Taxation-Federal Commons^™

Can Tax Expenditure Analysis Be Divorced From A Normative Tax Base?: A Critique Of The 'New Paradigm' And Its Denouement, J. Clifton Fleming Jr., Robert J. Peroni

Faculty Scholarship

Tax expenditure analysis (TEA) requires a baseline for identifying tax provisions that provide subsidies or incentives instead of serving to define the tax base and to implement the tax. With respect to the federal income tax, the baseline historically has been the Schanz-Haig-Simons (SHS) definition of income with a few modifications. Critics have continuously and strongly attacked TEA by characterizing the SHS baseline as unprincipled, imprecise, and insufficiently related to our hybrid income/consumption tax system as it actually exists. Since the baseline is hopelessly defective, so the critics argue, TEA is fatally dysfunctional and the results of its application to …

Tilted Versus Reasonable Interpretation Of Tax Law, Steve R. Johnson

Scholarly Publications

In part, Interpretation Matters is about the craft of advocacy, how statutory interpretation arguments can be effectively made – and effectively countered – in state and local tax cases. For example, when one’s opponent in such a case invokes one or another of the canons of construction, how is that canon to be blunted?

One strategy we often have explored is fighting fire with fire – that is, identifying and asserting another recognized canon that leads to an opposite conclusion. One of the most famous articles on statutory interpretation arrayed dozens of pairs of canons that seemingly contradict each other. …

Pro & Con: Should Congress Adopt A New Tax Credit For Buying A Home? Yes: No Recovery Is Possible If Homeowners Lose Their Homes, Jessica D. Gabel

Faculty Publications By Year

No abstract provided.

Intermountain And The Growing Importance Of Administrative Law In Tax Law, Steve R. Johnson

Scholarly Publications

On September 29, 2009, Treasury issued regulations retroactively extending the six-year limitations period for income tax deficiencies resulting from basis overstatements. In its May 6 Intermountain decision, the Tax Court unanimously invalidated those regulations, but on divided rationales. The government has appealed.

lntermountain is a must-read for tax academics and practitioners. It is among the richest decisions on the procedural and substantive validity of tax regulations. Moreover, the opinions in the case, subsequent cases on the issue, .and commentary on these opinions and cases present genuine opportunity for improvement of the law.

This report has five sections. Section I sketches …

The Redemption Puzzle, Reuven S. Avi-Yonah

Articles

After the adoption of partial integration in 2003, there has been only a modest rise in dividends, but a sixfold increase in redemptions. This article argues that the explanation for that lies in the different treatment of dividends and capital gains to foreign shareholders and that Congress should respond by making sections 302 and 304 inapplicable to foreign shareholders.

Morgens: More Qtip Mischief, Wendy G. Gerzog

All Faculty Scholarship

In Morgens, the court ruled in favor of the government that section 2035(b) applied to the gift taxes paid by the qualified terminable interest property (QTIP) trust beneficiaries to gross up the widow’s estate by that amount. Because the surviving (or donee) spouse must be taxed on the underlying property over which she has no ownership rights, Congress enacted section 2207A to allow the second spouse to recover from the beneficiaries of the property the transfer taxes relating to her gift or estate inclusion. However, the court held that section 2207A did not shift the gift tax liability to those …

Tax Court Invalidates New Section 6501(E) Regulations, Steve R. Johnson

Scholarly Publications

The title of an article of mine in the Fall 2009 issue of the NewsQuarterly asked “What’s Next in the Section 6501(e) Overstated Basis Controversy?” The Tax Court answered that question on May 6, 2010, in its decision Intermountain Insurance Service of Vail, LLC v. Commissioner, 134 T.C. No. 11. In that decision, the court invalidated two temporary regulations that had been issued on September 24, 2009: sections 301.6229(c)(2)-IT and 301.6501(e)-IT.

Flp In The Black, Wendy G. Gerzog

All Faculty Scholarship

In Estate of Black, because the Tax Court held the Blacks' transfers fell within the bona fide sales exception of section 2036, they were successful at avoiding the application of the provision. Thus, they were able to obtain valuation discounts for their transfers of property (mostly marketable securities) to their son and grandchildren. The court also decided the marital trust funding valuation date issue in the executor's favor and allowed almost half of the claimed administrative expense deductions.

An Irs Duty Of Consistency: The Failure Of Common Law Making And A Proposed Statutory Solution, Steve R. Johnson

Scholarly Publications

The IRS should endeavor to treat similarly-situated taxpayers similarly, but does this aspiration rise to the level of a judicially enforceable duty? If the IRS takes a position on Taxpayer B that is correct under the law but is inconsistent with a position the IRS took on similarly-situated Taxpayer A, should the IRS’s position on Taxpayer B fail simply because of the inconsistency? These questions implicate important themes, such as fairness, the rule of law, separation of powers, administrative exigencies, the role of common law making in a highly positivistic system, and the sustainability of legal regimes.

A constitutional standard …

The Key To Closing The Tax Gap: Understanding, Susan Striz

West Virginia Law Review

No abstract provided.

