Monday, April 24, 2006
The current debate on whether the US tax base should be income or consumption has been waged in terms of the traditional criteria for evaluating tax policy - efficiency, equity and administrability. Proponents of the consumption tax have argued that it is superior to the income tax on all three grounds. If that argument is correct, it is difficult to understand why most countries have both income and consumption taxes, and why countries like the United States adopted the income tax as a substitute for consumption taxes. This paper argues that the debate omits consideration of the goals of taxation in the modern era, which are (1) to raise revenue for government activities, (2) to mitigate unequal distributions of wealth in society, and (3) to regulate private economic activity. When these goals are taken into consideration, it is clear that both income and consumption taxes have a role in modern tax policy, and that the US should follow the path of other developed countries and employ both at the federal level.
When I had a dose of experience, I tried to move up, applying to Coopers and Lybrand, a large firm. Since I had the experience, they took a chance on me, even though I didn't go to a great Ivy League college. While there, I did what I advise, I read everything -- I read the entire Internal Revenue Code, the regulations and something called the BNA portfolios on taxes -- all cover to cover. All this while going to law school at night. I got to the office at 5:30 a.m. and left at 6 p.m. to go to law school at night.
Interesting New York Times article: Property Tax Dispute Threatens Band of Polygamists, by Kirk Johnson:
Thousands of polygamists are engaged in a highly unusual standoff here over property taxes that could ultimately cost them their houses or thrust them into a mainstream America they fear and despise.
In one corner is a group of 8,000 or so adherents of the Fundamentalist Church of Jesus Christ of Latter Day Saints, an offshoot of the Mormon Church that had long paid the property taxes of its members, sometimes even rolling a wheelbarrow through meetings to collect the needed cash.
Seth J. Chandler (Houston) has reverse engineered the U.S. News law school rankings in Analyzing US News & World Report Rankings Using Symbolic Regression.
Seth has developed a four-factor model that predicts the U.S. News law school rankings with an R-Squared statistic of 97.7%. The four factors are:
- Peer reputation rating (Peer)
- Employed at nine months after graduation (Employed9)
- Student-faculty ratio (SFRatio)
- 75th percentile UGPA (UGPA75)
The formula is: 8.3124 + 0.04139Peer(1.1487Employed9-SFRatio)UGPA75
Example: Connecticut has a Peer rating of 2.9, an Employed9 rating of 96.4, a SFRatio of 11.8, and a UGPA75 of 3.63. The model predicts a score of 51, which is Connecticut's actual U.S. News score.
Seth also has developed a seven-factor model that predicts the U.S. News law school rankings with an R-Squared statistic of over 99%.
In our article, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83, 87 n.9 (2006), we discuss the claim by Tom Bell (Chapman) that he has reverse engineered the U.S. News rankings:
- The Puzzle of Penn Law School's Ranking (5/24/05)
- Gory Details, by Demand (5/24/05)
- Rank This Job (5/1/05)
The IRS recently released Information Letter 2006-0027, which noted that "payments made by a tax-exempt organization, pursuant to its purpose statement, to help needy individuals pay for the cost of an adoption" are nontaxable gifts and not income:
Situation 2 of Rev. Rul. 2003-12, 2003-1 C.B. 283, considered whether a grant received by an individual under a § 501(c)(3) charitable organization’s program to pay or reimburse certain expenses incurred as a result of a disaster was includable in the individual’s gross income. Rev. Rul. 2003-12 cites Rev. Rul. 99-44, 1999-2 C.B. 549, for the proposition that “in general, a payment made by a charity to an individual that responds to the individual’s needs, and does not proceed from any moral or legal duty, is motivated by detached and disinterested generosity.” In Situation 2 of Rev. Rul. 2003-12, the grants made by the charitable organization are designed to help distressed individuals with unreimbursed medical, temporary housing, or transportation expenses they incur as a result of a flood. Under these facts, Rev. Rul. 2003-12 concludes that payments made by the § 501(c)(3) charitable organization are made o ut of detached and disinterested generosity rather than to fulfill any moral or legal duty and, thus, are excluded from the gross income of the recipients under § 102. Rev. Rul. 2003-12 also concludes that the amounts excluded from gross income under the ruling are not subject to information reporting under § 6041.
Thus, payments analogous to those described in your letter have been held to be gifts and, therefore, not includible in the recipient’s gross income or subject to information reporting if the payments are made directly to the needy individuals.
Sunday, April 23, 2006
Form N-12, Hawaii Individual Tax Form (Line 33):
Exceptional trees deduction (attach affidavit)
Hawaii Individual Income Tax Instructions (Page 38):
Line 33 Exceptional Trees Deduction. You may deduct up to $3,000 per exceptional tree for qualified expenditures you made during the taxable year to maintain the tree on your private property. The tree must be designated as an exceptional tree by the local county arborist advisory committee under chapter 58, HRS. Qualified expenditures are those expenses you incurred to maintain the exceptional tree (excluding interest) that are deemed “reasonably necessary” by a certified arborist. No deduction is allowed in more than one taxable year out of every three consecutive taxable years. The deduction is allowed for amounts paid in taxable years beginning after December 31, 2003.
