Tax Law Commons^™

Limitation On Benefits Or Principal Purpose Test? Part 1, Reuven S. Avi-Yonah

Articles

An interesting recent column by Tax Notes’ Lee Sheppard criticizes the principal purpose test (PPT) that was adopted as a minimum standard in the OECD’s base erosion and profit-shifting project 1.0 and has since been incorporated into many tax treaties through the multilateral instrument. Sheppard explains:

Readers will recall that BEPS 1.0 had a set of minimum standards for participating countries, one of which was a treaty amendment to cement the purpose of the treaty to prevent both double taxation and double nontaxation. Participants could choose between a seemingly simple, subjective principal purpose test (PPT) and a complicated but objective …

Crypto Losses, Xuan-Thao Nguyen, Jeffrey A. Maine

Articles

The crypto industry has been hit hard with various market forces and scams, leaving investors with trillion-dollar losses in recent years. The appropriate tax treatment of such losses has yet to be fully examined, as there is scant guidance and a dearth of academic literature on the subject. This Article attempts to fill this gap by applying general tax principles to crypto losses and making several recommendations to improve the clarity and consistency of tax results. It explores various theories of crypto loss “realization” (including theft, abandonment, and worthlessness), highlighting where additional guidance is needed. And it considers appropriate legislative …

Has Cost Sharing Outlived Its Usefulness?, Reuven S. Avi-Yonah

Articles

In her thoughtful column on cost sharing, Mindy Herzfeld explains the history of costsharing arrangements (CSAs) going all the way back to 1966, and then asks several questions, including: “Should the existing CSA regs be scrapped in favor of another regime, or simply eliminated as a choice for taxpayers?”

Pillar 2 And Specific Benefits For Multinationals, Reuven S. Avi-Yonah

Articles

In a recent column, Tax Notes’ Martin Sullivan asked whether a country that wishes to neutralize the effect of pillar 2 on its investment incentives can get around the OECD prohibition on a multinational enterprise receiving what amounts to a refund of the pillar 2 tax it pays to that country. He writes that:

It would make a mockery of the pillar 2 taxation system if an investment hub imposed a 15 percent minimum tax on a company — thereby shielding profit in that hub from other jurisdictions’ pillar 2 tax — and then, through a separate mechanism, unconditionally returned …

Preventing Inversions, Reuven S. Avi-Yonah

Articles

Inversions (transactions in which a U.S. parent corporation becomes a subsidiary of a foreign corporation, but the headquarters remain in the United States) were a major focus of tax policy before the Tax Cuts and Jobs Act.1 There have been no inversions since the TCJA, but that is more a result of the current rate structure. If the corporate tax rate is increased, inversions may come back, and the time to act to prevent that is now.

The Court Of Justice Kicks Around The Dichotomy Between Data Protection And Competition Law Case Comment Of The Preliminary Ruling In Case C-252/21 Meta Platforms V. Bundeskartellamt, Alba Ribera Martínez

Yearbook of Antitrust and Regulatory Studies

Data protection and competition law have been at a crossroads in terms of their integration. Antitrust authorities as well as data protection supervisory authorities have grappled with the question of whether both fields of law should be combined into the same analysis. The German competition authority, the Bundeskartellamt, was the first to fuse them in its landmark case against Facebook’s data processing terms and conditions. The exploitative theory of harm put forward by the German NCA is the first of its kind to integrate data protection considerations into the antitrust analysis, namely by drawing a line between an infringement with …

Should Large Corporate Mergers Be Subsidized?, Reuven S. Avi-Yonah

Articles

On March 21 Sens. Sheldon Whitehouse, DR. I., and J.D. Vance, R-Ohio, introduced the Stop Subsidizing Giant Mergers Act. They explained that large mergers have been increasing in recent years and that since 2007, up to 40 percent by value of all mergers have been structured as tax free. They argue that the tax breaks to mergers are a “wasteful subsidy.”

Taxation Of Information And The Data Revolution, Yariv Brauner

UF Law Faculty Publications

Existing and universal income tax rules are inherently incompatible with an economy in which information-based transactions play a significant role. This Article contends that income taxation is incapable of taxing information effectively. It goes on to argue that this incapability currently necessitates reform, and it offers three viable paths to such reform: consumption taxation, data taxes, and formulary taxation. The Article concludes that formulary taxation is currently the most desirable and plausible path to effective reform, owing to its promise to best stabilize and maintain the legitimacy of the international tax regime.

Australia’S Definition Of Royalties: Overreach Or Evolution, Vincent Ooi, Kerrie Sadiq

Research Collection Yong Pung How School Of Law

In this article, Ooi and Sadiq examine the Australian Taxation Office’s reasoning for adopting a broad interpretation of royalties amidst various criticisms suggesting it has gone too far and is out of step with internationally accepted principles.