What Are We - Laborers, Factories, Or Spare Parts? The Tax Treatment Of Transfers Of Human Body Materials, Lisa Milot

Scholarly Works

Transfers of human body materials are ubiquitous. From surrogacy arrangements, to sales of eggs, sperm and plasma to clinics, to black markets for kidneys, to pleas for donations of body materials, these transfers are covered and debated daily in popular and academic discourse. The associated philosophical and legal issues have been explored by a wide range of commentators. The appropriate tax treatment of these transactions, however, is mostly unexamined.

Current law is unclear about what the tax consequences of these transfers are. There are no statutory provisions directly on point, Internal Revenue Service guidance is outdated and conflicting, and the …

The Case Against Taxing Citizens, Reuven S. Avi-Yonah

Law & Economics Working Papers

The US is the only developed country to tax citizens living permanently overseas on their worldwide income. This rule was created at a time when the income tax applied only to the rich and when some of the rich moved overseas to avoid the draft. We do not have a draft any more, the income tax applies to the middle class, and many more US citizens live permanently overseas for non-tax reasons. In a globalized world, citizenship-based taxation is an anachronism which should be abandoned.

Xilinx Revisited, Reuven S. Avi-Yonah

Articles

On March 22 the Ninth Circuit released its new opinion in Xilinx v. Commissioner, Doc 2010-6163, 2010 WTD 55-42. 1 As has been expected since the panel withdrew its original opinion, it reversed itself and in a 2-1 opinion held for the taxpayer. The opinion makes it pretty clear why the reversal occurred. It was the result of concentrated pressure by the international tax community and the fact that the government was unwilling to defend the theory on which the panel originally decided the case: that the arm’s-length standard of the section 482 regulations does not apply to cost sharing. …

Check-The-Box Regs And Gift Tax Discounts, Wendy G. Gerzog

All Faculty Scholarship

This article discusses the recent Tax Court decision in Pierre and the effect for gift tax purposes of an entity’s classification made under the check-the-box regulations. The court was split on what those regulations mean when they state that an entity is to be disregarded ‘‘for federal tax purposes.’’

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 …

California Women: Trying To Use Federal Taxes To Put The 'Community' In Community Property, Stephanie H. Mcmahon

Faculty Articles and Other Publications

Community property is thought to be a more equitable marital property regime than the common law because we assume that providing each spouse with an interest in fifty percent of the family’s income also provides a substantial amount of equality between spouses. Historically, however, as the regime operated in the United States, it was not especially favorable to wives. Although the concept implied a partnership between spouses, in practice wives were denied rights a partner would expect to enjoy. This article examines how women lobbied to enlarge the protection California wives enjoyed under the state’s community property regime in the …

Tax Shelters: Up Off The Canvas?, Steve R. Johnson

Scholarly Publications

Recently, taxpayers prevailed at trial in two federal tax shelter cases: TIFD III-E Inc. v. United States, 2009 WL 3208650 (D. Conn. Oct. 7, 2009) (“Castle Harbour III”) and Consolidated Edison Co. v. United States, 2009 WL 3418533 (Fed. Cl. Oct. 21, 2009) (“Con Ed”). Doing full justice to these cases would require detailed descriptions of their facts, the arguments presented and the rationales in the opinions. I leave this work to the inevitable parsing and spinning in briefs in tax shelter cases to come and to more length commentary. See, e.g., Lee A. Sheppard, Con Ed’s Night of the …

Running From The United States Treasury: The Need To Reform The Taxation Of Multinational Corporations, 43 J. Marshall L. Rev. 1041 (2010), Jennifer Barton

UIC Law Review

No abstract provided.

Avoiding Misuse Of Donor Advised Funds, Michael J. Hussey

Cleveland State Law Review

This Article presents a proposal for further modifying donor advised funds to retain most of their hallmark flexibility and ease of use while drawing them into line with other charitable giving vehicles that put contributed funds to use for active charitable purposes. This Article argues that using individual retirement accounts as an underlying legal model for donor advised funds will address Congress's concerns regarding the appropriateness of the income tax deductions for contributions to donor advised funds while allowing donor advised funds to retain much of their hallmark flexibility and ease of operation.

Taking The Good With The Bad: Recognizing The Negative Externalities Created By Charities And Their Implications For The Charitable Deduction, Shannon Weeks Mccormack

Articles

The tax code allows taxpayers to deduct amounts donated to an extremely broad variety of organizations deemed to create societal benefits — that is, positive externalities. But many organizations that may receive tax-deductible contributions also cause harms. Both the tax code and subsidy theory, one of the most utilized scholarly theories developed to analyze the deduction from an economic and morally neutral perspective, fail to properly account for these negative externalities. In order to do so, one needs to look beyond the economic models utilized by subsidy theorists. For instance, there should be some limit to the types of harms …

The Times They Are Not A-Changin': Reforming The Charitable Split-Interest Rules (Again), Wendy G. Gerzog

