Taxation-Federal Estate and Gift Commons^™

Moore Questions, Some Answers: Fixing The Personal Tax System Despite Constitutional Constraints, David Gamage, John R. Brooks, Edward J. Mccaffery

Faculty Scholarship

Moore v United States was expected to rule on the constitutional necessity of the tax-law realization requirement originating from Eisner v Macomber, a potential impediment to progressive tax reform efforts aimed at shutting down the planning techniques of Buy Borrow Die. The various opinions in Moore, however, provided no definitive answer to this core question, instead leaving many more questions. Amid the lingering uncertainty, we argue that various responses to the problem of wealthy Americans’ not needing to pay any taxes remain possible after Moore. An incremental, “mix-and-match” approach to progressive tax reform may best suit the …

Donor-Advised Funds In The Wake Of The Tax Cuts And Jobs Act, David I. Walker

Faculty Scholarship

Donor-advised funds (DAFs) are conduits for charitable giving that support immediate tax deductions while creating a reservoir of assets for subsequent disposition to end-use charities. The number of new DAF accounts has skyrocketed in the wake of the 2017 Tax Cuts and Jobs Act (TCJA). This Article presents evidence suggesting that bunching charitable contributions to game the TCJA-enhanced standard deduction likely motivates much of the onslaught of new DAF accounts established since 2016 and argues that the typical buncher is likely to differ from other DAF account holders in ways that matter from a policy perspective. Thus, while DAF critics …

Substance Over Form In Transfer Tax Adjudication, Richard Schmalbeck, Jay A. Soled

Faculty Scholarship

The elevated exemption level under the federal transfer tax system (now in excess of $24 million for a married couple) has opened up new and abusive tax-avoidance opportunities. In many areas of the tax law, the substance over form doctrine historically has been effective in controlling such abuses; however, for a myriad of reasons, transfer tax jurisprudence has been marred by the reluctance of courts to embrace this doctrine. In this analysis, we urge reconsideration of that posture.

Determining An Asset's Tax Basis In The Absence Of A Meaningful Transfer Tax Regime, Jay A. Soled, Richard L. Schmalbeck

Faculty Scholarship

Until recently, in those circumstances where there was a valuation range with respect to a particular asset, executors faced a choice: among estates subject to the estate tax, declaring a high value would increase the estate tax liability; however, due to the Internal Revenue Code's "basis equal to fair market value" rule applicable at death, declaring a low value would expose heirs to a greater capital gains tax on subsequent asset disposition. Because the estate tax rates were higher and that tax was immediate (as opposed to deferred until a later sale by the heir), executors typically minimized asset values, …

Improving Tax Rules By Means-Testing: Bridging Wealth Inequality And "Ability To Pay", James M. Puckett

Faculty Scholarship

The federal income tax can and should do more to address wealth disparities and income inequality. The income tax does not directly count wealth, and the realization rule and basis "step-up" at death exclude substantial amounts of income for the wealthy. The Constitution limits Congress's ability to tax wealth. Despite these serious challenges, this Article considers how to potentially bridge the gap between wealth and the income tax. For example, asset-based phase-outs in the income tax should pass muster without apportionment, although their bite would necessarily be limited. The Article posits that the public would be more receptive to phase-outs …

Advocating A Carryover Tax Basis Regime, Richard Schmalbeck, Jay A. Soled, Kathleen Delaney Thomas

Faculty Scholarship

For close to a century, an important (but unfortunate) feature of the Internal Revenue Code has been a rule that the tax basis of any asset is made equal to its fair market value at death. Notwithstanding the substantial revenue losses associated with this rule, Congress has retained it for reasons of administrative convenience.

But from three different vantage points, pressure has been mounting to change what is commonly referred to as the “step-up in basis rule.” First, politicians and commentators have historically tied the step-up in basis rule to the estate tax on the theory that income be taxed …

Lack Of Marketability And Minority Discounts In Valuing Close Corporation Stock: Elusiveness And Judicial Synchrony In Pursuit Of Equitable Consensus, Stephen J. Leacock

Faculty Scholarship

No abstract provided.

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 …

Rethinking The Penalty For The Failure To File Gift Tax Returns, Jay A. Soled, Paul L. Caron, Charles Davenport, Richard L. Schmalbeck

Faculty Scholarship

In this article, the authors argue that Congress must reform the penalty structure associated with the failure to file gift tax returns if it wants to maintain the integrity of the transfer tax system.

The Politics And Policy Of The Estate Tax – Past, Present, And Future, Michael J. Graetz

Faculty Scholarship

This paper is an edited transcript of the Lloyd Leva Plaine Distinguished Lecture, delivered at the University of Miami’s Heckerling Estate Planning Institute on January 11, 2011. It reviews the history of the estate tax, discusses the politics of its bizarre repeal for the year 2010 only, and outlines the forces that led to reinstatement of the tax for 2011 and 2012 with a $5 million exemption and 35 percent top rate. The paper makes clear that the coalition pushing for repeal of the estate tax will continue to work to eliminate it and also explores potential broader implications of …

The Taxation Of Cause-Related Marketing, Terri Lynn Helge

Faculty Scholarship

With the economy in turmoil, charitable organizations are looking to nontraditional sources of financing to supplement contributions and fee-based revenues. One potentially lucrative source of revenue stems from cause-related marketing. Cause-related marketing is the public association of a for-profit company with a charitable organization to promote the company’s product or service in order to raise money for the charitable organization. Introduced almost twenty-five years ago, cause-related marketing has now become a $1 billion a year industry. Cause-related marketing has evolved beyond mere use of a charitable organization’s name to an apparent union for the purpose of promoting products that carry …

E-Vat: An Electronically Collected Progressive Consumption Tax, Daniel S. Goldberg

Faculty Scholarship

This report proposes replacing the income tax with an electronic, progressive consumption tax that couples a credit-method VAT (modified for wages) with a progressive wage tax. I have called this proposal e-VAT (a convenient contraction for an electronic value added tax), because it is based on a business-level-credit VAT and can be collected automatically and electronically at the point of sale.

