TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, July 23, 2018

Henderson: The Legal Profession Is At An Inflection Point

Henderson 2William D. Henderson (Indiana), Legal Market Landscape Report (Commissioned by the California State Bar) (July 2018):

Executive Summary
Throughout the United States, legal regulators face a challenging environment in which the cost of traditional legal services is going up, access to legal services is going down, the growth rate of law firms is flat, and lawyers serving ordinary people are struggling to earn a living. The primary mechanism for regulating this market is lawyer ethics, including the historical prohibition on nonlawyer ownership of businesses engaged in the practice of law. However, private investors are increasingly pushing the boundaries of these rules by funding new technologies and service delivery models designed to solve many of the legal market’s most vexing problems.

There is ample evidence that the legal profession is divided into two segments, one serving individuals (PeopleLaw) and the other serving corporations (Organizational Clients). These two segments have very different economic drivers and are evolving in very different ways. Since the mid-1970s, the PeopleLaw sector has entered a period of decline characterized by fewer paying clients and shrinking lawyer income. Recent government statistics reveal that the PeopleLaw sector shrank by nearly $7 billion (10.2%) between 2007 and 2012. Throughout this period, the number of self-represented parties in state court continued to climb. 

Figure 5

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July 23, 2018 in Legal Education | Permalink | Comments (0)

Lesson From The Tax Court: Origin Of The Claim Test For §162

Tax Court (2017)Last week’s post involved taxpayers whose tax troubles arose from events related to the Great Recession. Those troubles resulted in litigation and a lesson about how the Tax Court applies an “origin of the claim” test in evaluating claimed §104(a)(2) exclusions.

This week’s post also involves a taxpayer whose life took a downturn during the Great Recession. Only this week we look at the more traditional application of the “origin of the claim” test when taxpayers seek to deduct litigation expenses. In Sky M. Lucas v. Commissioner, T.C. Mem.o 2018-80 (June 11, 2018) the IRS sent Mr. Lucas an NOD asserting a tax deficiency of $1.7 million for 2010. Part of that deficiency was due to the disallowance of about $3 million in legal and professional fees related to Mr. Lucas’ divorce litigation.  The multi-year litigation was a fight over some $47 million.  No wonder it was expensive. In the end, Mr. Lucas got to keep most of that.  Mr. Lucas thought he could deduct his litigation costs.  For a great lesson in how the Tax Court applied the origin of the claim test to deny him the deduction, see below the fold.

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July 23, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (0)

Last Week's Ten Most Popular TaxProf Blog Posts

TaxProf Blog Weekend Roundup

Sunday, July 22, 2018

Blockchain For Law Students

Walter A. Effross (American), Blockchain For Law Students:

Why should law students become familiar with blockchain technology?

As a law professor, I know that the most popular faculty recommendations for new law students are: guides to studying, exam-taking, and career success; biographies of lawyers and judges; novels like “To Kill a Mockingbird” and “Billy Budd”; surveys of American legal history; and discussions of current social concerns.

But the graduation gifts that I sent in May to a friend’s law school-bound daughter included two other items: New York Court of Appeals Judge (and future Supreme Court Justice) Benjamin Cardozo’s commencement speech, “The Game of Law and Its Prizes,” and an introductory book on blockchain.

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July 22, 2018 in Legal Education | Permalink | Comments (2)

The Geometry Of Wealth: How To Shape A Life Of Money And Meaning

Geometry of WealthBrian Portnoy, The Geometry of Wealth: How To Shape A Life Of Money And Meaning (2018):

In The Geometry of Wealth, behavioral finance expert Brian Portnoy delivers an inspired answer based on the idea that wealth, truly defined, is funded contentment. It is the ability to underwrite a meaningful life. This stands in stark contrast to angling to become rich, which is usually an unsatisfying treadmill.

At the heart of this groundbreaking perspective,Portnoy takes readers on a journey toward wealth, informed by disciplines ranging from ancient history to modern neuroscience. He contends that tackling the big questions about a joyful life and tending to financial decisions are complementary, not separate, tasks.

These big questions include:

  • How is the human brain wired for two distinct experiences of happiness? And why can money"buy" one but not the other?
  • Are the touchstones of a meaningful life affordable?
  • Why is market savvy among the least important sources of wealth but self-awareness is among the most?
  • Can we strike a balance between pushing for more and being content with enough?

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July 22, 2018 in Book Club, Legal Education, Tax | Permalink | Comments (0)

22 Tax Profs File Amicus Brief: The Section 107 Housing Allowance For 'Ministers Of The Gospel' Violates The First Amendment's Establishment Clause

Ellen Aprill (Loyola-L.A.), Reuven Avi-Yonnah (Michigan), Linda Beale (Wayne State), Samuel Brunson (Loyola-Chicago), Neil Buchanan (George Washington), Patricia Cain (Santa Clara), Adam Chodorow (Arizona State), Mark Cochran (St. Mary's), Bridget Crawford (Pace), Jonathan Forman (Oregon), Gregory Germaine (Syracuse), David Herzig (Valparaiso), Benjamin Leff (American), William Lyons (Nebraska), Roberta Mann (Oregon), Lori McMillan (Washburn), Joel Newman (Wake Forest), Henry Ordower (St. Louis), Katherine Pratt (Loyola-L.A.), Daniel Schaffa (Richmond), Erin Scharff (Arizona State) & Theodore Seto (Loyola-L.A.), Amicus Curiae Brief of Tax Law Professors in Support of Appellees (Gaylor v. Mnuchin, Nos. 18-1277 & 18-1280, 7th Cir. :

Section 107 allows “ministers of the gospel” to exclude the value of housing benefits from income, whether provided in-kind or as a cash allowance, at a cost of approximately $9.3 billion in forgone taxes over a ten-year window. The trial court dismissed the challenge to Section 107(1), which excludes in-kind housing, on standing grounds, but that section remains relevant to the analysis of Section 107(2). Supporters argue that Section 107(2), which excludes cash allowances, comports with the First Amendment’s Establishment Clause because (1) it is part of a broad policy expressed in a number of provisions that exempts housing provided for the convenience of the employer and (2) tax exemptions do not subsidize religious actors. Alternately, they argue that Section 107(2) is permitted as an accommodation for religion because it equalizes treatment of different religious groups and avoids church/state entanglement. Finally, they claim that eliminating Section 107(2) would imperil other exemptions.

