Tax Law Commons^™

Business-Entity Charitable Workarounds, Karen Burke

UF Law Faculty Publications

In 2017 Congress enacted a controversial $10,000 cap on individual deductions for state and local taxes. States initially responded by enacting charitable workarounds which invited individual taxpayers to convert capped § 164 deductions for state income taxes into uncapped § 170 deductions for contributions to charitable organizations in exchange for state income tax credits that reduced or eliminated state tax liability. Final regulations under § 170 shut down the tax shelter by treating state tax credits received in exchange for charitable payments as a quid pro quo, reducing or eliminating any charitable deduction. In 2020, acceding to pressure from business …

Background And Implications Of China's Central Bank Digital Currency: E-Cny, Jiaying Jiang, Karman Lucero

UF Law Faculty Publications

The People’s Republic of China is a leading experimenter in central bank digital currencies (CBDCs). This Article explores the current background, deployment, features, potential impacts, challenges, and legal concerns of China’s CBDC: the electronic yuan, or E-CNY. This Article explains the potential significance of what is known and not known about E-CNY with a particular focus on how E-CNY might fit into existing legal and economic systems, both within China and internationally. On the surface, E-CNY looks transformative. When you dig a little deeper, however, most of the potential changes or transformations turn on broader institutional, political, and legal changes …

Stepping Up Basis In Living Taxpayer Assets With Upstream Wealth Transfers Through Intentionally Defective Grantor Trusts, Michael J. Schaum

St. Thomas Law Review

This paper will begin with a brief background discussion on the tax and estate planning principles underlying the legality of the wealth transfer including (A) the Taxable Gross Estate; (B) the Unified Tax Credit against the Estate and Gift Tax; (C) Basis and Adjustments; (D) Defective Grantor Trusts; and (E) Downstream Sale Combined with a Grantor Trust. The paper will then discuss the absence of guidance from the IRS on the legality of these trust structures and finally conclude that the IRS should allow wealth preservation through the transactions described herein because the current Code, properly construed, allows for it.

The Digital Transformation Of Tax Systems Progress, Pitfalls, And Protection In A Danish Context, Louise Blichfeldt Fjord, Peter K. Schmidt

Indiana Journal of Global Legal Studies

The authors examine possibilities and challenges in using digital tools to obtain tax simplification and to improve tax assessment, collection, and transparency. Hence, the main objectives of the article are, from a legal perspective, to shed additional light on the relations between tax administrations and taxpayers in an increasingly digitalized world and to discuss how this development may influence taxpayers’ rights and the overall efficiency of tax systems. In doing so, practical experiences—incurred in Denmark during its journey from a paper-based and manual tax administration process toward a more digitalized one— are analyzed. Against this background, it is concluded that …

Judicial Line Drawing And Implications For Tax Avoidance, Ivan Ozai

Articles & Book Chapters

The choice between a bright line and a nuanced approach is one of the cornerstones of judicial law making. Yet the nature and implications of this choice remain to be fully understood. The term “bright line” is often used ambiguously to refer to two distinct line-drawing techniques. The first construal of the term refers to the variability in determining the circumstances that qualify the facts for the application of the law (the legal rule’s antecedent), where the choice ranges between a bright-line rule, characterized by simplicity and unambiguity, and a multifold rule, which involves a complex, multifactor analysis. The second …

Universal Forms Of Influence: Support For Women On Boards, Cindy A. Schipani, Paula J. Caproni

Seattle University Law Review

There are various efforts underway to increase gender diversity on corporate boards, including legislation in California, a recent SEC approved comply or explain rule for companies listed on the Nasdaq stock exchange, and efforts by institutional investors such as State Street and BlackRock to recognize the value diversity brings to corporate decisionmaking. Although some of these efforts are being contested in the courts, many companies have begun to comply with these initiatives.

