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Sunday, July 31, 2005

Top 5 Tax Paper Downloads

SSRN LogoThere is a lot of movement on this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with two new papers joining the list:: 

1.  Travails in Tax: KPMG and the Tax-Shelter Controversy, by Tanina Rostain (New York Law School)

2.  Neuroeconomics and Rationality, by Terrence R. Chorvat (George Mason) & Kevin McCabe (George Mason University, Department of Economics)

3.  Regulating 527 Organizations, by Gregg D. Polsky (Minnesota) & Guy-Uriel E. Charles (Minnesota)

4.  Beating the "Wrap": The Agency Effort to Control Wraparound Insurance Tax Shelters, by Charlene Davis Luke (Florida State)

5,  The Degradation of Reported Corporate Profits, by Mihir Desai (Harvard Business School)

July 31, 2005 in Top 5 Downloads | Permalink | TrackBack (0)

Karlinsky, Pinto & Pope on Top 10 Myths of a Consumption Tax System

Tax_analysts_152Stewart Karlinsky (San Jose State), Dale Pinto (Curtin University) & Jeff Pope (Curtin University) have  published Top 10 Myths of a Consumption Tax System, 108 Tax Notes 453 (July 25, 2005), also available on the Tax Analysts web site as Doc 2005-15201, 2005 TNT 142-31.  Here is the abstract:

Much of the recent tax policy literature and political rhetoric suggests that moving to a consumption tax (value added tax, goods and services tax, national sales tax, income minus investments) would be simpler, and less expensive to administer and comply with. Therefore, according to the rhetoric, the United States should drastically overhaul its tax system and repeal the income tax as we know it and substitute a consumption tax like a VAT or a GST that our trading partners are subject to. What those positions fail to mention is that our trading partners have a higher compliance and administrative cost than we do, and they have both an income tax (corporate and individual) and a VAT. Interestingly, Jeffrey Owens, OECD tax commissioner, who has the advantage of worldwide perspective on various tax systems, has observed that "there is no crisis (in the U.S. tax system), but lots of room for improvement."

This article will discuss the top 10 myths regarding a consumption tax system to give readers, legislators, and tax policymakers an understanding of the issues that may arise if the United States moves to a substitute or complementary consumption tax system.

July 31, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Bogdanski Reviews Meet the Beatles

Bookclublogo_1_1 Beatles Jack Bogdanski (Lewis & Clark) reviews Meet the Beatles by Steven D. Stark here.  Here's a taste to whet your appetite (and convince you to click on the link to the full review):

Stark's angle on the much-told Beatles story is that of a cultural historian. His main purpose here is to put the Beatles into a historical framework -- to identify the social and political forces that the group tapped into, and sometimes even set into motion, consciously or otherwise. With those larger currents in focus, Stark gives a pretty convincing analysis of why this particular rock quartet was successful beyond anyone's wildest imagination.

What surprises me most about Stark's account, however, is his exquisite treatment of the Beatles as people -- particularly John and Paul, who were the group's obvious leaders. Stark provides a detailed look at the two men's childhoods, which were not particularly happy ones. Both lost their mothers, and much of what both of them did in their careers as musicians was influenced by that sad fact. But John's reaction was very different from Paul's, as the author shows us in incident after telling incident. The book reminded me of something that's easy to forget -- how very young these guys were. But it also revealed something I hadn't ever given much thought to -- how wounded they were as people.

July 31, 2005 in Book Club | Permalink | TrackBack (0)

NYSBA Submits Report to IRS on Deferred Compensation and Notice 2005-1

The New York State Bar Association Tax Section has submitted a report to the IRS on Section 409A of the Internal Revenue Code and Internal Revenue Service Notice 2005-1:

July 31, 2005 in ABA Tax Section | Permalink | TrackBack (0)

Saturday, July 30, 2005

Spotlight_2Leslie M. Book (Villanova)

      • B.A. 1987, Franklin & Marshall
      • J.D. 1990, Stanford
      • LL.M. 1994, NYU   

    

Book_2 I principally teach in Villanova Law School’s low income taxpayer clinic. In the Clinic, I supervise students and, on occasion, actually roll up my sleeves and represent clients before the IRS and in Tax Court. Issues include mainstays of a controversy practice for individual taxpayers, like earned income credit disputes and considerations of alternatives to enforced collection (like offers in compromise), but also include cases touching on a wide range of subjects, like innocent spouse, casualty losses, passive activity losses, the hobby loss rules, and the taxation of settlement proceeds. The work is fun, and challenging, and satisfies my interests in different areas, including tax procedure, professional responsibility, administrative law and poverty law. It is also immensely rewarding to expose students to the benefits of public service and legal representation for those generally without access to lawyers. Likewise, I get great pleasure from the privilege of introducing my students to the messy business of actually representing clients.

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July 30, 2005 in Tax Prof Spotlight | Permalink | TrackBack (0)

Cummings on Arthur Andersen Lives to Fight Another Day (Maybe)

Tax_analysts_86Jasper L. Cummings, Jr. (Alston & Bird, Atlanta) has published Arthur Andersen Lives to Fight Another Day (Maybe), 108 Tax Notes 463 (July 25, 2005), also available on the Tax Analysts web site as Doc 2005-14569, 2005 TNT 142-32. Here is the Introduction:

Chief Justice William H. Rehnquist authored a unanimous opinion of the United States Supreme Court that reversed and remanded for further proceedings consistent with the opinion of the criminal conviction of Arthur Andersen LLP for causing the destruction of its own documents related to its audit of Enron Corporation in 2001. If a cat may look at a king, a tax lawyer may ask what the Supreme Court was thinking.