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July 22, 2018 in New Cases, Scholarship, Tax | Permalink | Comments (2)

The Top Five New Tax Papers

SSRN Logo (2018)There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #4 and #5:

  1. [319 Downloads]  Introduction to Tax Policy Theory, by Allison Christians (McGill)
  2. [246 Downloads]   The International Provisions of the TCJA: A Preliminary Summary and Assessment, by Reuven Avi-Yonah (Michigan)
  3. [173 Downloads]   Rethinking Legal Taxonomies for the Gig Economy: Tax Law, Employment Law, and Economic Incentives, by Abi Adams, Judith Freedman & Jeremias Prassl (Oxford)
  4. [155 Downloads]   U.S. Tax Reform: Potential Impact on Europe and EU Corporations (Presentation Slides), by Reuven Avi-Yonah (Michigan)
  5. [147 Downloads]   Recent Developments in Federal Income Taxation: The Year 2017, by Bruce McGovern (South Texas) & Cassady Brewer (Georgia State)

July 22, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, July 21, 2018

Field: Tax Opinions And Probability Theory — Lessons From Donald Trump

Heather M. Field (UC-Hastings), Tax Opinions & Probability Theory: Lessons from Donald Trump, 156 Tax Notes 61 (July 3, 2017):

This report uses tax opinions rendered to Donald Trump’s enterprises in the early 1990s as a case study for examining the relevance of probability theory in multi-issue opinions in which each tax position must be correct for the desired benefits to be achieved. This report also makes recommendations for incorporating probability theory into tax opinion practice.

July 21, 2018 in Scholarship, Tax | Permalink | Comments (1)

NYU Is 22nd Law School To Accept GRE For Admissions

GRENYU is the 22nd law school to accept the GRE (joining Arizona, Brooklyn, BYU, Cardozo, Chicago Kent, Columbia, Cornell, Florida State, Georgetown, Harvard, Hawaii, John Marshall (Chicago), Northwestern, Pace, PennSt. John's, Texas A&M, UCLA, USCWake Forest, and Washington University). Two law schools allow the GRE in limited circumstances: Chicago (admissions committee may grant LSAT waiver) and Georgia (students enrolled in a dual degree program at the university). (George Washington has rescinded its use of the GRE because it has not done a school-specific validation study.)

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July 21, 2018 in Legal Education | Permalink | Comments (0)

Tax Probe Of Trump Foundation Faces High Bar For Criminal Charges

Wall Street Journal, Tax Probe of Trump Foundation Faces High Bar for Criminal Charges, Experts Say:

New York state is investigating whether the Donald J. Trump Foundation violated tax laws, according to a senior Cuomo administration official, and legal experts say the bar for any resulting criminal charges is high.

The state Department of Taxation and Finance is leading the investigation, which is examining whether the foundation or its officers, including President Donald Trump, broke state tax laws by transferring assets or making misrepresentations to the state that might affect tax liability, the official said.

The state tax department could issue a criminal referral to either the New York state attorney general’s office or the Manhattan district attorney’s office, the official said. The office that got the referral would decide whether to prosecute. ...

Legal experts say charging tax crimes, such as fraud, carries a high bar because prosecutors must prove that a defendant intended to deceive or commit wrongdoing.

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July 21, 2018 in Tax | Permalink | Comments (1)

Dan Markel’s Parents Release Statement On Four-Year Anniversary Of His Murder

Markel 3The Forward, Dan Markel’s Parents Release Statement On Anniversary Of His Murder:

Four years ago, on July 18, 2014, Dan was brutally assassinated in his driveway in the prime of his life. On the anniversary of this tragedy, Dan’s parents, Ruth and Phil Markel, remain in agony. Their only son was stolen from them. They have since been denied any relationship with Dan’s two young boys, their beloved grandsons—an unimaginable cruelty. Despite these tragedies, the Markels are hopeful that the coming year will see all those responsible for Dan’s murder apprehended and brought to justice.

Tallahassee Democrat, Dan Markel's Parents Hoping For More Arrests Four Years After His Murder

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July 21, 2018 in Legal Education | Permalink | Comments (1)

Friday, July 20, 2018

Weekly SSRN Tax Article Review And Roundup: Glogower Reviews Oei & Osofsky's Constituencies And Control In Statutory Drafting

This week, Ari Glogower (Ohio State) reviews a new work by by Shu-Yi Oei (Boston College) and Leigh Osofsky (North Carolina), Constituencies and Control in Statutory Drafting: Interviews with Government Tax Counsels, 104 Iowa L. Rev. __ (2019).

Glogower (2016)

How do stylistic drafting choices affect the administration and substance of the tax law? One might suppose that mere questions of style do not matter at all, as long as the provisions operate as intended. Shu-Yi Oei and Leigh Osofsky’s new work challenges this assumption, and sheds new light on the implications of these stylistic choices for the tax system. When it comes to drafting of tax statutes, it turns out, form may in fact matter.

