Taxation-Federal Commons^™

Why The Corporate Amt Should Be Retained, Reuven S. Avi-Yonah

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The corporate AMT is under attack. Repeal has been proposed by the White House, endorsed by the ABA/AICPA/TEI tax simplification project, and included in the stimulus bill passed by the House of Representatives. Repeal is supported on two principal grounds: That the corporate AMT increases complexity, and that it is pro-cyclical.

The U.S. Treasury's Subpart F Report: Plus Ça Change, Plus C'Est La Même Chose?, Reuven S. Avi-Yonah

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On 29 December 2000, the U.S. Treasury Department released its long-awaited study of Subpart F, entitled “The Deferral of Income Earned through U.S. Controlled Foreign Corporations." This study was commenced in the aftermath of the controversy that ensued from the issuance and subsequent withdrawal of Notice 98-11. The study was originally expected to be issued in 1999 in response to the report published that year by the National Foreign Trade Council, which advocated significant changes in Subpart F. The Treasury Study’s delayed issuance at the end of the Clinton Administration means that it only has (at best) persuasive force for …

Making Sense Of U.S. International Taxation: Six Steps Toward Simplification, Reuven S. Avi-Yonah

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The Joint Committee on Taxation of the U.S. Congress issued a three-volume study in April 2001 entitled Study of the Overall State of the Federal Tax System and Recommendations for Simplification. Among the more than 100 recommendations of the Joint Committee Study, ten relate to international taxation. Of these, only one can be regarded as achieving significant simplification – the proposal to reduce the number of antideferral regimes from six to two. The other recommendations were limited to relatively minor changes of detail in various international provisions. Even these small steps toward simplifying the notoriously complex U.S. international tax …

Rulemaking, Michael Herz

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No abstract provided.

Tax Consequences Of Assigning Life Insurance - Time For Another Look, Douglas A. Kahn, Lawrence W. Waggoner

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The Taxpayer Relief Act of 1997 furnishes the courts and the Internal Revenue Service an opportunity to close certain loopholes in the federal tax consequences of assigning life insurance. About twenty years ago, we published an article arguing that the tax consequences of assigning life insurance affords taxpayers unwarranted opportunities for tax avoidance. Since then, developments in the case law and Internal Revenue Service rulings have broadened the loopholes. In the update of our article, we show how the new tax law supports our original position.

Toward A Tax-Based Explanation Of The Liability Insurance Crisis, Kyle D. Logue

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The so-called liability insurance crisis of 1985 and 1986 transformed the way we think about tort law and about liability insurance markets. The crisis phenomena, which first appeared in late 1984 and lasted until mid-1986, consisted of enormous increases in liability insurance premiums and alarming reductions in the availability of certain types of liability coverage. In the two principal liability lines of insurance (Other Liability and Medical Malpractice), premiums increased by hundreds (in some cases thousands) of percentage points in a matter of months. At the same time, the availability of liability insurance contracted sharply. The liability policies that were …

The American Dream In Legislation: The Role Of Popular Symbols In Wealth Tax Policy, William S. Blatt

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No abstract provided.

Tax Transitions, Opportunistic Retroactivity, And The Benefits Of Government Precommitment, Kyle D. Logue

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What if the current federal income tax laws were repealed and replaced with a simple flat tax? What if the entire Internal Revenue Code (with its graduated rates and countless deductions, exclusions, and credits) were scuttled in favor of a broad-based consumption tax? Only a few years ago, such proposals would have seemed radical and extremely unlikely to be adopted. But times are changing. Calls for a drastic overhaul of the Internal Revenue Code have become commonplace, even at the highest levels in the tax-policy community. In addition, proposals that would replace the income tax with a flat-rate broad-based consumption …

Tax Policy V. Revenue Policy: Qualified Plans, Tax Expenditures, And The Flat, Plan Level Tax, Edward A. Zelinsky

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No abstract provided.

Taxation Of Punitive Damages Obtained In A Personal Injury Claim, Douglas A. Kahn

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The author explains that in recent court opinions and commentaries concerning whether punitive damages are taxable, considerable weight has been given to a negative inference that appears to lurk in a 1989 amendment to the relevant code provision, section 104(a)(2). To the contrary, he argues, the legislative history of that amendment and the form that the bill had when it was reported out of the Conference Committee establish beyond doubt that no such inference is warranted.