July 30, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Dye Reviews Michigan at the Millennium: A Benchmark and Analysis of Its Fiscal and Economic Structure

Michatmillcover Ntj_logo_1Richard F. Dye (Lake Forest College, Department of Economics) has published Book Review:  Michigan at the Millennium: A Benchmark and Analysis of Its Fiscal and Economic Structure, 58 National Tax Journal 327-30 (June 2005). Here is the abstract:

Michigan at the Millennium: A Benchmark and Analysis of Its Fiscal and Economic Structure. Edited by Charles L. Ballard, Paul N. Courant, Douglas C. Drake, Ronald C. Fisher, and Elisabeth R. Gerber. East Lansing: Michigan State University Press, 2003, pp. 966. The editors and the chapter authors of Michigan at the Millennium have produced a volume that is authoritative, thoughtful, and useful. In doing so, they have meaningfully extended the legacy of Harvey Brazer. The volume covers a broad range of topics, has quality authors of the individual chapters, and the editors have given it a solid structure. If I were teaching public finance in Michigan, or if I were a policy analyst, advocate, or administrator in the state, I would want this volume on my shelf.

July 30, 2005 in Book Club | Permalink | TrackBack (0)

IRS Cancels Plans To Close 68 Taxpayer Assistance Centers

Irs_logo_119 The IRS on Friday announced that it has cancelled plans (announced in May and blogged here) to close 68 of its 400 Taxpayer Assistance Centers later this year:

IRS Commissioner Mark W. Everson today lauded the Congress for its progress thus far in securing additional funding in accordance with the IRS 2006 budget request, and he suspended plans to close some of its Taxpayer Assistance Centers.

July 30, 2005 in IRS News | Permalink | TrackBack (0)

Friday, July 29, 2005

Reynolds on Skybox Schools: Public Education as Private Luxury

Lreynold Laurie Reynolds (Illinois) has published Skybox Schools: Public Education as Private Luxury, 82 Wash. U. L.Q. 755 (2004).   Here is the abstract:

For the past three decades, plaintiffs in hundreds of state and federal court lawsuits have challenged state laws that fund public schools with the local property tax. As socioeconomic segregation remains at extremely high levels across the country, reliance on a tax that is based on the wealth of the property within a school district's territory produces huge inequality in revenues. As the result of numerous court opinions, legislative reforms, and public pressure, many states have revised their funding formula to shift some of the burden to the state level. However, notwithstanding the wide-ranging statutory amendments and increased state funding, the tremendous gap between wealthy and poor districts remains. In some cases the gap has increased, even in many of those states whose highest courts have invalidated their school finance statutes.

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July 29, 2005 in Scholarship | Permalink | TrackBack (0)

Schmalbeck on Reconsidering Private Foundation Investment Limitations

Schmalbeckr_1 Tax_law_reviewRichard Schmalbeck (Duke) has published Reconsidering Private Foundation Investment Limitations, 58 Tax L. Rev. 59 (2004).  Here is the Introduction:

This Article suggests reconsideration of the two mainstays of investment regulation of private foundations-the excess business holdings rules of § 4943, and the jeopardizing investment rules of § 4944. I argue that reconsideration reasonably would lead to reforming the former and repealing the latter. These suggestions run against a prevailing mood that could be described as a deregulation counter-revolution, characterized by regret that efforts to "unleash" securities markets, public utilities, and the telecommunications industry, among others, may have overshot their marks.

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July 29, 2005 in Scholarship | Permalink | TrackBack (0)

Lee on The Capital Gains "Sieve" and the "Farce" of Progressivity 1921-1986

Lee47John W. Lee III (William & Mary) has published The Capital Gains "Sieve" and the "Farce" of Progressivity 1921-1986, 1 Hastings Bus. L.J. 1-87 (2005). Here is the abstract:

From the Revenue Act of 1921's introduction of an individual capital gains preference until the Tax Reform Act of 1986's repeal by making the maximum individual permanent ordinary income rate and capital gains rate the same 28%, the capital gains preference reduced the average high income individuals' effective income tax rate substantially below the top nominal progressive income tax rates - dipping deeply in large incomes with a sieve as Henry Simon put it. This made progressivity "a farce" for most taxpayers, because generally 80% of the tax benefits of capital gains preference are garnered by about three quarters of the top 2 to 3% of individual taxpayers by household economic income. The article examines the evolution of this preference 1921-1986 through detailed chronology and analysis of its legislative history. It further explores shaping of the preference by political interests. Processes such as 'cloaking' in the capital gains debate are documented, e.g., in 1921 the preference was sold in part as helping to break up large farms; in 1978 a brokerage house witness caught arguing for the little investor (when his real interest was big investors) shifted to private firms selling out. In this same vein, Representative George H.W. Bush argued in 1969 that the predecessor to the AMT would impact heavily on the small black businessman with an SBA loan (80% of the original individual preferences consisted of the then 50% capital gains deduction).