An affidavit signed by a certified arborist stating that the amount of expenditures are deemed reasonably necessary must be attached to your tax return. The affidavit also must include the following information: (1) type of tree, (2) location of tree, and (3) description and amount of expenditures made in 2005 to maintain the tree. The affidavit must be notarized.
(Hat Tip: Tax Policy Blog.)
We previously have blogged (links below) the American Law Deans Association's challenge to the ABA's authority to use its accreditation power to require tenure or long-term contracts for deans, faculty, clinical faculty, legal writing instructors, and law library directors. Recent developments:
- Law Deans Criticize Their Accreditor, by Doug Lederman (Inside Higher Ed)
- Law Deans Deans Association Criticizes ABA Accreditation Standards, by David Bernstein (The Volokh Conspiracy)
- Bernstein on the Law Deans, Tenure, and the ABA, by Josh Wright (Truth on the Market)
- Reluctance To Call Required Preferences Required Preferences, by Josh Rosenberg (Discriminations)
- The Gatekeeper Effect on Law School Tenure, by Jim Downey (Rants & Raves on Just About Everything)
Prior TaxProf Blog coverage:
- Law Deans' Association Fights Tenure Requirement (4/3/06)
- More on Law Deans' Tenure Challenge (4/4/06)
- Tax Prof Profile: Jeffrey Kwall
- Where Do Your Tax Dollars Go?
- Application of Constructive Receipt Doctrine to Direct Deposit of Checks
- Kansas Faculty Making More Than $100k Subject to New Financial Disclosure Law
- Hanson & Sandalow on Greening the Tax Code
- Baylor Law Dean Closes Law Library for Son's Prom Dinner, Disrupting Students Preparing for Finals
- Top 5 Tax Paper Downloads
- Law Review and Court Citations to Legal Blogs
- IRS Wins First Court Test of "Son of Boss" Tax Shelter
- IRS on Tax Consequences of Extreme Makeover: Home Edition Reality TV Show
- WSJ: Can Bloggers Make Money?
Our sister Brian Leiter's Law School Reports flags this interesting story: Baylor Law Dean Closes Law Library for Son's Prom Dinner, Disrupting Students Preparing for Finals. See the full story here from the Waco Tribune:
The dean of Baylor Law School said he was wrong to let his son use part of the school’s library for a high school prom dinner Saturday evening as law students prepared for finals. Some law students were upset Saturday when they learned that the library would not be available to them between 4 and 8 p.m., as Dean Brad Toben’s son and about 40 classmates were using a portion of the library for the dinner. Final exams for the spring quarter began Saturday and run through Friday.
There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads on SSRN, with two new papers debuting at #4 and #5. Stephen Cohen's paper has risen to #42 all-time (out of 1741 tax papers on SSRN):
5. [99 Downloads] Taxing Undocumented Immigrants: Separate, Unequal and Without Representation, by Francine J. Lipman (Chapman) [blogged here]
Ohio State 3L Ian Best continues to do fascinating blog data mining on his 3L Epiphany blog. In recent days, he has posted data on the number of law review articles and cases that cite legal blogs. The hands down winner: our sister Sentencing Law & Policy blog by Doug Berman (Ohio State). Only four legal blogs have been cited by both law review authors and judges:
Law Review Citations
Sentencing Law & Policy
The Volokh Conspiracy
Legal Theory Blog
- New York Times: U.S. Judge Backs I.R.S. Ruling Invalidating Tax Shelter, Possibly Aiding U.S. Criminal Case, by Lynnley Browning
- Wall Street Journal: IRS Gets a Victory on Tax Shelter, by Robert Guy Matthews & David Reilly
- Tax Analysts: Government Scores Procedural Win in Son-of-BOSS Case
We have extensively blogged the proper tax treatment of payments received by taxpayers who participate in ABC's Extreme Makeover: Home Edition reality TV show (links below). The IRS recently released Information Letter 2006-0012, in response to a request from Congresswoman Marsha Blackburn (R-TN):
The producers . . . pay applicants $50,000 to rent their homes for 10 days. The producers advise the applicants that the home improvements are non-taxable under § 280A(g). The constituent asked that the Congress close this loophole and that the IRS ensure taxes are paid on income won on reality TV shows.
Due to disclosure and privacy laws, I cannot provide specific tax or taxpayer information on a taxpayer's case to anyone other than the taxpayer or the taxpayer's authorized representative. However, I can provide general information, which I hope is helpful....