The essential advantage of e-VAT over the Hall-Rabushka flat tax is that e-VAT’s use of a credit VAT as its foundation facilitates automatic and electronic collection of the tax. A credit VAT lends itself to electronic monitoring and auditing …

Cash Businesses And Tax Evasion, Susan C. Morse, Stewart Karlinsky, Joseph Bankman

Faculty Scholarship

No abstract provided.

Using Salience And Influence To Narrow The Tax Gap, Susan C. Morse

Faculty Scholarship

No abstract provided.

Deductions In A Proposed Calculation And Allocation Of Distributable Net Income To The Separate Shares Of A Trust Or Estate, Michael T. Yu

Faculty Scholarship

This article examines the treatment of certain deductions1" in the separate share regulations and discusses how the separate share regulations arguably provide two methods for calculating distributable net income (DNI) to be used in coordinating the income taxation of a trust or estate with separate shares and of the beneficiaries of such trust or estate. Specifically, this article analyzes how the two methods address the income taxation of a trust or estate with two separate shares in which one separate share has a net loss as to at least one type of income. Such loss, pursuant to the separate share …

The How And Why Of The New Public Corporation Tax Shelter Compliance Norm, Susan C. Morse

Faculty Scholarship

No abstract provided.

Reconsidering Private Foundation Investment Limitations, Richard L. Schmalbeck

Faculty Scholarship

No abstract provided.

Anatomy Of Valuing Stock In Closely Held Corporations: Pursuing The Phantom Of Objectivity Into The New Millennium, Stephen J. Leacock

Faculty Scholarship

No abstract provided.

What Can The Irs Compel Charities To Say To Donors, Alan L. Feld

Faculty Scholarship

The 1993 tax act created new substantiation and reporting requirements for charitable giving. One of the new provisions, section 6115, requires a charity to make specified disclosures to the donor. If the charity receives a "quid pro quo contribution" of more than $75 it must inform the donor that the amount of the charitable contribution excludes the value of goods or services the donor received. The charity must provide a good-faith estimate of the value of the goods or services. If the charity fails to comply, it may incur a penalty, section 6714, of $10 per contribution, but not more …

Tax Policy: The Chafee Bill- Trick Or Treat?, William T. Hutton

Faculty Scholarship

No abstract provided.

The Indivisible Tax Gift, Alan L. Feld

Faculty Scholarship

In Greene v. United States, the District Court for the Southern District of New York recently rewarded (with an income tax refund) the taxpayers' ingenuity in designing a charitable gift. The court did so, however, without discussion of a central issue in the case. Had it considered the nature of the gift more carefully, it might have denied or modified the claimed deduction.

Agricultural Preservation: Protesting The Application Of Revenue Ruling 78-384, William T. Hutton

Faculty Scholarship

No abstract provided.

Introduction To The Problems Of Acquiring Properties From Partnerships, Corporations, Estates, And Trusts, William T. Hutton

Faculty Scholarship

No abstract provided.

Unrequited Gifts: The Tax Fallout, William T. Hutton

Faculty Scholarship

No abstract provided.

To Praise The Estate Tax, Not To Bury It, Michael J. Graetz

Faculty Scholarship

For several decades, total revenues raised by estate and gift taxes have roughly equaled those raised by excise taxes on alcohol and tobacco. Yet no law journal has ever asked me to write on alcohol or tobacco excise taxes. The law firms of America do not routinely have divisions devoted to excise tax planning. We do not hear of the suffering of widows and orphans (or even of farmers and small businesses) because of alcohol and tobacco taxes. Philosophers and economists do not routinely debate the merits of such taxes. Perhaps most significantly, increases in such excise taxes do not …

Lifetime Gifts - A Quantitative Approach, Roger A. Pies, Daniel S. Goldberg

Faculty Scholarship

No abstract provided.

Carryover Basis: An Observation, An Irony, And A Proposal, Alan L. Feld

Faculty Scholarship

Alan L. Feld is a Boston University Law School professor and visiting professor at the University of Pennsylvania Law School. In this article Feld describes the changes in the treatment of capital gains transferred at death that were enacted in the Tax Reform Act of 1976. Feld notes that tax reformers would have preferred to tax capital gains at death but accepted the carryover basis provision as a second-best solution.

He reports that in the case of the very largest estates, the combined, effect of carryover basis and the lower estate tax rates results at most in a total estate …

Implications Of Minority Interest And Stock Restrictions In Valuing Closely-Held Shares, Alan L. Feld

Faculty Scholarship

The federal estate and gift taxes levy on the gratuitous transfer of wealth by both testamentary and lifetime disposition. The amount of the tax depends on the value placed on the property transferred by the decedent or donor. When the property transferred consists of shares of stock in a closely held corporation, there often exists no ready market to help in valuation. As a result, the value of the shares used to compute the federal estate or gift tax must be determined first by appraising the value of the enterprise, and then by allocating some portion of that value to …

Federal Estate And Gift Taxation, Robert Kramer

Faculty Scholarship

No abstract provided.

Federal Estate And Gift Taxation, Robert Kramer

Faculty Scholarship

No abstract provided.