July 29, 2005 in Scholarship | Permalink | TrackBack (0)

Garrett Named Vice Provost at USC

Garretthr Elizabeth Garrett has been named Vice Provost for Academic Affairs at USC.  She is a member of President Bush's Advisory Panel on Tax Reform and was recently named Sydney M. Irmas Professor of Public Interest Law, Legal Ethics and Political Science at USC.  From the USC press release:

A nationally recognized scholar and an expert in budget and tax policy, Garrett was appointed by President George W. Bush to the nine-member bipartisan Advisory Panel on Federal Tax Reform in February. The panel will present its recommendations for revising the U.S. tax code in late July.Garrett said she is ready for the challenge of taking USC to the next level of excellence. In particular, she said USC's focus on interdisciplinary programs promises to stimulate research, scholarship and teaching that will allow the university to become among the most "innovative and influential," she said.

July 29, 2005 in Tax Profs | Permalink | TrackBack (0)

Wood on Structuring Attorney Fees

Tax_analysts_62Robert W. Wood (Robert W. Wood, P.C., San Francisco) has published Structuring Attorney Fees:  Kingdom of Heaven?, also available on the Tax Analysts web site as Doc 2005-15920, 2005 TNT 142-28.  Here is the Conclusion:

Properly constructed attorney fee structures are unlikely to be struck down. Not only do they serve many tax and financial goals, they offer the beauty of tax-deferred investing, the tax and nontax benefits of income averaging, and even serve asset protection goals. Most plaintiffs' lawyers understand the dynamics of a structured personal physical injury settlement for a client. It's not a big leap from that kind of structure to an attorney fee structure.

I believe there will still be cases dealing with IRS assertions of constructive receipt and economic benefit arising out of attorney fee structures. However, I think they will probably be the marginal cases in which documents are poorly done or in which the realities of the arrangement are not respected.

July 29, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Anderson on Casino Taxation in the United States

Ntj_logo_1John E. Anderson (University of Nebraska-Lincoln, Department of Economics) has published Casino Taxation in the United States, 58 National Tax Journal 303-24 (June 2005). Here is the abstract:

This paper provides an overview of the forms of taxation that are applied to casinos by state and local governments, and analyzes those taxes and fees from a policy perspective. First, the paper contains a comprehensive review of the taxes and fees applied to commercial casinos in the 11 states where casinos are legal. The two most common forms of taxation include a tax on the net amount gambled (AGR, adjusted gross receipts, or gross receipts minus prizes paid) and admission taxes charged on riverboat casinos. A wide range of tax rates are applied to AGR by the states. Second, economic analysis of the efficiency and equity issues related to casino taxes is presented. Included in the analysis is consideration of the revenue offsets involved with other state and local taxes and the uses of the funds. Finally, a summary of our current knowledge of casino taxation and suggestions for needed research are presented.

July 29, 2005 in Scholarship | Permalink | TrackBack (0)

Thursday, July 28, 2005

Kearney on The Economic Winners and Losers of Legalized Gambling

Ntj_logo_1 Melissa Schettini Kearney (Brookings Institution) has published The Economic Winners and Losers of Legalized Gambling, 58 National Tax Journal 281-302 (June 2005). Here is the abstract:

This paper reviews the government role in the legalized gambling sector and addresses some of the major issues relevant to any normative analysis of what the government role should be. In particular, the paper reviews evidence identifying the economic "winners" and "losers" associated with the three largest sectors of the industry: commercial casinos, state lotteries, and Native American casinos. The paper also includes a discussion of the growing Internet gambling industry. In addition to reviewing existing literature and evidence, the paper raises relevant questions and policy issues that have not yet been adequately addressed in the economics literature.

July 28, 2005 in Scholarship | Permalink | TrackBack (0)

IRS Tax Forum Summer Tour Stops in Atlanta

Irs_logo_107 Atlanta The IRS Nationwide Tax Forum summer tour concludes its 3-day run today in Atlanta:

The Nationwide Tax Forums feature a variety of basic and advanced seminars that provide the tax professional community with the latest information on IRS policies and programs. Among the topics on the 2005 agenda are like-kind exchanges, estate and trust planning, identity theft, retirement plans for small businesses, alternative minimum tax and recent tax law changes. The seminars are conducted by IRS experts and tax industry leaders from the American Bar Association, the American Institute of Certified Public Accountants, the National Association of Enrolled Agents, the National Association of Tax Professionals, the National Society of Accountants and the National Society of Tax Professionals. Tax professionals are invited to bring unresolved cases or questions to IRS representatives for on-site resolution.  For the full program, see here.

July 28, 2005 in IRS News | Permalink | TrackBack (0)

More Estate Tax News

Center on Budget and Policy Priorities, New Kyl Proposal Still Calls for Applying Capital Gains Rate to Estate Tax, So Revenue Loss Would Be Substantial (7/27): Criticizes estate tax compromise proposed by Senator Jon Kyle (R-AZ):

  • $3.5 exemption ($7 million per couple), indexed for inflation after 2010
  • 15% tax rate (tied to capital gains rate)

New York Times, Bills on Energy and Transportation Move Toward Passage (7/28)

Senator Bill Frist, the majority leader, announced he would not try to force a vote in the next few days on a repeal of the estate tax, leaving that issue until Congress returned in September.