The work begins by reviewing the process for the production of tax statutes, and the role of various cooks in the tax law kitchen, including House and Senate members, their legislative counsel, the House Committee on Ways and Means, the Senate Committee on Finance, the IRS and Treasury, the JCT, and outside interest groups and lobbyists. The work then provides a topography of the basic drafting choices these different actors face. 

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July 20, 2018 in Ari Glogower, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Same-Sex Married Tax Filers After Windsor And Obergefell

Robin Fisher (Office of Tax Analysis, U.S. Treasury Department), Geof Gee (Office of Tax Analysis, U.S. Treasury Department) & Adam Looney (Brookings Institution), Same-Sex Married Tax Filers After Windsor and Obergefell, 55 Demography 1423 (2018):

This article provides new estimates of the number and characteristics of same-sex married couples after U.S. Supreme Court rulings in 2013 and 2015 established rights to same-sex marriage. The U.S. Department of the Treasury and the Internal Revenue Service subsequently ruled that same-sex spouses would be treated as married for federal tax purposes. Because almost all married taxpayers file joint tax returns, administrative tax records provide new information on the demographic characteristics of married same-sex couples. This study provides estimates of the population of same-sex tax filers drawn from returns filed in 2013, 2014, and 2015, using methods developed by the U.S. Census Bureau to address measurement error in gender classification.

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July 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

University of Illinois-Chicago/John Marshall Merger Creates Chicago's First Public Law School

JMUICChicago Tribune, UIC Approves Merger With John Marshall Law School:

In a marriage seen as both one of necessity and opportunity, University of Illinois at Chicago has agreed to a merger with John Marshall Law School, which will create Chicago’s first public law school.

University of Illinois’ board of trustees on Thursday unanimously approved the proposal that will fold the operations of the downtown private law school into the Near West Side campus. The new institution will be known as the UIC John Marshall Law School.

Brian Leiter (Chicago) discusses the impact of the merger:

While Urbana-Champaign won't be much affected, there will be considerable pressure on the private law schools in Chicago, namely, Chicago-Kent, DePaul, and Loyola-Chicago. (Northern Illinois, another public law school in the far suburbs of Chicago, won't be helped either.) The real pressure will be on DePaul, which has suffered from years of mismanagement and turmoil, and is the lowest rank of the three in the USNews.com rankings (#128 most recently; Loyola-Chicago and Chicago-Kent are solidly in the top 100).

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July 20, 2018 in Legal Education | Permalink | Comments (1)

More On Vermont Law School's Tenured Faculty Purge

Vermont Law School Logo (2017)Following up on my previous posts (links below):  VT Digger, Anxiety Grips Vermont Law School Community:

Almost three weeks after 75 percent of tenure faculty were stripped of tenure July 1, Vermont Law School is left with a culture of fear and uncertainty.

As of Wednesday, the administration still had not told faculty, students or staff who had tenure at the school and who didn’t. The secrecy had caused confusion among students, alumni and those faculty who remained. “People are pretty demoralized,” said professor Susan Apel. ... Some are sad professors will no longer have tenure, she said, while those who continue teaching are anxious. “I think they’re very nervous about their own status,” said Apel. “They don’t know what could happen to them next.”

Faculty were informed they no longer had tenure in private meetings with VLS President Tom McHenry and Academic Dean Sean Nolan. In the meetings, faculty were presented options for continuing at VLS without tenure or leaving July 1.

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July 20, 2018 in Legal Education | Permalink | Comments (2)

Tax Laws Are Holding Back California’s Housing Market

Bloomberg, These Tax Laws Are Holding Back California’s Housing Market:

Forty years ago last month, Californians passed Proposition 13, the property-tax limitation that helped spark a national tax revolt. It’s still popular. In a March survey by the Public Policy Institute of California, 57 percent of residents, and 65 percent of likely voters, said it had been mostly good for the state, with only 23 percent saying it had been mostly bad.

Prop 13 limited local property taxes to 1 percent of purchase price (or of the assessed value in 1975) and capped subsequent increases at 2 percent a year. It also required a two-thirds legislative majority for new state taxes and two-thirds voter approval for new local taxes.

The law enjoys continued support because it gives homeowners predictable expenses. You can’t get forced out of your home simply because it’s become valuable. You move when you’re ready.

That’s the theory, anyway.

There are, however, perverse effects, some of which have been amplified by the dramatic run-up in housing prices in the Bay Area and Southern California. Prop 13 doesn’t just allow people to keep their homes until they want to sell. It also encourages them to hang on long past the time when they would have otherwise moved on. This lock-in exacerbates California’s housing crisis. ...

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July 20, 2018 in Tax | Permalink | Comments (5)

ALI Elects 34 New Members — 17 Are Law Profs

ALI Logo (2015)The American Law Institute Elects 34 New Members:

  • Kerry Abrams (Dean, Duke)
  • Jonathan Adler (Case Western)
  • Mario Barnes, Seattle – Dean, University of Washington
  • Maxine Burkett (Hawaii)
  • Peter Joy (Washington University)
  • Glynn Lunney, Jr. (Texas A&M)
  • Timothy Lytton (Georgia State)
  • John Manning (Dean, Harvard)
  • Erin Ann O'Hara O'Connor (Dean, Florida State)

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July 20, 2018 in Legal Education | Permalink | Comments (0)

Thursday, July 19, 2018

NY Times: Brett Kavanaugh's Law Student Evaluations — 'Significantly Better Than Harvard's Full-Time Faculty,' 'Great Hair'

KavanaughNew York Times, ‘Best Professor.’ ‘Very Evenhanded.’ ‘Great Hair!’: Brett Kavanaugh, as Seen by His Law Students:

Anonymous evaluations of professors by their students can be caustic or catty. But they are also unfailingly candid, and collectively they paint a revealing picture of a teacher’s strengths and weaknesses.

