organization Honorary Board Member Immunity Under Internal Revenue Code 6672, Kenneth H. Ryesky

Akron Tax Journal

This article will discuss the implications of the various governmental trends and initiatives upon the potential trust fund liability of tax-exempt organizations' honorary board members.

Built-In Gain Discounts For Transfer Tax Valuation: A Resolution For The Big Debate, Scott Andrew Bowman

Akron Tax Journal

This article considers whether and to what extent courts should permit a built-in gain discount. It begins by presenting the challenges of valuing assets for transfer tax purposes, discussing the general principles of transfer tax valuation, and highlighting the particular methodologies used to value closely-held entities. The article then examines how, during the era of the General Utilities doctrine, a prospective liquidation test, which considered the prospect and affect of liquidation, led courts to repeatedly disallow the built-in gain discount. However, since the repeal of the General Utilities doctrine, the prospective liquidation test has been discarded, at least in part, …

Surviving A Heart Attack: Expatriation And The Tax Policy Implications Of The New Exit Tax, Steven J. Arsenault

Akron Tax Journal

Part II of this article provides an overview of the U.S. tax system applicable to citizens, permanent residents, and nonresidents. Part III discusses the prior law applicable to expatriates and the history behind that law. Part IV discusses the provisions of the HEART Act and the changes the new system makes to the exit tax regime. Finally, Part V considers the policy implications of the new exit tax system.

Whistleblowers And Tax Enforcement: Using Inside Information To Close The "Tax Gap", Edward A. Morse

Akron Tax Journal

This article provides a critical look at the current scheme for rewarding tax informants, and in particular on the relatively new program for so-called "whistleblower awards." Despite enhanced incentives for informants to come forward, tax award programs continue to operate in an environment based on discretion and uncertainty. Additional legislation is needed to clarify uncertainties and to limit eligibility for rewards, including protection of private tax return information from disclosure and preventing the government from incentivizing the breach of confidential obligations through offering rewards.

Part II provides an overview of the IRS examination function and examines data involving the utility …

Opinions On The Ethics Of Tax Evasion: A Comparative Study Of The Usa And Six Latin American Countries, Robert W. Mcgee, Wendy Gelman

Akron Tax Journal

This study does not take either of these approaches. It does not analyze tax evasion from the perspective of economics or public finance, and it does not apply ethical theory to determine under what circumstances tax evasion might be considered ethical, although ethics is discussed. It focuses on the attitude toward tax evasion of a wide range of individuals in six Latin American countries as well as the United States. The main goals of this study are to determine general attitudes on the ethics of tax evasion and to determine whether certain demographic variables, including gender, age, level of education, …

The Tax Debts Of Small Business Owners In Bankruptcy, Rafael Efrat

Akron Tax Journal

Tax burden on small business owners in the United States is significant and regressive in nature. Some studies have linked the tax burden on small business owners to lower profitability, lower rate of entrepreneurial growth, and business closures. The tax burden also appears to cause some small business owners to resort to bankruptcy protection. The objective of this study is to investigate the burden tax obligations impose on small business owners at the time of their bankruptcy filing. Specifically, using a national sample, this study ascertains the pervasiveness of tax debts among small business owner bankruptcy petitioners.

The findings from …

Adding Insult To Injury: The Federal Income Tax Consequences Of The Clawback Of Executive Compensation, Matthew A. Melone

Akron Tax Journal

Part I of this article discusses and analyzes clawbacks in general, including clawbacks that are part of common-law remedial schemes, federally legislated clawbacks, and those triggered by contractual clawback provisions. Part II of this article analyzes the tax consequences to the executives that result from the repayment or forfeiture of compensation. This part provides an analysis of the annual accounting concept and the claim-of-right doctrine which will generally result in the payment and return of compensation to be accounted for in separate tax years and, concomitantly, will generally result in incongruent tax consequences. The exceptions to the annual accounting concept …

Strict Liability And Tax Penalties, William A. Drennan

Oklahoma Law Review

No abstract provided.

The Individual Alternative Minimum Tax And The Intersection Of The Bush Tax Cuts: A Proposal For Permanent Reform, Gabriel Aitsebaomo

Akron Tax Journal

The foregoing article begins with a critical examination of the AMT, its purpose, policy rationale, and the manner that it is calculated. Next, the article discusses the mushrooming number of individuals subject to the AMT, and the author posits that the AMT, in its current form, is neither achieving its intended purpose nor fulfilling its policy objective given the increasing number of unintended middle and upper middle class taxpayers subject to the tax. Next, the author critically examines the Bush tax cuts from 2001 to 2004, and concludes that the Bush tax cuts, and the fact that the AMT parameters …

Tax Interpretation, Planning, And Avoidance: Some Linguistic Analysis, Menahem Pasternak, Christophe Rico

Akron Tax Journal

No abstract provided.

To Tax Or Not To Tax - That Is The Question In The Midst Of Murphy V. I.R.S., Margarita R. Karpov

Akron Tax Journal

This note examines § 104(a)(2) and the D.C. Circuit decision in Murphy v. I.R.S. focusing on the need for further guidance on taxation of personal damages. Part II inspects the background of taxation generally and § 104(a)(2) specifically. Additionally, Part II looks at the cases that shaped taxation of personal injury awards and Congress's interpretation of this taxation. Part III discusses the background and judicial response to Murphy's complaint, including the Secretary of Labor's findings, Administrative Law Judge's recommendations, the District Court decision, and the D.C. Circuit arguments and decision. Part IV assesses the reasoning of the D.C. Circuit's decision, …

Analyzing The Schizoid Agency: Achieving The Proper Balance In Enforcing The Internal Revenue Code, Richard Lavoie

Akron Tax Journal

The purpose of this article is to examine the considerations that should influence the development of appropriate controversy position standards for the Service. In this regard it is crucial to understand the inherent duality in the Service's role. On one hand it is charged with enforcing the Internal Revenue Code (the "Code"), and as a result it attempts to maximize the collection of all legally owed taxes. On the other, the Service is charged with maintaining the efficient and fair operation of the tax system as a whole. The United States federal income tax system is premised on voluntary taxpayer …

Fairness And Taxation: The Law Of Deferred Income Recognition For The Members Of Agricultural Cooperatives, Kathryn J. Sedo, Mychal S. Brenden

Akron Tax Journal

This Article examines the application of the principles of income recognition and deferral to agricultural cooperatives and suggests a resolution to current inconsistencies in the law. Recent decisions have brought into question the ability of cooperative members to utilize both the ISA and deferred income agreements. This Article asserts that cooperative members can and should be able to take advantage of such options. Part I provides a general background on agricultural cooperatives and sets out the current legal framework for income recognition and deferral. Part II analyzes the current state of the law in regard to the treatment of cooperatives …