To the extent that the value of the improvements constitutes a prize or an award, however, it cannot also be considered rent, and therefore could not qualify for the exclusion from gross income under § 280A(g).
- Extreme Makeover = Extreme Taxes? Tax Consequences of Home-Makeover TV Shows (5/10/04)
- More on Extreme Makeover = Extreme Taxes (5/12/04)
- Yet More on Extreme Makeover = Extreme Taxes (5/14/04)
- Extreme Makeover: Taxpayer Edition (7/5/04)
- More on Extreme Makeover: Taxpayer Edition (2/2/05)
- Student Note on Extreme Makeover (10/13/05)
- More Scholarship on Tax Consequences of Extreme Makeover: Home Edition (12/4/05)
The Wall Street Journal hosted an interesting (at least to me!) online debate on Can Bloggers Make Money? between Jason Calacanis (Co-Founder of Weblogs, Inc.) and Alan Meckle (CEO of Jupitermedia Corp.):
Blogs have a lot of buzz, but there's still considerable debate about whether that can translate into profits.
While many blogs remain little more than amateur diaries, several bloggers have tried to parlay their online ramblings into branded businesses. One, Jason Calacanis, co-founded Weblogs Inc., a network of blogging sites that was acquired last year by AOL. Mr. Calacanis has been an outspoken proponent of blogs as business vehicles, arguing that quality content can drive enough traffic to attract advertisers.
But longtime Internet entrepreneur Alan Meckler is skeptical. Mr. Meckler, who is chief executive of Jupitermedia Inc., believes that some blogs may achieve a measure of success, but doubts most blogs will be able to generate meaningful profits.
Saturday, April 22, 2006
Jeffrey L. Kwall (Loyola-Chicago; Visiting at Northwestern)
- B.A. 1977, Bucknell
- M.B.A. 1981, Penn
- J.D. 1981, Penn
I never contemplated a teaching career. After working my way through college, I set my sights on becoming a corporate lawyer in a big Wall Street firm. But the twists and turns of life lead one in unexpected directions.
After spending the summer after my first year of law school at a Philadelphia megafirm, the security of knowing I had a good home if desired allowed me to try something very different during my second summer. I found a mid-size firm in Beverly Hills that had begun as a tax boutique and evolved into a thriving general business practice. What a summer that was! My eyes were opened to the joys of a transactional practice where you did the tax work and executed the transaction in an environment that was nothing short of spectacular. But having spent my entire life in Pennsylvania, I wasn’t ready to give up the changing seasons so I spent my third year of law school searching for that Beverly Hills practice in an eastern (relatively speaking) locale. That search took me to many cities, one of which was Chicago, a place that I had never before seen but instantly felt like home.
Joe Milner, a computer progammer in Utah, has a cool web site, Where Are My Taxes. You type in your 2005 federal tax liability, and the site calculates where, to the penny, your tax dollars go among dozens of agencies, departments, and programs. For example, $4,000 of a $25,000 federal tax liability goes for the Treasury Department, broken down as follows:
Alcohol & Tobacco Tax Bureau $4.55
Bureau of the Public Debt $2.73
Financial Crimes Enforcement Network: $0.91
Financial Management Service: $98.34
Interest on Treasury securities: $2,259.98
Interest paid to trust fund accounts: $1,642.63
Interest paid to expenditure accounts: $55.54
Interest paid to Federal fund accounts: $50.99
Tax law enforcements: $43.71
Tax Information systems: $15.48
Tax Private collection agent program: $0.91
IRS other expenses: $528.12
The IRS recently released Information Letter 2006-0005, which provides guidance on the application of the constructive receipt doctrine in the context of the direct deposit of checks:
Generally, we consider checks income to a cash method taxpayer in the year he or she receives them unless constructively received in an earlier year. The fact that a check is issued in one year and received in another does not make the check taxable in the year issued. Checks sent through the mail are typically taken into income in the year the taxpayer actually receives them, unless the amounts are made available to the taxpayer in the earlier year. In other words, unless the taxpayer had access to or control over the check in the first year, no constructive receipt of the check occurred in the first year and the taxpayer should recognize the income in the second year when he or she actually received the check. However, if a taxpayer has the option of receiving payments by direct deposit instead of by checks sent through the mail, there may be constructive receipt of a payment on the earlier date that the direct deposit would have been made.
- List any corporation, partnership, proprietorship, trust, joint venture and every other business interest, including land used for income, and specific stocks, mutual funds or retirement accounts in which either you or your spouse has owned within the preceding 12 months a legal or equitable interest exceeding $5,000 or 5%, whichever is less.
- List any person, business or combination of businesses from which you or your spouse either individually or collectively, have received in the preceding 12 months, without reasonable and valuable consideration, goods or services having an aggregate value of $500 or more.