Over the last decade, about 350 law students at Harvard, Yale and Georgetown expressed views on classes offered by Judge Brett M. Kavanaugh, President Trump’s Supreme Court nominee. With rare exceptions, they praised his mastery of legal materials, intellectual rigor, fair-mindedness and accessibility. ...

[I]n 12 sets of evaluations spanning 700 pages, there was almost only glowing praise for Judge Kavanaugh’s teaching. More than a few students said he was the most impressive law school professor they had encountered.

“Significantly better than any full-time faculty I’ve had,” a Harvard student wrote. “Kavanaugh is the best professor I have had in law school,” wrote another. “Best class I’ve taken at HLS by a mile,” said a third. ...

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July 19, 2018 in Legal Education | Permalink | Comments (0)

Four Blue States Sue To Block Trump Tax Law's $10,000 State & Local Tax Deduction Cap

Wall Street Journal, Democratic States Sue Trump Administration Over Tax Overhaul:

A coalition of states led by New York sued the federal government Tuesday, alleging that last year’s tax overhaul was politically motivated and designed to interfere with the rights of states to manage their finances. New Jersey, Connecticut and Maryland joined New York in the federal lawsuit filed in U.S. District Court in New York. The lawsuit takes aim at a part of the new tax law limiting federal tax deductions for state and local taxes to $10,000.

The plaintiffs said the new law raises the federal tax liability of millions of taxpayers in those states, making it more difficult for the states to maintain their taxation policies. The tax law also seeks to force the states to slash public spending, the plaintiffs said.

Wall Street Journal editorial, Albany’s Millionaire Tax Revolt:

The Republican tax bill is the law for 2018, but some progressives are mounting an insurrection against taxation without . . . loopholes for rich people. As a slogan it’s not the Boston Tea Party, but check out the revealing legal challenge from four states. ...

This is a sure legal loser, not least because tax reform merely rewrote the federal tax code. Congress didn’t touch a single state statute. The plaintiff AGs claim their states were somehow politically targeted, but the federal law applies to all 50 states uniformly.

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July 19, 2018 in Tax | Permalink | Comments (6)

University Of Illinois-Chicago To Vote Today On Merger With John Marshall Law School

JMUICFollowing up on my previous post, University of Illinois-Chicago May Absorb John Marshall, Creating Chicago's First Public Law School: Champaign/Urbana News-Gazette, UI Chicago Moving Ahead on Merger With Private Law School in Loop:

The University of Illinois at Chicago could soon have its own law school, a counterpart to the 121-year-old College of Law at the Urbana campus.

The UI Chicago announced last November that it was in merger talks with John Marshall Law School, a diverse private institution in Chicago's South Loop area.

The university is now poised to move forward, asking UI trustees Thursday to approve a resolution supporting the idea and a formal proposal to establish the UI Chicago John Marshall College of Law. ...

Coincidentally, the move comes just two weeks after the Carle Illinois College of Medicine opened at the Urbana campus.  The UI Chicago has a major health care center and one of the nation's largest medical schools. ...

[B]ackers at both schools have noted that almost two-thirds of the public universities designated as top-tier research institutions by the Carnegie Foundation have law schools. The UI Chicago, the second-largest university in the state, is among the 35 percent that do not.

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July 19, 2018 in Legal Education | Permalink | Comments (0)

Banks Got A Trump Tax Bump

BanksBloomberg, Without Tax-Cut Boom, Banks Would Be Facing a Bust:

Here’s the latest sign of who’s benefiting in President Donald Trump’s economy: Without the tax cut, bank earnings growth in the second quarter would have been pretty close to zilch. Instead, the nation’s six biggest banks are set to report a 14 percent improvement in earnings in the April-to-June period. Nine of every 10 dollars of that increase is thanks to the tax cut. Just one dollar came from an actual improvement in operations.

That small gain, just $413 million out of an estimated $3.5 billion increase, is odd given how strong the economy appears to be. Just last year, investors seemed certain that a mixture of Trump’s deregulation and then proposed tax cuts would boost corporate America and banks in particular. And yet those tax gains haven’t translated into much more business for the banks.

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July 19, 2018 in Tax | Permalink | Comments (1)

Bankman, Hemel & Ventry: Why Filing Taxes Isn’t Easy

PostcardPolitico:  Why Filing Taxes Isn’t Easy, by Joseph Bankman (Stanford), Daniel Hemel (Chicago) & Dennis Ventry (UC-Davis):

The Trump administration unveiled a “postcard-sized” tax form late last month that will supposedly make it easier for Americans to do their own taxes. The move was nothing more than a publicity stunt—as a number of commentators noted, the administration achieved its postcard-sized ambitions only by requiring millions of Americans to submit supplementary worksheets that actually complicate the task of tax preparation.

The real action on tax filing right now is happening on the other end of Pennsylvania Avenue, where Congress is working hard to ensure that doing your taxes remains a time-consuming and expensive endeavor. The House of Representatives has passed two bills in recent weeks that seek to stop the IRS from simplifying the tax-filing process. One is pending in the Senate Finance Committee. The other cleared the Senate Appropriations Committee in late June, with a floor vote likely this summer.

At issue are two innovations that, if adopted by the IRS, would radically reduce the time and expense incurred in filing federal income tax returns. The first is free online tax preparation paired with electronic filing: The IRS could offer an easy-to-use product that assists you in completing your tax return, then allows you to submit your return online—all at a price of $0. A second and even more pioneering possibility is “pre-population”: the IRS could allow you to begin the filing process with an already filled-out return rather than making you enter each item of information from scratch.