James Madison And Public Choice At Gucci Gulch: A Procedural Defense Of Tax Expenditures And Tax Institutions, Edward A. Zelinsky

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Few academic doctrines can claim the intellectual and political success of tax expenditure analysis. In roughly a generation's time, Professor Surrey's procedural and substantive critique of tax subsidies has become entrenched in the law school curriculum and in legal scholarship. More impressively, the tax expenditure concept has been enshrined in federal law and become part of the daily discourse of the national budget process.

Tax Expenditure Budgets: A Critical View, Douglas A. Kahn, Jeffrey S. Lehman

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During the past few months, Tax Notes has featured an extended discussion about the "normalcy" (or lack thereof) of accelerated depreciation. Two contributions to that discussion came from Professor Calvin Johnson of the University of Texas Law School, who disagreed with certain aspects of an article that Professor Kahn wrote in 1979. And the debate shows no sign of slowing down. The interchange over the details of accelerated depreciation offers a useful backdrop against which to consider a more general issue: the intellectual coherence of the tax expenditure budgets. The larger concept of tax expenditures was what motivated Kahn to …

Tax Policy And Panda Bears, Douglas A. Kahn, Jeffrey S. Lehman

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In this article. Professors Kahn and Lehman argue that the concept of tax expenditure is flawed as a tool for measuring the propriety of tax provisions. It assumes the existence of on true and correct standard of federal income taxation that applies to all circumstances. To make that a assumption, the proponents of the concept implicitly make a particular moral claim about the relative importance of a wide range of values, including efficiency, consumption/savings neutrality, privacy, distributional equity, administrabiliy, charity, and pragmatism. They then measure a tax provision's "normalcy" exclusively by how it conforms to their Platonic concept of income. …

Lost On A One-Way Street: The Taxpayer's Ability To Disavow Form, William S. Blatt

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No abstract provided.

Federal Income Taxation And Community Property Law: The Case For Divorce, John A. Miller

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No abstract provided.

The Two Faces Of Tax Neutrality: Do They Interact Or Are They Mutually Exclusive?, Douglas A. Kahn

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The term "tax neutrality" refers to at least two quite different concepts. In its most common usage, tax neutrality refers to tax provisions that conform to an ideal tax system. A tax provision that is consistent with such an ideal system is described as "neutral." A tax provision that cannot be reconciled with the ideal system is sometimes referred to as a "tax expenditure" item. I will discuss tax expenditures later in this paper.

Should General Utilities Be Reinstated To Provide Partial Integration Of Corporate And Personal Income—Is Half A Loaf Better Than None?, Douglas A. Kahn

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The General Utilities doctrine is the name given to the now largely defunct tax rule that a corporation does not recognize a gain or a loss on making a liquidating or nonliquidating distribution of an appreciated or depreciated asset to its shareholders. The roots of the doctrine, can be traced to a regulation promulgated in 1919 that denied realization of gain or loss to a corporation when making a liquidating distribution of an asset in kind. No regulatory provision existed which specified the extent to which realization would or would not be triggered by a nonliquidating distribution such as a …

Efficiency And Income Taxes: The Rehabilitation Of Tax Incentives, Edward A. Zelinsky

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This Article explores two prominent issues in current legal literature: the propriety of tax incentives in the federal income tax and the use of economic analysis to examine questions of concern to academic lawyers. One premise of this Article is that there is a connection between these two topics.

The Federal Circuit's 1985 Tax Cases: The Exercise Of Equity, William S. Blatt

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No abstract provided.

Over The Back Fence: Tax Shelters And Other Sales Of Federal Income Tax Reductions, Thomas A. Robinson

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No abstract provided.

The Supreme Court's Misconstruction Of A Procedural Statute-A Critique Of The Court's Decision In Badaracco, Douglas A. Kahn

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When a taxpayer files an honest' federal income tax return for a taxable year, section 6501(a) of the Internal Revenue Code2 limits the period of time during which the Government can assess a tax for that year to a three-year period commencing with the date that the return was filed. The three-year limitations period is extended for an additional three years by section 6501(e)(1)(A) if the taxpayer's return omits properly includible gross income in an amount in excess of twenty-five percent of the gross income that was reported. If a taxpayer fails to file a return for a taxable year …

Disparate Tax Treatment Of Different Types Of Business Organizations: Where Should We Go From Here?, Douglas A. Kahn

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If several persons wish to join together in a common enterprise in order to pool their capital or labor or some of each, they may choose among a variety of available organizational structures that will serve that purpose. The most common entity forms are partnerships (including joint ventures), corporations, and trusts. While, in its typical structure, each of those entity forms has its own distinct characteristics, the structure of such organizations often is modified by agreement so as to adopt attributes of another type of entity. Because of this, the substantive distinction between entity types is blurred.