- List all places of employment in the last calendar year, and any other businesses from which you or your spouse received $2,000 or more in compensation (salary, thing of value, or economic benefit conferred on you or your spouse in return for services rendered, or to be rendered), which was reportable as taxable income on your federal income tax returns.
- List any organization or business in which you or your spouse hold a position as officer, director, associate, partner or proprietor at the time of filing, irrespective of the amount of compensation received for holding such position.
- List each client or customer who paid fees or commissions to a business or combination of businesses from which fees or commissions you or your spouse received an aggregate of $2,000 or more in the preceding calendar year.
- List of Kansas faculty making over $100,000
- Kansas Professors Assail New Law on Financial Disclosure, Chronicle of Higher Education
- New, Little-Known Law that Requires Disclosure of Financial Details Angers Some KU Professors, Lawrrence Journal-World
- Number of Employees Who Earn $100K Rises, Lawrrence Journal-World
In recent years several Republican and Democratic governors have imposed new pollution taxes, often winning bipartisan acclaim. A growing number of commentators have supported such measures at the federal level.
Analysis indicates that taxes on air and water pollution could generate substantial revenue for the U.S. Treasury while improving environmental quality, stimulating technological innovation and enhancing energy security. Reducing tax expenditures with adverse impacts on natural resources could do the same. As lawmakers explore ways to reduce federal budget deficits and reform the tax code, they should consider measures that shift more of the tax burden onto activities—such as pollution—that make the economy unproductive or reduce quality of life.
This policy brief examines fiscal instruments that both raise revenue and help improve environmental quality. The paper analyzes several different types of pollution taxes, considers current tax expenditures with adverse environmental impacts, discusses ways of integrating these instruments into tax reform packages and suggests directions for further research
Friday, April 21, 2006
Bartlett's decision to step down comes as the school completes a five-year strategic plan. "The last five years we have pushed hard to add a record number of exceptional new faculty, recruit an increasingly talented student body and strengthen the school's commitment to community, leadership, and faculty-student collaboration," Bartlett said. "The law school is well positioned now to attract a strong leader who can build on what the faculty has achieved in the last several years."
One of Bartlett's most important goals for the remainder of her deanship is the completion of the school's building initiatives, which include renovation of the law library and a new atrium that will provide much needed space for students and public functions. Under Bartlett's leadership, nearly all of the school's classrooms have been renovated and a 30,000-square-foot addition has expanded space for faculty as well as for clinic and journal offices.
6th Circuit Splits on Standard of Review to be Applied to Tax Court Determination in Debt v. Equity Case
Indmar Products Co. v. Commissioner, No. 05-1573 (6th Cir. 4/14/06), produced three separate opinions on the appropriate standard of review to be applied to the Tax Court's holding that a majority shareholder's advances advances to his corporation should be treated as equity contributions rather than as loans.
Interesting article in today's Wall Street Journal, Symantec Bucks $1 Billion Tax Bill Sought by IRS, by Antione Boessenkool:
The $1 billion tax bill that may be coming due for Symantec Corp. is largely the result of a widely used corporate maneuver that can shift profits overseas and shelter income from U.S. taxes. The security-software company owes the money as a result of licenses granted to foreign units, according to IRS audits that were disclosed by the company Monday in a SEC filing. Symantec, based in Cupertino, Calif., disputes the IRS conclusion, and said it will fight to overturn it.
Symantec and other companies grant licenses for a fee to foreign subsidiaries, and those licenses generate profits overseas. The Symantec dispute is over whether the company got fair value -- and paid taxes for that value -- on the licenses it granted. The disputed Symantec licenses involve Irish subsidiaries of Symantec and Veritas Software Corp., which was acquired by Symantec last year.
Ireland's favorable economic conditions, including a low corporate tax rate, make it a fairly standard place for U.S.-based multinational companies to do business....While the U.S. has a corporate tax rate of 35%, Ireland's corporate tax is 12.5%....
For the Form 8-K filed with the SEC, see here. For more media coverage, see:
Daniel N. Shaviro (NYU) has posted Simplifying Assumptions: How Might the Politics of Consumption Tax Reform Affect (Impair) the End Product? on SSRN. Here is the abstract:
One of the main advantages of consumption taxation that its advocates, including me, have claimed is simplification. However, the extent to which simplification actually would result from a major consumption-based tax reform would depend not only on the compliance and administrative issues raised by the structure of the hypothetical new system, but also by the politics of enactment. This paper, commissioned for a conference concerning consumption-based reform, asks the inevitably speculative question of how the politics of such a reform, if it occurred, would affect (or impair) the end product. The conclusions reached are not very optimistic.