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July 19, 2018 in Tax | Permalink | Comments (1)

Yin: How The Byrd Rule Might Have Killed the 2017 Tax Bill . . . And Why it Didn't

George K. Yin (Virginia), How the Byrd Rule Might Have Killed the 2017 Tax Bill . . . And Why it Didn't:

During debate on the 2017 tax bill that was once slated to become the “Tax Cuts and Jobs Act,” the number of stories referencing an arcane budget law known as the “Byrd rule” skyrocketed in publications as diverse as the New York Times and the weekly trade magazine, Tax Notes. Many of the references, however, dealt with minor effects of the rule, such as its role in removing the bill’s short title from the final legislation. This article briefly describes a much more important and little-known aspect of this little-known rule that might have—and perhaps should have—killed the bill altogether.

July 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

Vermont Law School's Tenured Faculty Purge And What It Portends For Legal Education

Vermont Law School Logo (2017)Following up on my previous posts (links below):  Forbes, When the Numbers Don't Add Up: Vermont Law School's Tenured Faculty Purge and What It Portends:

Vermont Law School (Vermont) recently announced it had issued pink slips to 14 of its 19 tenured faculty members. This is not the first time a law school has terminated tenured professors for something other than sex, drugs, and rock-n-roll. Albany Law School, Charleston Law, and others have traveled that road, and several other law schools have shuttered. Vermont’s wholesale decimation of its tenured faculty is something different—a clarion call to the legal Academy that its economic model is unsustainable for all but a handful of elite institutions. Students have borne the brunt of the model’s economic pain; now it’s affecting the other side of the lectern. ...

Vermont cited fiscal constraints as the basis for the tenured faculty housecleaning. The law school’s recent $17M loan from the Department of Agriculture to lower the interest rate of its existing debt is, as lawyers say, res ipsa loquitor of its fiscal extremisThe ABA Journal reported that Craig Pease, one of the sacked professors, contends that “the institution has not stated that it faces financial exigencies.” Let’s hope Professor Pease does not teach bankruptcy or evidence. While it’s understandable that he is pursuing his legal and equitable remedies (and foregoing a settlement package), his contention that Vermont fails to meet its financial exigency burden itself flunks the giggle test. That level of economic denial is all-too-prevalent among law school faculty. Vermont’s action might just be that “Thanks…I needed that” slap in the face to wake them up. ...

The unsustainable cost of law school is nothing new to students—most graduate with six-figure law school debt on top of undergrad obligations. Let’s put aside other faults one could assign to the legal Academy—doctrinally-heavy curricula, detachment from the marketplace, most faculty lacking meaningful marketplace experience and awareness of its trends, the (ir)relevance of most legal “scholarship” (noted by Chief Justice Roberts), a “one-size fits all” pedagogical model, a recent building frenzy—and focus on economics. Law school is just too damn expensive for all but the handful that can afford it and/or elite candidates who are given free/steeply discounted rides for ranking purposes. Let’s also exempt graduates of top-tier schools provided they are among a dwindling pool that land high-paying jobs. For everyone else, it’s reasonable to ask, “Is law school worth it?” Short answer: perhaps, but only if one can stomach the debt and has differentiated skillsets—technological, business, linguistic skills, etc.— to augment baseline legal knowledge.

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July 19, 2018 in Legal Education | Permalink | Comments (9)

OMB Seeks To Hire A Tax Policy Analyst

OMBThe Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB) is seeking to hire a Policy Analyst with expertise in tax policy/administration.  See here and here.

As a Policy Analyst, GS-0301-14/15, your typical work assignments may include the following:

Policy analysts within the IP Branch are the core source of expertise on matters pertaining to the regulatory and information policies of Federal departments and agencies with tax policy/administration, financial, banking, consumer protection, and related missions. Policy analysts are responsible for:

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July 19, 2018 in Tax | Permalink | Comments (0)

Wednesday, July 18, 2018

Buchanan Reviews Abreu's The 2017 Tax Act: Requiem For Ability to Pay

Jotwell (Tax) (2016)Neil H. Buchanan (George Washington), The Ability-To-Pay Principle and the Counterintuitive Distributive Justice Analysis of Alimony Payments (JOTWELL) (reviewing Alice Abreu, Tax 2018: Requiem for Ability to Pay, 52 Loyola L.A. L. Rev. ___ (2018)):

The tax bill that Republicans in Congress passed, and that Donald Trump signed in December 2017, might end up being one of the shortest-lived tax laws in U.S. history. Not only are large elements of it explicitly temporary, but the political moment that led to its passage seems already to be passing, quite likely to be followed by a time when progressive tax policy will once again be politically viable.

However, even if this bill lapses or is repealed (in whole or in part), Alice Abreu provides an important contribution to our understanding of what just happened in Tax 2018: Requiem for Ability to Pay. The title of the article telegraphs the importance of the issue that she identifies as the most unfortunate aspect of the new tax law. Whereas objective analysts knew that the bill’s changes would make the tax system less progressive than it had been, Abreu explains that seemingly unrelated elements of the bill add up to a repudiation of the very idea of progressive taxation. ...

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July 18, 2018 in Scholarship, Tax | Permalink | Comments (2)

Public College President Salaries, 2016-17

Book-It-Legal: Uber For Law Students Seeking Micro-Clerkships

BookIntroducing Book-It Legal: The Innovative Legal Startup That May Forever Change the Student Clerkship:

Named by the ABA as the number-one legal startup in the country for 2018, Book-It Legal is singlehandedly changing the way law students and attorneys across the country view the student clerkship. 

In a nutshell, Book-It Legal is the Uber of law student clerkships.  Book-It’s platform allows top law students to bid on paid legal projects posted by licensed attorneys from across the country.  Book-It gives law students the flexibility to bid on the projects they want — and to work at their own pace.