Wall Street Journal, Fuzzy Tax Math (7/28):

Senate Majority Leader Bill Frist disappointed Republicans and grassroots activists again yesterday with his decision not to hold a vote this week to eliminate the death tax. He's rescheduled a vote for September, but supporters are beginning to wonder if the world's greatest deliberative body will ever get around to passing one of the GOP's most popular priorities.

The explanation for this nonsense is that Congress has subordinated much of its tax-writing function to the unelected number crunchers at the Joint Committee on Taxation (JCT).

The Joint Tax calculations of the "cost" of death tax repeal have been particularly wild and inexplicable....This year the JCT is peddling another indefensible death-tax cost estimate: $300 billion in lost tax collections. This guess also turns a blind eye to any dynamic impact of faster economic growth, more savings, more job creation, and more capital investment that can be anticipated once the tax is gone.

In addition to being bad math and bad economics, all of this works to distort tax policy....Death should not be a taxable event, as most other serious countries seem to understand. A study released last week by the American Council on Capital Formation finds that of 60 major nations around the world, only two have higher death tax rates than the U.S. and 24 have no inheritance tax at all. America is about the most expensive place to die on the planet.

July 28, 2005 in News | Permalink | TrackBack (0)

White Collar Criminal Cases Often Include Tax Charges

Maine Court Holds Residency Statute Unconstitutionally Vague

Maine_2 Fascinating story in the local Portland, Maine paper: Law Criticized as Tax Case Dropped:

A Superior Court justice dismissed tax evasion charges against two Maine Maritime Academy graduates Tuesday, in what some called a landmark decision for Maine tax law. Michael Falcone and James Jannetti were indicted by the state last year. Prosecutors said they claimed residency elsewhere to avoid paying Maine income taxes.

Superior Court Justice Roland Cole ruled that Maine's definition of residency is unconstitutionally vague. "Taxpayers like Falcone received no help from the tax statutes, and little guidance from the Maine Revenue Service instructions," Cole wrote in his 11-page decision.

(Of course, this raises an even more important tax question: does blogging this story make my family vacation deductible?)

July 28, 2005 in New Cases | Permalink | TrackBack (0)

Sheppard on European Wealth Taxes

Sheppard Tax_analysts_75Lee A. Sheppard (Contributing Editor, Tax Analysts) has published Was D Really Rich?, also available on the Tax Analysts web site as Doc 2005-15378, 2005 TNT 142-3.  In the article, Sheppard revisits the European Court of Justice's judgment in D, considering Europe's housing bubble and how overinflated real estate prices may have worsened the troubles of the German resident whose property in the Netherlands subjected him to the Dutch net wealth tax.

 

July 28, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Energy Tax Incentives Act of 2005

House Holds Hearing Today on Members' Tax Reform Proposals

House_of_rep_2The Subcommittee on Select Revenue Measures of the House Ways and Means Committee holds a hearing today on various tax reform proposals by House Members:

The focus of the hearing will be to examine proposals made by Members of the U.S. House of Representatives that satisfy the President’s objectives of fair, simple, and growth‑oriented tax reform.

The hearing will take place in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 am.

July 28, 2005 in Congressional News | Permalink | TrackBack (0)

Wednesday, July 27, 2005

Happy Birthday To Me!

Maine_1 Happy_birthdayI am celebrating my birthday today on the shores of Sebago Lake in Maine with my wife, 2 kids, 80-year old father, and sister -- life is good!

 

July 27, 2005 in About This Blog | Permalink | TrackBack (0)

IRS Attorney Directory by Code Section & Subject Matter

Tax_analysts_logo_34 Irs_logo_45The monthly update of the 116-page directory of attorneys in the IRS Chief Counsel's Office, arranged by Internal Revenue Code Section and Subject Matter, for June 2005, is available on the Tax Analysts' web site.      

July 27, 2005 in IRS News, Tax Analysts | Permalink | TrackBack (0)

Tax Profs on the Radio

RadioCheck out the archives of Professor Michael Myers’s Elder Law Forum radio show at the Unviersity of South Dakota and listen to tax profs like Roger Baron, Pat Dilley, Randy Gingiss, and Frank Slagle.  (You can listen via Windows Media, RealPlayer, QuickTime, or Radio Quality MP3.)  Email Mike here if you would like to appear on the show to discuss your research on tax issues affecting the elderly.  (Hat Tip: Jonathan Barry Forman.) 

 

July 27, 2005 in Tax Profs | Permalink | TrackBack (0)

Johnson on KPMG's FLIP/OPIS Tax Shelter

Tax_analysts_151 Johnsonsg Calvin H. Johnson (Texas) has published Tales from the KPMG Skunk Works:  The Basis-Shift or Defective-Redemption Shelter, 108 Tax Notes 431 (July 25, 2005), also available on the Tax Analysts web site as Doc 2005-14507, 2005 TNT 142-30.  Here is part of the absrtact:

In this report, Johnson argues that the basis-shift or defective-redemption shelter, called FLIP or OPIS by KPMG, was an early product of KPMG's endeavor to develop complete tax packages that could be sold for multimillion-dollar fees to many customers. The FLIP/OPIS shelter gives a rare opportunity, he says, to see both KPMG internal deliberations and also the profession's many independent evaluations. KPMG said the shelter was likely to prevail, Johnson writes, but the tax profession has reached a consensus that the shelter did not meet professional standards, shown by its acceptance of the IRS's generous settlement offer.