Two new developments about our symposium on Bloggership: How Blogs Are Transforming Legal Scholarship to be held one week from today at Harvard Law School (Friday, April 28):
- Eugene Volokh is organizing a meet-the-bloggers social event on Thursday evening, April 28, at 9:00 p.m. I hope those of you in the Boston area will stop by and say hello. 19 of the symposium particpants/bloggers will be there.
- For those of you unable to attend the conference, a live streaming audio cast will be available on the Barkman Center for Internet & Society web site. (A permanent recording will be available on the web site in about a week after the event.)
Paul Butler has published a list of the Most-Cited Minority Law Faculty from the Top 30+ Law Schools, derived from Brian Leiter's Faculty Quality Based on Scholarly Impact, 2005 Ranking. The listing consists of the 43 minority law professors whose citation counts place them in the Top 25% of the faculty at these schools.
In our paper, Ranking Law Schools: Using SSRN to Measure Scholarly Performance, 81 Ind. L.J. 83 (2006), Bernie Black and I discuss citation count rankings of law faculties (at pages 92-95), and then compare those rankings (as well as rankings of law faculties by reputation and publications) with the SSRN rankings (at pages 97-102, 107-20). Although our article focused on rankings of law faculties, we plan in future work to take on the question of rankings of individual law faculty (we briefly discuss individual faculty rankings in our respective corporate and tax law areas at pages 120-22).
Here are the SSRN rankings and measures for total downloads (as of April 1, 2006) of the most-cited minority law faculty from the Butler-Leiter list:
Mitu Gulati (Georgetown)
John Yoo (UC-Berkeley)
Keith Hylton (Boston University)
Bruce Kobayashi (George Mason)
Neal Katyal (Georgetown)
Saikrishna Prakash (San Diego)
Jim Chen (Minnesota)
Daniel Rodriguez (San Diego)
Gabriel Chin (Arizona)
Adrienne Davis (North Carolina)
Lan Cao (William & Mary)
Sheila Foster (Fordham)
Hiroshi Motomura (North Carolina)
Alex Johnson (Minnesota)
Only 14 of the 43 most-cited minority law professors are included in the SSRN rankings. This ranking excludes minority faculty not on the Butler-Leiter list (e.g., Stephen Choi (NYU), who ranks #32 with 10066 downloads; Tim Wu (Columbia), #49 with 6844 downloads; and my colleague Rafael Gely (Cincinnati), #180 with 2492 downloads). In our Indiana article, we discuss (at pages 116-17) the racial (and gender) implication of prior faculty ranking studies as well as the under-representation of minorities (and women) in the SSRN rankings.
David Cay Johnston has a fascinating series of articles in the New York Times that uses IRS data to track wealth (adjusted gross income and interest income) by zip code in Connecticut, New Jersey, and New York (Long Island and Westchester):
Wealth in Connecticut
Wealth in New Jersey
Wealth on Long Island, New York
Wealth in Westchester, New York
After bragging yesterday about TaxProf Blog's recent traffic surge, the IRS's release of its traffic stats (IR-2006-66) put me in my place: On April 17, there were 3,385,936 visits to the IRS web site, peaking at 3,237 hits per second at 12:30 p.m. From the Information Release:
The IRS Web site is one of the most heavily used sites on the Internet during the tax filing season. This week’s record usage follows a redesign of the Web site last fall that enhanced search capabilities and provided easier access to tools that help taxpayers and tax professionals. The American Customer Satisfaction Index level for the Web site has also increased this year.
Thursday, April 20, 2006
A surge in capital gain distributions in 2005 contributed to a large increase in taxes paid by mutual fund shareholders in the most recent filing season, Chairman Jim Saxton said today. Saxton based his remarks about this growing tax burden on a new study released by the respected Lipper research organization. According to the Lipper study, long-term capital gain distributions made by mutual funds surged 152 percent from 2004 to 2005.
Slemrod Presents Taxation and Big Brother: Information, Personalization, and Privacy in 21st Century Tax Policy Today at UCLA
Joel Slemrod (University of Michigan, Ross School of Business) presents Taxation and Big Brother: Information, Personalization, and Privacy in 21st Century Tax Policy at UCLA today as part of its Tax Policy and Public Finance Workshop Series, moderated by Eric Zolt & Victor Fleischer. Here is the abstract:
The transmission and processing of information is at the core of taxation, and one of the great ongoing technological resolutions has been in information technology. Looking forward ten, twenty, or thirty years, what are the implications of technological advancements for tax policy? How will, and how should, tax policy be different twenty years from now than it is today? This paper argues that, although the new technology greatly facilitates the use of taxpayer information to create a personalized tax system, there are forces pushing the tax system in the opposite direction, toward a radically depersonalized tax system, partly out of concern over the infringement on privacy of the information.
The colloquium takes place in Room 2448, UCLA Law School, 4:00 - 6:00 p.m. PST.