Death, Taxes, And Clean Energy: How The Inflation Reduction Act Harnesses Tax Law To Revitalize American Clean Energy, James A. Ferguson

The Journal of Business, Entrepreneurship & the Law

This article explores the nature and impact of the IRA’s historic tax reform on U.S. clean energy markets, emphasizing its significance for businesses, American workers, the global community, and the climate. It begins with an overview of federal tax credits for clean energy, comparing German and American approaches to incentivizing clean energy investments. The article then details five key provisions of the IRA, including extensions of the ITC and PTC, creation of new credits, transferability of tax credits, prevailing wage and apprenticeship requirements, and additional tax credits for domestic content and siting. It further analyzes the IRA’s practical implications for …

United Nations: Will It Take The Road ‘Less Traveled’ In International Taxation?, Ashrita Prasad Kotha

Popular Media

Excerpt:

"We are amid what promises to be a significant moment in international tax law. Recently, an ad hoc committee of experts held extensive meetings in New York to draft the terms of reference for future work on international tax cooperation. The work responds to the UN General Assembly Resolution 78/230 passed in December 2023 which steers the path for UN to work towards a fully inclusive and effective international tax cooperation. The UN General Assembly Resolution was prompted by a resolution tabled by the representative of Nigeria on behalf of the African Group of countries.

[...]This ad hoc committee …

Are Exit Taxes Discriminatory?, Reuven S. Avi-Yonah

Articles

In a recent column, Tax Notes’ Robert Goulder analyzed case law in Europe on the constitutionality of exit taxes. Many EU member states impose exit taxes on individual residents who move to lower-tax jurisdictions, but the Court of Justice of the European Union has repeatedly struck them down as inconsistent with freedom of movement unless they allow for deferral until realization or death with no interest charge, which is equivalent to having no exit tax at all. Goulder cogently argues that this issue is similar to the Moore problem in the United States, especially since the U.S. exit tax on …

Tax Law Analysis, Bradley T. Borden

Brooklyn Journal of Corporate, Financial & Commercial Law

Tax law has a unique analytical framework, which the nature of tax law requires. In areas of uncertainty, advisors and taxpayers are unable to determine the outcome of some reporting positions. If a taxpayer takes a reporting position that results in the taxpayer paying less tax at the time a tax return is filed, the taxpayer runs the risk of being required to pay tax later upon an IRS audit. Congress recognizes that there are areas of uncertainty in tax law and only imposes penalties if the authority supporting a reporting position is weak. To determine the strength of a …

The Section 1031 Qualified-Use Requirement, Bradley T. Borden

Brooklyn Journal of Corporate, Financial & Commercial Law

Section 1031 allows owners of real property to dispose of their property and acquire replacement real property tax-free, and it is one of the most widely used transactional-planning provisions in federal tax law. With the variation in size of the transaction to which section 1031 applies comes varying levels of advice available to property owners. The significant variation in advice that property owners receive affects the actions that they take with respect to their property. Such variation appears to be most pronounced with respect to section 1031 exchanges that occur in proximity to business transactions (i.e., contributions to and distributions …

The Section 1031 Exchange Requirement, Bradley T. Borden

Brooklyn Journal of Corporate, Financial & Commercial Law

Section 1031 is the most widely used transactional tax-planning tool in federal income tax law. It allows owners of real property to transfer their property and acquire like-kind real property without recognizing taxable gain. Yet one of its most fundamental elements—the exchange requirement—remains under-analyzed and widely misunderstood, with costly consequences to untold numbers of taxpayers every year. Inaccurate information regarding the exchange requirement is disseminated to property owners by advisors and exchange professionals, causing property owners to forego business and transactional opportunities. Other property owners pay for costly transactional planning at the urging of advisors who misunderstand the exchange requirement. …

Tax Law Analysis Applied To Section 1031 Exchanges & Proximate Business Transactions, Bradley T. Borden

Brooklyn Journal of Corporate, Financial & Commercial Law

The popularity of nonrecognition of gain under section 1031 of the Internal Revenue Code attracts advisors from several corners of the real estate industry, including real estate attorneys; real estate professionals, such as brokers; section 1031 qualified intermediaries; and tax advisors. The varying degrees of professional training often results in advice varying from one advisor to the next. Nowhere is this more apparent than with respect to so-called “drop-and-swap” and “swap-and-drop” transactions. Some advisors claim that property owners must hold property for a specific period of time before or after an exchange to qualify for section 1031 nonrecognition. Others advise …

Ticnerships, Bradley T. Borden

Brooklyn Journal of Corporate, Financial & Commercial Law

Tenancy-in-common (TIC) ownership has been around for centuries, but the commercial use of TIC ownership of real property has accelerated over the last couple of decades. The impetus for TIC ownership of real property is twofold: (1) a desire property owners have to obtain the tax benefits of section 1031 of the Internal Revenue Code and (2) the desire property owners have to own property with other property owners and other professional managers and developers. Because section 1031 only applies to exchanges of real property, interests in partnerships and LLCs—the most common type of real property ownership—do not qualify for …

Digital Barter Taxes: A Legal Defense, Young Ran (Christine) Kim, Darien Shanske

Articles

This short essay, aimed at state legislators, defends digital barter taxes from the most common legal objections.

The Administrative Procedure Act Problem Reconsidered, Reuven S. Avi-Yonah

Articles

Tax Notes contributing editor Ryan Finley’s excellent article on the 3M case1 and the Administrative Procedure Act provides an opportunity to reconsider the damage done to tax law by taxpayers constantly invoking the APA to invalidate regulations or IRS notices.

Dol Fiduciary Rule 3.0 Strikeout, Base Knock, Or Home Run?, Antolin Reiber

DePaul Business & Commercial Law Journal

No abstract provided.