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July 27, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (1)

IRS To Audit 5,000 S Corp Returns

Irs_logo_117 The IRS has announced (IR-2005-76) plans to audit 5,000 randomly selected S corporation returns from 2003 and 2004 as part of a National Research Program study to assess the reporting compliance of S corporations.

 

July 27, 2005 in IRS News | Permalink | TrackBack (0)

Grubert Debates Desai & Hines on U.S. Tax Burden on Foreign Income

Ntj_logo_1 Harry Grubert Ttreasury Department) has published Comment on Desai and Hines, Old Rules and New Realities: Corporate Tax Policy in a Global Setting, 58 National Tax Journal 263-74 (June 2005). Here is the abstract:

In the December 2004 issue of the National Tax Journal, Desai and Hines claim that the current "U.S. tax burden on foreign income is in the neighborhood of $50 billion a year."  This note shows that each step in their analysis is based on flawed theory and the misinterpretation of data.

Mihir A. Desai (Harvard Business School) & James R. Hines Jr. (University of Michigan Business School) have published Reply to Grubert, 58 National Tax Journal 275-78 (June 2005). Here is the abstract:

The spirited comment by Grubert (2005) on Desai and Hines (2004) is a useful continuation in the ongoing debate on the appropriate taxation of foreign income. It raises numerous points on which intuition can easily go astray and, thereby, indirectly illustrates the benefits of hard and dispassionate analysis. While it is tempting to reply individually to every point raised in this comment, its length suggests that interested readers would benefit most from revisiting the original article. Accordingly, the function of this reply is to address some of the central issues in a manner that may serve to prevent further confusion.

July 27, 2005 in Scholarship | Permalink | TrackBack (0)

Tuesday, July 26, 2005

More Estate Tax News

Weisbach on The (Non) Taxation of Risk

Tax_law_reviewWeisbach_2_1_1 David A. Weisbach (Chicago) has published The (Non) Taxation of Risk. 58 Tax L. Rev. 1-57 (2004).  Here is the abstract:

A long line of literature argues that income taxes do not tax the return to risk bearing. The conclusion, if correct, has important implications for the choice between an income tax and a consumption tax and for the design of income taxes. The literature, however, on its face seems unrealistic because it models only very simplified tax systems, assumes perfect rationality by individuals, and requires the government to take complex positions in securities markets to hold in equilibrium. This paper examines the extent to which these problems affect the conclusions we draw from the literature. It argues that the criticisms are overstated. Moreover, the criticisms do not detract from the central value of the models, which is to understand ideal income taxes, which are the purported goal of most who support an income tax.

July 26, 2005 in Scholarship | Permalink | TrackBack (0)

Beale on Congress Fiddles While Middle America Burns: Amending the AMT (and Regular Tax)

Beal75 Ssrn_logo_32Linda M. Beale (Illinois) has posted Congress Fiddles While Middle America Burns: Amending the AMT (and Regular Tax), 6 Fla. Tax Rev. 811 (2004), on SSRN.  Here is the abstract:

Several features of the budgetary context and the interaction of the alternative minimum tax (AMT) and the regular tax system suggest that the AMT will increasingly reach into the pool of ordinary taxpayers over the next few years. Taxpayers with incomes of less than $100,000 may in fact constitute the majority of AMT payers. The increase in taxpayers subject to the AMT over time creates a quandary - the longer Congress waits to reform the AMT, the more it will cost to do so, as the AMT becomes an increasingly important source of revenues. Many commentators have nonetheless called for outright repeal of the AMT. This article, however, urges that the appropriate response to these challenges should be AMT reform, not repeal.

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July 26, 2005 in Scholarship | Permalink | TrackBack (0)

Sigler on Stock Option Strategies for Employees

Tax_analysts_146 Kevin D. Sigler (University of North Carolina-Wilmington) has published Stock Options: Taxes and Tax Strategies for Employees, 108 Tax Notes 427 (July 25, 2005), also available on the Tax Analysts web site as Doc 2005-15180, 2005 TNT 138-27.  Here is the abstract:

Qualified incentive stock options (ISOs) and nonqualified stock options are used by corporations as types of equity compensation for employees. Qualified options provide tax benefits but have complicated tax consequences. When compared to qualified ISOs, nonqualified options have the disadvantage that taxable income must be reported at the time nonqualified options are exercised, and the income is taxed as ordinary income and not as a long-term capital gain. Qualified ISOs avoid that disadvantage because there is no income to report at the time the qualified option is exercised unless the stock is sold at the same time it is exercised. And qualified options can qualify for long-term capital gain treatment for the entire appreciation above the exercise price if they are held for a specific period of time.