Michael S. Kirsch (Notre Dame), whose Monday's post on Cheney Tax Return Shows Katrina Tax Benefits for Non-Katrina Charitable Contributions attracted a great deal of attention in the blogosphere (noted here), has some follow-up comments:
I think it's important to keep this whole issue in perspective. I don't think it represents any wrongdoing (either legal or ethical) by the Vice President. Under the VP's 2001 gift administration agreement, all of the income from his Halliburton options was irrevocably set aside to pay (i) taxes on that income, and (ii) gifts to the charities (as well as administrative costs of implementing the agreement). In effect, the Katrina tax legislation (and some heads-up tax planning by the VPs advisors) had the net effect that more of the stock option proceeds went to the charities and less (i.e., zero) went to pay taxes. It didn't result in any extra personal financial benefit to the VP.
I think the main point of these events is to shine light on the ad hoc way that Congress goes about changing the tax code. Instead of enacting the short-term changes to the charitable giving rules (which expired on 12/31/05), Congress should decide on the proper way to handle charitable contributions and then stick with it (in that regard, I think many people would argue that the approach of the Katrina legislation -- which removed the arbitrary limits on the amount of charitable contributions that can be deducted in any one year -- should become the permanent rule).
Jeffrey B. Liebman (Harvard University, Kennedy School of Government) presents Should Independent Taxation Be a Barrier to Return-Free Filing for the U.S.? at NYU today as part of its Colloquium on Tax Policy and Public Finance series conducted Alan Auerbach and Daniel Shaviro.
The Colloquium will be held in Room 120 of Furman Hall from 4:00 - 6:00 p.m. EST. Although the public is invited to attend, due to heightened security throughout NYU Law, please contact Rosemary Simon so she can provide the Guard's desk with your name.
I am sorry to bring you the new of the death of Daniel Q. Posin, Judge René H. Himel Professor of Law at Tulane. I am reprinting (with permission) an email sent today to the Tulane community by Dean Lawrence Ponoroff:
I received a call this morning to let me know that Dan Posin slipped into a coma last night and, shortly thereafter, peacefully passed away. He was with his family and close friends at the end. Arrangements for a service have not yet been finalized, but it is likely to happen on Saturday. I will let you know as soon as I have further information. I know you all join me in extending our deepest sympathies to Dan’s family. It is a terrible loss.
Here is Dan's bio from the Tulane web site:
Daniel Q. Posin is the Judge René H. Himel Professor of Law. His areas of scholarship and teaching are corporate law, alternative dispute resolution of business problems, and tax law. He is the author of Corporate Tax Planning: Takeovers Leveraged Buyouts and Restructurings, and the co-author of The Hornbook on Federal Income Taxation, 6th edition. Professor Posin has served as Special Counsel to the Corporate and Securities Section of the leading New Orleans law firm of Jones Walker. He also regularly mediates business and commercial disputes. Professor Posin is an arbitrator with the National Association of Securities Dealers, where he has served as a panel chair. He is also an arbitrator with the American Arbitration Association.
I will provide more details as they become available.
The Tax Court yesterday decided an interesting gift v. income case, Peebles v. Commissioner, T.C. Summ. Op. 2006-61 (4/19/06). You don't often find facts like these in a tax case:
Petitioners are married and lived in DeWitt, Arkansas, when they filed the petition....In 1999, Milton D. Peebles (petitioner) was a police officer in DeWitt. Mrs. Peebles was a patient of Dr. John M. Hestir (Dr. Hestir), who had a medical practice in DeWitt. Petitioner discovered in October 1999 that Dr. Hestir and Mrs. Peebles were having an affair.
Petitioner then lured Dr. Hestir to petitioners’ home on the pretext that Mrs. Peebles needed medical care. Petitioner is about 20 years younger than Dr. Hestir and is capable of being loud and garrulous when angry....Petitioner was angry when Dr. Hestir arrived. At that time, petitioner confronted him with the evidence of the affair and threatened to sue him for $150,000....Dr. Hestir told petitioner that he did not have $150,000,but he did have $25,000. They agreed to meet 2 days later so that Dr. Hestir could pay that amount to petitioner....
Petitioner and Dr. Hestir met in the parking lot of DeWitt Bank & Trust, and Dr. Hestir gave petitioner $25,000 in cash. During the exchange, petitioner and Dr. Hestir had a conversation which petitioner taped. Dr. Hestir said he was sorry about the affair and stated that this was “free money”, but that petitioner should be careful how he spent it because it could be considered income.
Dr. Hestir was right -- the Tax Court concluded that the $25,000 was income and not a gift:
The U.S. District Court for the Northern District of California ruled on Monday in Christian Legal Society v. Kane, No. C 04-04484 JSW (N.D. Cal. 4/17/07), that Hastings College of Law can deny student-activities funds and official recognition to a Christian Legal Society student group on the ground that the group's refusal to allow gay and lesbian members and officers violates the school's antidiscrimination policies.