This Article is organized as follows. Part I provides an overview of several efforts to increase gender diversity on boards along with numerous research studies showcasing the benefits …

“Statistics Are Human Beings With The Tears Wiped Away”: Utilizing Data To Develop Strategies To Reduce The Number Of Native Americans Who Go Missing, Lori Mcpherson, Sarah Blazucki

Seattle University Law Review

On New Year’s Eve night, 2019, sixteen-year-old Selena Shelley Faye Not Afraid attended a party in Billings, Montana, about fifty miles west of her home in Hardin, Montana, near the Crow Reservation. A junior at the local high school, she was active in her community. The party carried over until the next day, and she caught a ride back toward home with friends in a van the following afternoon. When the van stopped at an interstate rest stop, Selena got out but never made it back to the van. The friends reported her missing to the police and indicated they …

The Future Of The Corporate Form In Income Tax: A Case Study Of Canada, Jinyan Li

All Papers

A corporation is nothing but a piece of paper. And yet, this piece of paper enjoys the status of a person and has an independent identity as a taxpayer (the “separate entity principle”). It can generate tremendous value for its shareholders through tax savings resulted from tax deferral, tax shifting, and tax subsidies. Why does tax law allow such value to exist? Is there any hard line constraining the scope of the tax benefits associated with the corporate form? To what extent can the two pillars (Pillar One and Pillar Two) crush the corporate form? What is the future of …

Reforming The Exit Tax, Reuven S. Avi-Yonah

Articles

Code Sec. 877A was enacted in 2008 to impose a significant price on U.S. cit-izens who expatriate. But the price is not right. The quarterly data on expatri-ations (published in the Federal Register since 1998) show an increasing trendsince 2008. For example, 3,422 Americans expatriated in 2022, and the averagesince 2013 was 3,239. By comparison, between 1998 and 2012, fewer than1,000 Americans expatriated each year. This paper will discuss why the increasehappened and what Congress can do about it.

What Would Surrey Say? The Long Reach Of Stanley S. Surrey, Reuven Avi-Yonah, Nir Fishbien

Articles

Stanley S. Surrey died in 1984, two years before the enactment of the Tax Reform Act of 1986, which gave us the Internal Revenue Code of 1986 as amended. Historians have recently discovered Surrey’s work through his memoirs, published in 2022, and several articles based on the memoir and on the unpublished Surrey papers at Harvard Law School. There is no doubt that Surrey was a towering historical figure during his “Half-Century with the Internal Revenue Code.” As his protégé Donald Lubick, who served as Assistant Secretary for Tax Policy in both the Carter and the Clinton Administrations, stated, Surrey …

The Utpr And The Credits, Reuven S. Avi-Yonah

Articles

Critics of the UTPR (formerly known as the undertaxed payments rule) of the G-20/0ECD/ inclusive framework base erosion and profit shifting project's pillar 2 have focused on the potential impact of the top- up tax on U.S. environmental credits enacted in the Inflation Reduction Act(IRA, P.L.11 7-169) and on credits to encourage domestic chip manufacturing in the Creating Helpful Incentives to Produce Semiconductors and Science Act (the CHIPS Act, P .L. 117-167). They argue that Congress's ability to effectively implement its chosen policy goals is undermined because the UTPR - when applied to other parts of U.S. multinational enterprises - …

Pillar 2 And The Credits., Reuven S. Avi-Yonah

Articles

The international tax provisions of the Build Back Better Act (BBB) passed by the House of Representatives represent a reasonable compromise. They are consistent with the OECD’s Pillar Two statement, and they represent a significant move toward the implementation of the single tax principle (STP). In what follows, we will discuss the proposed changes and how they fit in with the new international tax regime (ITR). We will also address the possible interactions with the ITR if BBB is not enacted.

Introducing A Global Minimum Tax (Pillar Two) In Canada: Some Knowns And Unknowns, Jinyan Li

Articles & Book Chapters

This paper provides a high-level overview of Pillar Two Global Minimum Tax in terms of its policy objectives, technical design and implications for Canada. After teasing out some significant known and unknown challenges, it offers some thoughts on whether, and if so, how and when Canada can proceed with implementation.