But the tax advantages from qualified incentive stock options may be offset by the alternative minimum tax. This is a complicated calculation that may cause the taxpayer to pay tax at the time the qualified options are exercised and may also negate the long-term capital gain rate on the sale of both qualified and nonqualified option stock. Also, the $100,000 restriction on the grant value of qualified option stock may negate the special tax treatment it has above the $100,000 limit. This article discusses both qualified and nonqualified options, reviews how they are taxed, and offers strategies to minimize taxes on both types of options.

July 26, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Nary a Tax Lawyer on NBC's The Law Firm

There is not a tax lawyer among the 12 associates duking it out on NBC's new reality show, The Law Firm.  The bios of the associates list a variety of legal specialties (including civil litigation, criminal defense, employment law, entertainment law, personal injury), but not one is a tax lawyer.

July 26, 2005 in Celebrity Tax Lore | Permalink | TrackBack (0)

England & Zhao on Assessing the Distributive Impact of a Revenue–Neutral Shift from a Uniform Property Tax to a Two-Rate Property Tax with a Uniform Credit

Ntj_logo Richard W. England (Lincoln Institute of Land Policy, Cambridge, MA) & Min Qiang Zhao (Ohio State University, Department of Economics) have published Assessing the Distributive Impact of a Revenue–Neutral Shift from a Uniform Property Tax to a Two-Rate Property Tax with a Uniform Credit, 58 National Tax Journal 247-60 (June 2005). Here is the abstract:

A number of economists have argued that a property tax with a lower rate applied to improvement values than to land values is superior to a property tax with a uniform tax rate that yields the same total revenue. This paper explores the statutory incidence of shifting to two–rate property taxation from single–rate property taxation. The authors recommend a tax credit provision to mitigate the regressive tendencies of this type of tax reform.

July 26, 2005 in Scholarship | Permalink | TrackBack (0)

Monday, July 25, 2005

Judge Roberts' Supreme Court Record in Tax Cases

Supreme Court nominee John Roberts argued four tax cases before the Court and prevailed in three of them:

Roberts Victories:

Roberts Defeat:

July 25, 2005 in Political News | Permalink | TrackBack (0)

ABA Real Property, Probate & Trust Section Proposes Amendments to § 6166

Real_property_probate_trust_6The Business Planning Group of the ABA Section on Real Property, Probate & Trust Law has proposed various amendments to § 6166, which allows closely-held businesses to defer payment of estate tax.  The proposal is based on this survey of its members.

July 25, 2005 in ABA Tax Section | Permalink | TrackBack (0)

Cushing on Net Marginal Social Security Tax Rates over the Life Cycle

Ntj_logo Matthew J. Cushing (University of Nebraska-Lincoln, College of Business Administration) has published Net Marginal Social Security Tax Rates over the Life Cycle, 58 National Tax Journal 227-45 (June 2005). Here is the abstract:

This paper estimates net marginal Social Security tax rates, by age, for the cohorts of workers covered by Social Security in 2000, 2010, 2020 and 2030. The paper updates and extends Feldstein and Samwick's (1992) study. In contrast to their study, which found net tax rates much higher for young workers relative to older workers in 1990, this paper finds net tax rates to be relatively uniform across age groups. This paper's inclusion of the Disability Insurance program, the projected decline in future mortality rates, and the continued phase–in of higher retirement ages accounts for our sharply differing conclusions.

July 25, 2005 in Scholarship | Permalink | TrackBack (0)

Joint Tax Committee Releases Description of 2005 Tax Technical Corrections Act

Blue_book_13The Joint Committee on Taxation has issued issued Description of the "Tax Technical Corrections Act Of 2005" (JCX-55-05).  Here is the Introduction:

This document, prepared by the staff of the Joint Committee on Taxation, provides a description of the “Tax Technical Corrections Act of 2005.” The bill was introduced on July 21, 2005, as H.R. 3376 in the House of Representatives and as S. 1447 in the Senate.

July 25, 2005 in Gov't Reports | Permalink | TrackBack (1)

Buckley on The Tangled Web of the Individual AMT

Tax_analysts_147John Buckley (Chief Tax Counsel, House Ways and Means Committee Democratic Staff) has published The Tangled Web of the Individual AMT, 108 Tax Notes 347 (July 18, 2005), also available on the Tax Analysts web site as Doc 2005-14434, 2005 TNT 138-28.  The article discusses the coming explosion in the number of taxpayers who will have to pay the alternative minimum tax.

July 25, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Kim on Anti-Speculation Laws and Their Impact on Korean Real Estate and Financial Markets

Jasper Kim (Graduate School of International Studies, Ewha University, Seol, South Korea) has published Anti-Speculation Laws and Their Impact on the Real Estate and Financial Markets: The Korean Case, 18 Colum. J. Asian L. 47 (2004).  Here is the Conclusion:

The Anti-Speculation Laws may seemingly represent a good faith effort on behalf of the Korean government to curb real estate investment speculation. However, notable risks and increased tax burdens exist (such tax burdens applying to nearly every type of investor, not only to short-term property investors, but also to long-term property investors as well) which could outweigh the benefits of the Anti-Speculation Laws' objective of curbing perceived short-term property investment speculation.