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July 18, 2018 in Legal Education | Permalink | Comments (1)

Treasury Department Restricts Donor Disclosure Requirement To § 501(c)(3) Groups

Treasury Department Logo (2017)Press Release, Treasury Department and IRS Announce Significant Reform to Protect Personal Donor Information to Certain Tax-Exempt Organizations:

The Treasury Department and IRS announced today that the IRS will no longer require certain tax-exempt organizations to file personally-identifiable information about their donors as part of their annual return.  The revenue procedure released today does not affect the statutory reporting requirements that apply to tax-exempt groups organized under section 501(c)(3) or section 527, but it relieves other tax-exempt organizations of an unnecessary reporting requirement that was previously added by the IRS.  

Nearly fifty years ago, Congress directed the IRS to collect donor information from charities that accept tax-deductible contributions.  That statutory requirement applies to the majority of tax-exempt organizations, known as section 501(c)(3) organizations, receiving contributions that can be claimed by donors as charitable deductions.  This policy provided the IRS information that could be used to confirm contributions to those organizations.

By regulation, however, the IRS extended the donor reporting requirement to all other tax-exempt organizations—labor unions and volunteer fire departments, issue-advocacy groups and local chambers of commerce, veterans groups and community service clubs.  These groups do not generally receive tax deductible contributions, yet they have been required to list the names and addresses of their donors on Schedule B of their annual returns (Form 990).

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July 18, 2018 in IRS News, Tax | Permalink | Comments (2)

Liscow: Are Court Orders Sticky? Evidence On Distributional Impacts From School Finance Litigation

Zachary D. Liscow (Yale), Are Court Orders Sticky? Evidence on Distributional Impacts from School Finance Litigation, 15 J. Empirical Legal Stud. 4 (2018):

Whether welfare analysis of legal rule changes should evaluate distributional outcomes as well as efficiency depends crucially on how much their distributional impacts stick. That is, do court mandates ultimately affect the distribution of taxes and spending or do legislatures offset the distributional consequences of those court orders with other changes? Little is known about this question. To offer insight into it, I use an event study methodology to show how state revenues and expenditures respond to court orders to increase funding for schools.

I find that the court orders’ distributional impacts do stick. The education spending is financed by tax increases that do not target the largest beneficiaries of the increased education spending, the poor and those with children.

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July 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

Cornell Is Second Law School To Accept The GMAT And GRE

GMATGRECornell has joined Penn in accepting both the GMAT and the GRE, and is 21st law school to accept the GRE (joining Arizona, Brooklyn, BYU, Cardozo, Chicago Kent, Columbia, Florida State, Georgetown, Harvard, Hawaii, John Marshall (Chicago), Northwestern, Pace, PennSt. John's, Texas A&M, UCLA, USCWake Forest, and Washington University). Two law schools allow the GRE in limited circumstances:  Chicago (admissions committee may grant LSAT waiver) and Georgia (students enrolled in a dual degree program at the university). (George Washington has rescinded its use of the GRE because it has not done a school-specific validation study.)

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July 18, 2018 in Legal Education | Permalink | Comments (0)

Red State Charities Could Be Collateral Damage From The GOP's War On California's High Taxes

Los Angeles Times, Red State Charities Could be Collateral Damage From the GOP's War on California's High Taxes:

[There are] more than 100 charitable tax-credit programs in dozens of states — including red ones such as Alabama, Georgia, South Carolina and Louisiana — that could be collateral damage in a dispute between Republicans in the nation’s capital and leaders of Democratic-controlled states, including California. ...

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July 18, 2018 | Permalink | Comments (0)

ABA Reveals $1.3M Theft By Former Staffer On Tax Form

ABA Journal (2014)ABA Journal, ABA Reveals $1.3M Theft by a Now-Former Staff Member on Tax Form:

The American Bar Association has posted a tax form that reveals a onetime staff member diverted about $1.3 million from the ABA over a period of eight years.

The ABA became aware of the theft by a nonmanagerial staff member last September, according to Form 990 (see page 118) and an interview with ABA Executive Director Jack Rives.

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July 18, 2018 in Legal Education | Permalink | Comments (2)

Tuesday, July 17, 2018

Democratic Criticism Of The 2017 Tax Act Grows More Incoherent

E21Brian Riedl (Manhattan Institute), Criticism of Tax Cuts Grows More Incoherent:

The 2017 Tax Cuts and Jobs Act (TCJA) remains controversial, with public opinion evenly split and many Democrats campaigning on repeal. However, the Democratic critique of the tax cuts has grown increasingly incoherent. The party excoriates the “tax cuts for the rich” while trying to tilt them even further to the wealthy. Democrats slam the deficit effect of the tax cuts while working to worsen budget deficits. In addition, they erroneously describe the law as a “middle-class tax hike” while proposing policies that would truly raise middle-class taxes. ...

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July 17, 2018 in Tax, Think Tank Reports | Permalink | Comments (2)

Planning Your Law School Class To Utilize Effective Learning Techniques

James McGrath (Texas A&M), Planning Your Class to Take Advantage of Highly Effective Learning Techniques, 96 U. Det. Mercy L. Rev. ___ (2018):

What are the most highly effective learning techniques? Take a moment and consider what you think they are. Write them down if it is convenient. The symposium that is the subject of this law review volume examines the impact of formative assessment. In this article, I will connect formative assessment possibilities with ideas on how to take advantage of some of the proven highly effective learning techniques. The road there is a bit tortuous, but it is my hope that even the most well-informed teacher will find something that they can add to their quiver of techniques to help with her efforts of continually improve her teaching.