Individual Mobility And The Corporate Tax, Reuven S. Avi-Yonah

Articles

The COVID-19 pandemic greatly increased the ability of individuals to move to their preferred location on the globe and continue to work remotely. This phenomenon has significant implications for individual income taxation because if they are U.S. citizens, these individuals are subject to two global residence-based tax regimes.

Standing On The Shoulders Of Llcs: The Tax Entity Status And Decentralized Autonomous Organizations, Samuel D. Brunson

Faculty Publications & Other Works

Since the formation of the first decentralized autonomous organization (DAO) in 2016, their use has exploded. Thousands of DAOs now try to take advantage of smart contracts to solve a problem that plagues business entities: the gulf between ownership and management. Armed with smart contracts and requiring token-holders to vote on any change in strategy, DAOs dispense with the management layer so necessary in traditional business entities. DAOs owe their existence to technology. Without blockchain, without cryptocurrency, and without smart contracts, there would be no DAOs. But they owe their explosiveness to something much more unexpected: Treasury regulations. In the …

Tax Law, Religion, And Justice: An Exploration Of Theological Reflections On Taxation. By Allen Calhoun, Samuel D. Brunson

Faculty Publications & Other Works

Since its inception, Congress has used the income tax to accomplish multiple divergent goals. Raising revenue for an expanding array of state functions has always been one critical goal, but has never been the only one. Among other things, Congress has consistently used the income tax to reduce economic inequality, both through progressive tax rates and through redistributive benefits. While these redistributive goals have always underlain the federal income tax, by the middle of the twentieth century, politicians and tax theorists began to view redistribution ambivalently. Concerns over the efficiency of the tax began to displace equitable concerns. Rather than …

Leave Your Conscience At The Court: Religious Tax Protest Before And After Rfra, Samuel D. Brunson

Faculty Publications & Other Works

In the 1970s and 1980s, a number of Americans objected, on religious grounds, to paying income taxes on the grounds that certain government spending violated their religious beliefs. These religious tax protestors largely came from two traditions: Catholics, who opposed government spending on abortion and Quakers, whose Peace Testimony prohibited them from paying taxes that funded war.

These First Amendment objections proved singularly unavailing. Courts consistently held that the Free Exercise Clause of the Constitution does not excuse tax payments, irrespective of the sincerity and ardor of a religious believer’s objections. This constitutional rule was fundamental and established enough that …

A More Capacious Concept Of Church, Samuel D. Brunson

Faculty Publications & Other Works

United States tax law provides churches with extra benefits and robust protection from IRS enforcement actions. Churches and religious organizations are automatically exempt from the income tax without needing to apply to be so recognized and without needing to file a tax return. Beyond that, churches are protected from audit by stringent procedures. There are good reasons to consider providing a distance between church and state, including the state tax authority. In many instances, Congress granted churches preferential tax treatment to try to avoid excess entanglement between church and state, though that preferential treatment often just shifts the locus of …

The Shifting Economic Allegiance Of Capital Gains, Amanda Parsons

Publications

Technological advances and the digitalization of the global economy have created an economic environment beyond the imagination of the original designers of the international tax system. Much scholarly attention has been paid to the question of how these economic transformations should affect which country is able to tax a multinational company's income. But which country should be able to tax capital gains income from the sale of that company's shares is an important and overlooked question.

This Article answers this question. It concludes that taxing authority over capital gains income must be reallocated to the countries in which companies conduct …

Canadian Qdmtt Challenges, Jinyan Li, Angelo Nikolakakis, Jean-Pierre Vidal

Articles & Book Chapters

Nobody believes that Canada is a tax haven. The fact remains that the effective tax rate of certain entities could be less than 15%. If nothing is done, Pillar Two could therefore apply and taxes that naturally accrue to Canada could end up in foreign hands. We must therefore find a solution and the most obvious is that of adopting a qualified domestic minimum top up tax. Other solutions are possible, but they seem less attractive. A QDMTT still presents some challenges. These challenges include sharing with the provinces, determining the priority to be given to certain foreign taxes relating …