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July 25, 2005 in Scholarship | Permalink | TrackBack (0)

Sunday, July 24, 2005

Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement on this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with two new papers debuting at #4 and #5: 

1.  Travails in Tax: KPMG and the Tax-Shelter Controversy, by Tanina Rostain (New York Law School)

2.  Corruption, Inequality and Fairness, by Alberto F. Alesina (Harvard, Department of Economics; NBER) & George-Marios Angeletos (MIT, Department of Economics; NBER)

3.  Tax Treaties for Investment and Aid to Sub-Saharan Africa: A Case Study, by Allison Christians (Wisconsin)

4.  Neuroeconomics and Rationality, by Terrence R. Chorvat (George Mason) & Kevin McCabe (George Mason University, Department of Economics)

5.  Regulating 527 Organizations, by Gregg D. Polsky (Minnesota) & Guy-Uriel E. Charles (Minnesota)

July 24, 2005 in Top 5 Downloads | Permalink | TrackBack (0)

More Developments in the Kanter/Ballard Saga

More developments in the Kanter/Ballard/Lisle saga of special trial judge reports in the Tax Court:

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In an extraordinary move, Tax Court Chief Judge Joel Gerber released statements from two judges and the special trial judge involved in the Kanter, Ballard, and Lisle cases describing the procedure followed by the Tax Court in adopting its memorandum opinion in those cases, Estate of Lisle v. Commissioner, Nos. 21555-91, 16164-92 & 75557-93 (7/19/05), also available on the Tax Analysts web site as Doc 2005-15506, 2005 TNT 139-14

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On Friday, Crystal Tandon & Karla L. Miller published Judges' Statements on Kanter, Ballard Provoke Dismay, available on the Tax Analysts web site as Doc 2005-15578, 2005 TNT 140-3.

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Also on Friday, Geri L. Dreiling published Tax Court Secrets Revealed; Policy Change Will Make Public Trial Court Reports That Were Formerly Off-Limits, ABA Journal e-Report (7/22/05)

(Thanks to Leandra Lederman for the tips.)  For prior TaxProf Blog coverage, see here, here, here, here, and here.

July 24, 2005 in New Cases | Permalink | TrackBack (0)

Dye, McGuire & McMillen on Are Property Tax Limitations More Binding over Time?

Ntj_logo Richard F. Dye (Lake Forest College, Department of Economics), Therese J. McGuire (Northwestern University, Kellogg School of Management) & Daniel P. McMillen (University of Illinois-Chicago, Department of Economics) have published Are Property Tax Limitations More Binding over Time?, 58 National Tax Journal 215-25 (June 2005). Here is the abstract:

In 1991, a property tax limitation measure was imposed in five Illinois counties. Dye and McGuire (1997) studied its short–term impact. With the limit now in effect for over a decade and extended to many more counties, we assess its long–term impact. Because jurisdictions brought under the limitation since 1997 have done so after a county–option referendum, our estimation strategy treats the measure as endogenous. We find that the restraining effect of the limit on the growth of property taxes is stronger in the long run than the short run, and that the growth of school expenditures is slowed by the measure.

July 24, 2005 in Scholarship | Permalink | TrackBack (0)

Desai on The Degradation of Reported Corporate Profits

Desai_2 Ssrn_logo_5 Mihir Desai (Harvard Business School) has posted The Degradation of Reported Corporate Profits on SSRN.  Here is the abstract:

U.S. firms are afforded the opportunity to characterize profits to capital markets and tax authorities in distinct ways. How does the latitude afforded managers influence the quality of these corporate profit reports? This paper traces the evolution of the dual reporting system and assesses its impact on corporate profit reporting. Case-based evidence suggests that managers exploit the differences between book and tax reporting opportunistically thereby reducing the quality of corporate profit reporting both to tax authorities and the capital markets. More systematic evidence provided in the paper suggests that both types of profit reporting have degraded in quality and various reasons for this degradation, and its relationship to the dual reporting system, are considered. The degradation of profit reporting brings into question the confidential nature of corporate tax returns, the rationale for two books and the nature of the corporate tax.

July 24, 2005 in Scholarship | Permalink | TrackBack (0)

Saturday, July 23, 2005

Spotlight_2Jay A. Soled (Rutgers Business School)

      • B.A. 1985, Haverford
      • J.D. 1988, Michigan
      • LL.M. (Taxation) 1989, NYU 

 

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TAXPROF. So states my license plate, proclaiming to the world that I am proud to be a tax professor.  [Editor's Note:  He's not kidding -- check out the picture below, previously blogged here.]

Not unexpectedly, my journey into the world of tax began where most tax professors begin their tax odyssey—law school. At Michigan, I had the pleasure of learning tax from three of the country’s leading tax scholars: Douglas Kahn, Richard Schmelback (who was visiting from Duke), and Lawrence Waggoner. Even today, I remain inspired by the energy each of them put into the classroom experience.

Taxprofplate After Michigan, I went into private practice in the tax department at a large New Jersey law firm. I began my teaching career lecturing about estate planning for adult classes and conducting various financial planning seminars. Then my big break came: I heard that Rutgers Business School was looking for adjunct professors to help staff its new masters program in taxation. I jumped on this opportunity, teaching income taxation, corporate taxation, estate & gift taxation, partnership taxation, and federal tax procedure. Four years later, Rutgers Business School offered me a tenure-track position. I enjoyed the classroom experience so much that this decision was one of the easiest I ever made, and in 1995 I joined Rutgers faculty on a full-time basis.