Michael Graetz (Yale) (left) & Alvin C. Warren (Harvard) (right)have published Income Tax Discrimination and the Political and Economic Integration of Europe, 115 Yale L.J. 1186 (2006). Here is the abstract:
In recent years, the European Court of Justice (ECJ) has invalidated many income tax law provisions of EU member states as violating the guarantees of the European constitutional treaties of freedom of movement for goods, services, persons, and capital. These decisions have not, however, been matched by significant European income tax legislation, because no European political institution has the power to enact such legislation without unanimous consent from the member states. Under the treaties, the member states have retained a veto power over income tax legislation. In this Article, we describe how the developing ECJ jurisprudence threatens the ability of member states to use tax incentives to stimulate their domestic economies and to resolve problems of international double taxation. We conclude that the ECJ approach is ultimately incoherent because it constitutes an impossible quest - in the absence of harmonized income tax bases and rates throughout Europe - to eliminate discrimination based on both origin and destination of economic activity. We also compare the ECJ’s jurisprudence with the resolution of related issues in the U.S. taxation of interstate commerce and international taxation. Finally, we consider the potential responses of both the European Union and the United States to these developments.
This conference brings together academics, practitioners and officers of revenue authorities from around the world to discuss and compare contemporary issues and research in tax administration.
For more information, see:
Following up on Tuesday's post, Houston Dean Rapoport Resigns Following Flap Over Drop in U.S. News Rankings: Inside Higher Ed has published Resigned Over Rankings, by Rob Capriccioso:
In 2002, the University of Houston Law Center was ranked 50th in the U.S. News & World Report annual law school rankings.
Today, it’s ranked number 70.
Some faculty members and students at the institution believe that the downward slide may have been the cause of Monday’s resignation of Nancy Rapoport, the center’s dean since 2000. Others say that notion — and the rankings themselves — are phooey.
“After six years as dean, I don’t think this is a really big deal,” says Michael A. Olivas, a law professor at Houston and director of the Institute for Higher Education Law and Governance at the school. “There is a shelf life for deans, you know. These rankings are definitely not how I measure the success of a dean.”
But, according to students who attended a faculty member meeting last week, some professors directly criticized the dean for the drop. While the U.S. News rankings are regularly derided by educators as poor measures of quality, many of those same educators worry about how their institutions fare....
One professor, who wished to remain anonymous, said that faculty members and student groups had been meeting regularly since the most recent rankings came out to discuss what could be done to boost them. The professor indicated that none of these meetings involved the dean.
Disclosure: I am a big fan of Dean Rapoport, as she gave one of the best talks at our symposium last year on The Next Generation of Law School Rankings and published a particularly thoughtful paper, Eating Our Cake and Having It, Too: Why Real Change is so Difficult in Law Schools, 81 Ind. L.J. 359 (2006). In light of the recent events, I was struck in re-reading her concluding words:
An administrator who has the best interests of her school at heart can’t afford the folly of taking things personally or of retaliating when people oppose her ideas.
What I’ve learned as part of Magellan [Houston's strategic plan], though, is that not all of my colleagues operate under the same constraints. The debates in Magellan have involved matters of deeply held principles, and there has been real heat in our discussions. In fact, on more than one occasion, one committee member’s passionate advocacy of his position took on the appearance of a personal attack....The point is that, out of honest disagreement or just pure cussedness, a faculty member can resist change and even rally his colleagues to resist change. Sometimes, that resistance is healthy for the institution. Not all change is good. But only time will tell whether resistance at a particular point in a school’s history was good or bad for the school.
The University of Oregon student newspaper has an interesting article on the turmoil surrounding the law school's dean search: Controversy Besets Dean Search:
Two University Law School faculty members are preparing to take unexpected leaves of absence next year as a result of the University’s fruitless search for a new Law School dean, interim Law School dean Margie Paris told law students and faculty at a townhall-style meeting Monday. Law professors Keith Aoki and Steven Bender are planning to take sabbaticals to “ponder where to take our work where it is appreciated as we heal from these latest wounds to friends,” Bender wrote in an e-mail circulated among University employees. Paris said they both plan on returning after no more than a year away.
Controversy has embroiled the Law School faculty after the University failed to hire Kevin Johnson, the current associate dean for academic affairs at the University of California-Davis. Johnson withdrew from the search after the two other candidates accepted offers elsewhere....
Faculty at the Law School say Johnson was treated differently than the other candidates and question if race played a role in the University’s decision, while University administrators have remained relatively tight-lipped on the issue, saying only that the search process is complex, had nothing to do with race and that they were very disappointed with its outcome.