Tax Accrual Workpapers: Protected By A Limited Privilege?, Patricia D. White

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United States of America

v.

Arthur Young & Company and Amerada Hess Corporation

(Docket No. 82-687)

To be argued January 16, 1984

The Issuer's Paper: Property Or What? Zero Basis And Other Income Tax Mysteries, Elliott Manning

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No abstract provided.

Stock Redemptions: The Standards For Qualifying As A Purchase Under Section 302(B)., Douglas A. Kahn

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This Article discusses the requirements of section 302(b) for characterizing a stock redemption as a purchase rather than as a dividend equivalent. The focus is primarily on two issues: (1) whether the election authorized by section 302(c)(2) to waive family attribution rules should be available to an entity such as a trust or estate; and (2) the determination of the standards to be applied in resolving whether a redemption is "not essentially equivalent to a dividend" so that section 302(b)(1) is applicable.

Accelerated Depreciation Revisited—A Reply To Professor Blum, Douglas A. Kahn

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Professor Blum's comment addresses the proper or neutral tax treatment to be accorded three of the items discussed in my recent article on accelerated depreciation - namely, annuities, prepaid expenses, and exhaustible assets. Blum disputes my analysis in all three cases. While Blum's article is eminently readable, I do not believe that it refutes my earlier work to any extent. In this reply to Professor Blum, I will deal separately with each of the three items he examines. First, however, it is useful to consider the meaning of the term "tax neutrality" and to set forth my views as to …

Accelerated Depreciation—Tax Expenditure Or Proper Allowance For Measuring Net Income?, Douglas A. Kahn

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Since the 1950s, it has become fashionable to attack various provisions of the Internal Revenue Code by calling them "subsidies" rather than "proper" means of measuring taxable income. These "subsidies" through Code provisions have come to be referred to as "tax expenditures," a term coined by Professor Stanley Surrey in a speech he made as Assistant Secretary of the Treasury for Tax Policy on November 15, 1967. In that speech, Professor Surrey stated that our tax system often deliberately departs "from accepted concepts of net income," so that by granting exemptions, deductions, and credits that are not appropriate to an …

Federal Taxation Of The Assignment Of Life Insurance, Douglas A. Kahn, Lawrence W. Waggoner

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The most litigated estate tax issue concerning life insurance is whether the proceeds should be included in the insured's gross estate. This question usually is governed by section 2042 of the Internal Revenue Code of 1954, the estate tax provision directed specifically at life insurance. While the Tax Reform Act of 1976 wrought enormous changes in many areas of estate taxation, Congress did not change section 2042. Thus the several unresolved questions concerning the interpretation of that section remain unsettled. But the question of the includability of life insurance proceeds in the gross estate of the insured is not always …

Distributions In Kind And The Dividends Paid Deduction--Conflict In The Circuits, Dwight Drake

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The dividends paid deduction provided for in section 561 of the Internal Revenue Code is of vital importance to any corporation that is subject to the accumulated earnings tax or the personal holding company tax. Either of these taxes, if applicable, is imposed in addition to the federal income taxes otherwise payable by the corporation.

Since the accumulated earnings tax is substantial and the personal holding company tax is downright confiscatory, a corporation must do whatever is necessary legally to avoid paying these additional taxes. A corporation subject to either of the taxes generally can avoid them only by taking …

A Definition Of "Liabilities" In Code Sections 357 And 358(D), Douglas A. Kahn, Dale A. Oesterle

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Internal Revenue Code section 351(a) provides that no gain or loss shall be recognized if property is transferred to a corporation solely in exchange for its stock or securities and the transferors control the corporation immediately after the exchange. If, in addition to receiving stock or securities in an exchange that would otherwise qualify for section 351 treatment, a transferor receives other property or money -- "boot" -- any realized gain is recognized up to the amount of the money and the fair market value of the other property received. The transferee corporation's assumption of the transferor's liabilities or its …