Continue reading

July 23, 2005 in Tax Prof Spotlight | Permalink | TrackBack (0)

Willens on Conducting an Acquired Business in a Lower-Tiered Entity

Tax_analysts_145 Robert Willens (Managing Director, Lehman Brothers, New York) has published Conducting an Acquired Business in a Lower-Tiered Entity, 108 Tax Notes 353 (July 18, 2005), also available on the Tax Analysts web site as Doc 2005-14129, 2005 TNT 138-29.  The article discusses the continuing vitality of the remote continuity of interest doctrine.

July 23, 2005 in Scholarship, Tax Analysts | Permalink | TrackBack (0)

Blumenthal, Erard & Ho on Participation and Compliance with the Earned Income Tax Credit

Ntj_logo Marsha Blumenthal (University of St. Thomas), Brian Erard (B. Erard & Associates, Reston, VA) & Chih–Chin Ho (National Taiwan University) have published Participation and Compliance with the Earned Income Tax Credit, 58 National Tax Journal 189-213 (June 2005). Here is the abstract:

We explore participation and compliance with the Earned Income Tax Credit (EITC) using a unique administrative data source. Among eligible households with a legal filing requirement, we find that EITC participation is high and that it responded positively to the rise in real benefit amounts during the 1990s. Although participation has also improved among households with no legal filing obligation, it remains rather low and may actually be inferior to participation within more traditional welfare programs. Compliance with the EITC has been a persistent problem. We find that erroneous claims are much more common among households who satisfy some (but not all) program requirements. We find no evidence of a deterrent role by tax practitioners with respect to improper claims.

July 23, 2005 in Scholarship | Permalink | TrackBack (0)

Pietruszkiewicz Leads Discussion on 2006 SEALS Annual Meeting Topics

Seals_1Christopher Pietruszkiewicz (LSU), President-Elect of the Southeastern Association of Law Schools (SEALS) leads a discussion on Possible Topics for the 2006 Annual Meeting at 8:00 am today at the 2005 SEALS Annual Meeting on Hilton Head, South Carolina.

July 23, 2005 in Conferences | Permalink | TrackBack (0)

Friday, July 22, 2005

Kelley on Rediscovering Vulgar Charity: A Historical Analysis of America's Tangled Nonprofit Law

KelleyThomas A. Kelley (North Carolina) has published Rediscovering Vulgar Charity: A Historical Analysis of America's Tangled Nonprofit Law, 73 Fordham L. Rev. 2437 (2005).  Here is the abstract:

Charitable organizations in the United States find themselves in a double bind these days. On one hand, our free-market American culture expects them to be entrepreneurial and bottom-line oriented, adopting many of the methods and practices of commercial enterprises. On the other hand, courts and governmental agencies, the IRS in particular, threaten and punish charities when they become too commercial. Charities live in fear of being ensnared by confusing and contradictory legal doctrines such as the operational test, the commerciality doctrine, the unrelated business income tax, and the commensurate in scope doctrine. This paper takes a historical approach to explaining why we find ourselves in this vexing bind, then proposes in broad outline a possible legislative fix.

July 22, 2005 in Scholarship | Permalink | TrackBack (0)

Tax Foundation Files Amicus Brief in Cuno v. DaimlerChrysler

Tax_foundation_logo_2For the first time in its 68-year history, the Tax Foundation has filed an amicus brief with the U.S. Supreme Court, requesting that the Court grant certiorari in Cuno v. DaimlerChrysler, 386 F.3d 738 (6th Cir. 2004) (previously blogged here, here, here, here, and here).  Here is the Executive Summary:

The Supreme Court’s guidance is needed to prevent immediate and permanent harm to commerce, particularly in Sixth Circuit states. The Court should grant certiorari because the Sixth Circuit’s ruling imperils the ability of the states—especially those in the Sixth Circuit (Kentucky, Michigan, Ohio, and Tennessee)—to compete for investment. This case involves an important issue of federalism: It affects the balance of authority between the federal and state governments. The Sixth Circuit has severely limited states’ autonomy in adopting their own competitive tax policies. Accordingly, this is exactly the kind of case the Supreme Court needs to decide.

The Supreme Court should also grant certiorari to provide needed clarity to its own decisions on the limitations imposed by the Commerce Clause on state tax authority. The Supreme Court’s own sweeping language in several of its past opinions serves, in part, as the basis for the lawsuit in this case. In fact, certain statements made by the Supreme Court in the past, if taken literally, could serve as the basis for even more lawsuits in the future against other state tax and spending programs. The Supreme Court’s review of this case is needed to clarify the standards for discrimination under the Commerce Clause.

Finally, the Supreme Court should grant certiorari to emphasize an important point: the Commerce Clause does not require a state to be more generous to out-of-state taxpayers than in-state taxpayers. The Sixth Circuit’s focus on pre-existing tax liability and coercion would turn the Commerce Clause on its head and require Ohio to give investment tax credits only when an investor first comes to Ohio from another state, a ruling that cannot be squared with the Supreme Court’s rulings that the Commerce Clause requires fair, not special, treatment of interstate commerce.

July 22, 2005 in Think Tank Reports | Permalink | TrackBack (0)