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July 17, 2018 in Legal Education, Scholarship | Permalink | Comments (3)

Ryznar: Homeownership As Savings

Margaret Ryznar (Indiana-Indianapolis), Homeownership as Savings, 159, Tax Notes 1145 (May 21, 2018):

This article suggests that housing is an important savings vehicle, proposing that the tax law should provide incentives for homeownership as it does for retirement savings.

July 17, 2018 in Scholarship, Tax | Permalink | Comments (0)

Would A Universal Basic Income Cure Poverty?

WSJ 2Wall Street Journal Book Review:  The Cure for Poverty?, by Edward Glaeser (Harvard) (reviewing Annie Lowrey, Give People Money (2018) & Andrew Yang, The War on Normal People (2018)):

The concept of a universal basic income, or UBI, has become part of the moral armor of Silicon Valley moguls who want a socially conscious defense against the charge that technology is making humanity obsolete. The logic of UBI runs that if every adult received $12,000 annually in free, unfettered cash, then we would not need to worry about an ocean of underemployed men who numb their feelings of worthlessness with computer games and opioids. The folly of UBI is that it sees a cash payment as a substitute for purpose and accomplishment and that it enables joblessness when we should be encouraging employment and job-creating innovation.

Two new books examining UBI are better than their subject deserves. Annie Lowrey’s “Give People Money” advances the general progressive case for UBI as a new link in the safety net. Andrew Yang’s “The War on Normal People” is squarely targeted at the techno-dystopians who see UBI as a response to a jobless future in America.

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July 17, 2018 in Book Club, Scholarship, Tax | Permalink | Comments (4)

LSU Seeks To Hire A Tax Prof

LSU Logo (2018)LSU Law School seeks to hire a tenure-track or tenured faculty member in business and commercial law, with particular attention in corporate, partnership, and other areas of tax law:

We may consider applications from persons who specialize in other areas as additional needs arise. Applicants should have superior academic credentials and publications or promise of productivity in legal scholarship, as well as a commitment to outstanding teaching. The Paul M. Hebert Law Center of LSU is an Equal Opportunity/Equal Access Employer and is committed to building a culturally diverse faculty. We particularly welcome and encourage applications from female and minority candidates.

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July 17, 2018 in Tax, Tax Prof Jobs | Permalink | Comments (0)

Law Firm Leaders Are Bullish: 70% Expect Growth In 2d Half Of 2018; Only 9% See Drop

Citi (2016)Law.com, Confidence Dips, but Firm Leaders Bullish on Demand Growth, Citi Report Says:

Law firm leaders are taking a slightly dimmer view of the legal industry’s prospects in the second half of 2018 as their confidence in the U.S. and global economy wanes, according to a survey released Wednesday by Citi Private Bank.

Citi’s latest edition of its Law Firm Leaders Confidence Index showed that while top brass at firms remain a confident group, they have some concerns about the state of the economy, and that has had an impact on overall confidence. The Citi index runs on a scale of 0 to 200, where everything above 100 indicates confidence. Overall confidence among law firm leaders had an index score of 118 in the latest semiannual Citi report, down one point from the previous edition of the report released in February.

Despite the dip firm leaders were more bullish about their own firms’ prospects, particularly in the realm of demand for their services, Citi’s report showed.

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July 17, 2018 in Legal Education | Permalink | Comments (0)

Puckett: Means-Testing 'Ability To Pay' In The Income Tax To Combat Wealth Inequality

James M. Puckett (Penn State), Improving Tax Rules by Means-Testing: Bridging Wealth Inequality and 'Ability to Pay', 70 Okla. L. Rev. 405 (2018):

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.

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July 17, 2018 in Scholarship, Tax | Permalink | Comments (2)

NYU Law Grad, Creator Of The Trump Resistance Manual, On The 'Hidden Privileges' Of Wealth

ForbesVox:  Like Kylie Jenner, I Was on a Forbes List. Here Are the Hidden Privileges That Made Me a “Success.”, by Aditi Juneja (J.D. 2017, NYU):

Gracing the cover of Forbes’s 60 Richest Self-Made Women issue this week was none other than Kylie Jenner, the 21-year old member of the Kardashian family dynasty and cosmetics mogul.

The problem with this particular cover, and more generally with magazine lists like these, is they often gloss over the role intergenerational wealth and access plays in success. This is especially true when that success is achieved at a young age. I should know. I was on the Forbes “30 Under 30” list this year for Law and Policy.

Lists like these — which fetishize achievement, particularly at a young age — erase the privilege and access that allow some of us to take career risks and be entrepreneurial in ways others can’t. They diminish the hard work done by people in more challenging circumstances and add to the myth that if you just work hard enough, you can pull yourself up by your own bootstraps. They ignore that some people have neither boots nor straps.

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July 17, 2018 in Legal Education, Tax | Permalink | Comments (4)

Monday, July 16, 2018

McGrath & Morriss: Law School Assessment, From Admissions To Curriculum To The Bar Exam

James McGrath (Texas A&M) & Andrew P. Morriss (Texas A&M), Assessments All the Way Down:

The role of assessments is getting attention throughout legal education. A growing acceptance of the Graduate Record Examination (“GRE”) as an alternative to the Law School Aptitude Test (“LSAT”) and its incorporation into the U.S. News & World Report (“USN&WR”) law school rankings opened the door to changes in who is going to law school and how they are recruited. At the other end of students’ journey through legal education, the discussion of recent graduates’ bar exam performance — linked by some to declining LSAT scores of entering students — raised questions about the design of bar exams as well as about law schools’ preparation of graduates for the bar. In between, the American Bar Association’s incorporation of assessment into its accreditation process spurred growing interest in how law schools conduct assessments and is prompting changes in how legal educators evaluate students.