All Faculty Scholarship

The article reviews the history of the tax treatment of charitable split interest gifts, explains the inequities that Congress both cured and generated in its 1969 reforms, and proposes solutions that are consistent with the goals of the 1969 legislation. The article discusses variations in the 1969 definition of a charitable split interest, which, because of the enacted statutory language, applies in instances where there is no abuse potential. The inequity produced by that definition penalizes the donor and flouts the rationale behind the 1969 legislation. By contrast, the creation of some required statutory forms of charitable split interests in …

The Politics And Psychology Of Gasoline Taxes: An Empirical Study, Shi-Ling Hsu

Scholarly Publications

Economists are beginning to form a consensus that a carbon tax is the most effective and cost-effective way to reduce global greenhouse gas emissions. The insight of economists and other policy analysts is that, in the greenhouse gas context, the design of cap-and-trade programs creates so many opportunities for rent-seeking that they may not be very cost-effective, and may not reduce greenhouse gas emissions at all. Carbon tax proposals are appealing because they are so simple and sensible that rent-seeking would have to be very audacious to succeed.

Carbon tax proposals, however, have divided economists from almost everybody else. In …

Excessive Executive Compensation: Prior Federal Attempts To Curb Perceived Abuses, 10 Hous. Bus. & Tax L.J. 196 (2010), Kathryn J. Kennedy

UIC Law Open Access Faculty Scholarship

No abstract provided.

Human Capital And Transfer Taxation, Kerry A. Ryan

Oklahoma Law Review

No abstract provided.

For The Love Of The Game: The Justification For Tax Exemption In Intercollegiate Athletics, 44 J. Marshall L. Rev. 179 (2010), Andrew D. Appleby

UIC Law Review

No abstract provided.

Recent Developments In Federal Income Taxation: The Year 2009, Martin J. Mcmahon Jr., Ira B. Shepard, Daniel L. Simmons

UF Law Faculty Publications

This article discusses, and provides context to understand the significance of, the most important judicial decisions and administrative rulings and regulations promulgated by the Internal Revenue Service and Treasury Department during 2008 – and sometimes a little farther back in time if the authors find the item particularly humorous or outrageous. Most Treasury Regulations, however, are so complex that they cannot be discussed in detail and, anyway, only a devout masochist would read them all the way through; just the basic topic and fundamental principles are highlighted. Amendments to the Internal Revenue Code generally are discussed to the extent that …

Question Of Purpose: Early Retirement Payments To Tenured Professors Constitute Wages Subject To Fica Taxation, Stephen Scott Wick

Cleveland State Law Review

Currently, there is a circuit split on the issue of whether early retirement payments (ERPs) made to tenured faculty constitute wages subject to Federal Insurance Contribution Act (FICA) taxation. In North Dakota State University v. United States, the Eighth Circuit held that ERPs made to tenured faculty do not constitute FICA wages because such payments are made to purchase the constitutionally protected property interest that tenured faculty hold in their tenure rights. However, the Sixth and Third Circuits, in Appoloni v. United States and University of Pittsburgh v. United States respectively, held that such payments do constitute FICA wages because …

Where Credit Is Due: Advantages Of The Credit-Invoice Method For A Partial Replacement Vat, Itai Grinberg

Georgetown Law Faculty Publications and Other Works

If a value-added tax (VAT) were chosen to supplement or replace some portion of the revenue from the income tax, a choice would likely be made between the credit-invoice method and the subtraction-method for calculating VAT liability. Credit-invoice method VATs and subtraction-method VATs are, at a conceptual level, very similar taxes. The key substantive difference between most subtraction-method VAT proposals and extant credit-invoice method VATs is that subtraction-method VAT proposals generally do not impose an invoice requirement. The invoice requirement substantially reduces tax avoidance opportunities in the VAT, and also ensures the ability to provide appropriate treatment for exports while …

Of Coase, Calabresi, And Optimal Tax Liability, Kyle D. Logue, Joel Slemrod

Articles

The Article proceeds as follows. Part II offers a primer on the Coase Theorem, beginning with the classic case of neighbor externalizing on neighbor (farmer and rancher), and it explains the basic invariance propositions. Part III shifts the focus to Coasean situations involving buyers and sellers in a market or contractual relationship, buyers and sellers whose market interactions cause harm to third parties. Using supply-and-demand diagrams, we illustrate (in a new way) some of the most basic findings of the economic analysis of law, including both the Coasean invariance and efficiency propositions and the Calabresian least-cost avoider idea. Also in …

The Misuse Of Textualism: A Further Reply To Prof. Kahn, Stephen B. Cohen

Georgetown Law Faculty Publications and Other Works

Because readers have already endured four articles, two by me and two by Prof. Douglas A. Kahn, debating the meaning of section 67(e)(1), I am reluctant to respond to Prof. Kahn’s rejoinder, which appeared in the January 18 issue of Tax Notes. Nevertheless, our disagreement implicates the judicial craft of two U.S. Supreme Court members, Chief Justice John Roberts and Justice Sonia Sotomayor. I therefore feel it important to answer Prof. Kahn’s latest contentions, recognizing my duty to be as brief as possible.