In this article, we begin with the issues raised by the GRE’s appearance as an alternate pathway. Next, we set out assessment principles likely to influence future conversations in the legal academy. Then we look at how the bar results discussion connects to improving assessment strategies. Finally, we conclude with speculation about what this all means.

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July 16, 2018 in Legal Education, Scholarship | Permalink | Comments (0)

IRS Gives Green Light To Back-Door Roth IRAs For High-Income Taxpayers

Forbes, IRS Unlocks The 'Door' For High-Income Savers:

For years, there’s been a debate raging in the financial planning community surrounding something that’s colloquially become known as “The Back-Door Roth IRA.” Some practitioners (including myself) have been advocates of the planning strategy, which involves a two-step process that effectively enables certain high-income taxpayers to skirt the Roth IRA contribution income limits, viewing it as a clever technique to make the most of nonsensical rules. Other practitioners, however, have preached caution, and have largely encouraged their clients to avoid making such transactions out of concern that the IRS could disallow the move thanks to something known as “the step-transaction doctrine.”

Despite the uncertainty surrounding the somewhat popular strategy, the IRS had been relatively tight-lipped as to its official view on the matter… or at least it had been until this past Tuesday. Earlier this week, on a July 10th Tax Talk Today webcast, Donald Kieffer Jr., a tax law specialist with the IRS’s Tax-Exempt and Government Entities Division, gave the Back-Door Roth IRA it’s biggest vote of confidence yet. Here’s what Kieffer had to say about the strategy:

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July 16, 2018 in Tax | Permalink | Comments (5)

Simkovic: How Secure Is Tenure?

Following up on my recent posts:

Michael Simkovic (USC), How Secure Is Tenure?:

Colleges and universities typically pay educated professionals a fraction of what similar individuals earn in the private sector (typically around 60 to 80 cents on the dollar) in return for greater job security and academic freedom.  In recent years, some law schools have effectively reneged on this bargain, slashing compensation, de-prioritizing research support and/or accepting outside funding that compromises academic freedom, and terminating even some tenured faculty members.

Recent reports suggest that Vermont Law School has taken this to the extreme. According to the ABA Journal, Vermont Law School recently stripped tenure from 14 of its 19 tenured professors. This was done without a formal declaration of financial exigency, and according to faculty members and the AAUP, apparently without the consent of faculty members typically required for such decisions. ...

If the reports are accurate, Vermont has essentially acted as if tenure does not exist. This could potentially raise questions about whether Vermont is in compliance with ABA standard 405, but it is unclear how assertive the ABA or site visit teams will be in enforcing those standards. 

The incident highlights the importance of faculty members joining organizations like the AAUP which protect tenure and academic freedom.  At many institutions, tenured faculty members are increasingly getting the worst of both worlds—private-sector level risks with public-sector level compensation.

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July 16, 2018 in Legal Education | Permalink | Comments (7)

UC-Irvine Launches Graduate Tax Program

UCI Logo (2018)UCI Law Launches a New, Innovative Graduate Tax Program:

The University of California, Irvine School of Law is pleased to announce its Graduate Tax Program, a one-of-a-kind, practice-oriented Master of Laws (LL.M.) degree program led by renowned tax scholars Omri Marian, Joshua Blank and Victor Fleischer. True to the spirit of UCI Law’s cutting-edge approach to legal education, the Graduate Tax Program offers a unique tax curriculum emphasizing practice skills and featuring small class sizes and a collegial, supportive learning environment. The program will provide students with both the doctrinal depth and the experiential learning needed to practice tax law and to develop a deep understanding of the new tax law — enacted in 2017. The program will prepare graduate students for careers as tax attorneys, judges, tax administrators and policy advocates in the United States and abroad, and will also offer the opportunity for current practitioners to dramatically expand their tax knowledge and skills. The Program will begin accepting applications in August 2018 for admission to the inaugural class, with students matriculating in the fall of 2019.

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July 16, 2018 in Legal Education, Tax | Permalink | Comments (0)

Lesson From The Tax Court: An 'Origin of the Claim' Test For §104(a)(2) Exclusions

Tax Court (2017)Here at Texas Tech we require all law students to take the basic course in federal income tax. That is not because we are especially cruel, but rather because tax law touches so many other areas of practice that the faculty believes every student should have an introduction to tax. I must shape my course knowing that at least two thirds of the students do not want to become tax lawyers. One tack I take is to highlight tax issues that regularly come up in other practice areas such as family law and litigation.

A case from the Tax Court last week teaches a useful lesson about the intersection of tax with litigation practice.  Jacques L. French and Sherry L. French v. Commissioner, T.C. Summary Op. 2018-36 (July 12, 2018) involves taxpayers seeking to exclude a settlement payment under §104(a)(2), the section that allows taxpayers to exclude from gross income the amount of damages received because of personal physical injury or physical illness.

We usually think about the “origin of the claim” test in the §162 context, where courts use it to decide when taxpayers may deduct expenses associated with litigation. In fact, just this last week I saw another Tax Court opinion that involves this application of the origin of the claim test. I may blog that next week, unless something else catches my eye.

This week, however, I think it is useful to see how the Tax Court takes a very similar approach to deciding when a taxpayer can exclude a damage award under §104(a)(2). In both situations, it is the nature of the claim asserted in litigation that governs the potential exclusion or the potential deduction.  Looking at §104(a)(2) also allows me to give a shout out to the Tax Court's newest Special Trial Judge, Diana L. Leyden.  Her carefully constructed opinion shows us exactly how the Tax Court applies this “origin of the claim test” in the §104(a)(2) context. It makes for a nice lesson from the Tax Court.

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July 16, 2018 in Bryan Camp, New Cases, Tax | Permalink | Comments (0)

LSAT Adopts 12 Different Gender Identity Options; GRE Only Has Two