The University began its search for a new dean in April 2005 and named three finalists early in the 2005-06 school year — Hiram Chodosh, currently the associate dean for academic affairs at Case Western Reserve University’s School of Law , Gail Agrawal, currently the interim dean of the University of North Carolina Law School, and Johnson.
The University first offered the post to Agrawal on January 19, but she accepted an offer at the University of Kansas. The University then asked Chodosh on February 13, but he accepted an offer at the University of Utah.
Paris said the Law School faculty expected an offer to be made to Johnson after the first two candidates accepted offers elsewhere, but instead of a job offer, the University called Johnson back for further interviews, unlike the other candidates.
(Hat Tip: JD2B.)
Disclosure: Kevin Johnson is co-editor of our ImmigrationProf Blog.
- The student newspaper published an editorial today, UO Should Explain Truth Behind Law Dean Fiasco:
The search for a new Law School dean is proving to be a time-consuming and embarrassing task for the University. Although three candidates were chosen early this school year, two of those finalists declined the position in lieu of offers from other U.S. colleges. Kevin Johnson, associate dean for academic affairs at the University of California-Davis, then became the sole candidate, but the University did not immediately extend him an offer. Administrators asked him to return for further interviews, which has stirred up allegations of racist hiring practices because Johnson is Latino....
Administrators have stated that race did not play a part in the dean search process, but they have yet to publicly offer an explanation for why Johnson was the only one of the three finalists asked to undergo follow-up interviews....
The oddity of the search continued when the University eventually extended an offer to Johnson only after he had already withdrawn from the search. Johnson himself has not cleared up what went wrong, but he has told the Emerald that he is “glad that chapter in my life is behind me.”
Wednesday, April 19, 2006
Michael Kirsch's post on Monday, Cheney Tax Return Shows Katrina Tax Benefits for Non-Katrina Charitable Contributions, has spawned a great deal of attention in the blogosphere. Here is how the post has moved the traffic needle on TaxProf Blog:
The post has generated more comments (133) than any of the other 4,800 posts on TaxProf Blog since its inception.
In Kanofsky v. Commissioner, T.C. Memo. 2006-79 (4/18/06), the Tax Court sustained the Service's disallowance of business deductions claimed by Alvin S. Kanofsky, a full-time physics professor at Lehigh University:
For each year in issue, petitioner filed a Form 1040, U.S. Individual Income Tax Return, showing zero taxable income and no tax due. On a Schedule C attached to each of those returns, petitioner listed as his principal business or profession "research and development" and as the name of his business "A.S.K. Enterprises". Only the 1999 and 2000 Schedules C listed a business address, which was 30 E. 3d St., Bethlehem, PA 18015 (the Bethlehem property). All of the Schedules C report zero gross receipts and zero gross income, and they report the following amounts of total expenses (and resulting losses):
Year Schedule C Expenses
Neither petitioner's exhibits nor his testimony is sufficient to establish that he was engaged in a trade or business during the 1996- 98 period. Moreover, petitioner's 1996 98 Schedules C reporting zero gross receipts from A.S.K. Enterprises support a finding that he was not engaged in any trade or business during that period....
Petitioner's evidence of business use for his three properties is no more convincing for 1999 and 2000 than it is for 1996-98.
The Department of Justice has indicted former U.S. Attorney Sam Currin for tax fraud involving offshore trust arrangements. From the News & Observer:
A protege of former U.S. Sen. Jesse Helms, Currin is a former U.S. attorney for Raleigh and the Eastern District of North Carolina. He also has been a Superior Court judge and state Republican Party chairman. The charges Currin faces carry maximum punishments totaling 60 years in prison.
The indictment, unsealed Tuesday, alleges that Currin and two co-defendants concocted arrangements so that wealthy U.S. citizens could evade federal income taxes. Currin and the two co-defendants also are accused of preparing fraudulent documents to deceive the IRS....
Currin and Graves had their initial appearances Tuesday at the federal courthouse in Raleigh. Currin's wife, a former dean of Campbell University's law school, sat in the front row. Neither of the Currins would talk after court.
Danshera Cords (Capital) has published Tax Protestors and Penalties: Ensuring Perceived Fairness and Mitigating Systemic Costs, 2005 BYU L. Rev. 1515. Here is the Conclusion:
Voluntary compliance is essential to the efficient and effective collection of revenue by any government. Allowing certain members of the society to avoid their obligation to contribute to the government, simply because they engage in dilatory tactics, is not an acceptable option. If some succeed, and their success is known, others may be encouraged to engage in the same behavior. Moreover, it is unfair that the majority bear the costs to the system resulting from tax protestors' use of frivolous positions.
The good folks at Conglomerate have announced their Second Annual Junior Scholars Workshop for untenured law professors or candidates entering the law teaching market this fall. T hey have issued both a Cal for Papers and a Call for Commentators:
Call for Papers: If you are sending out a scholarly article this fall on a topic that may be interesting to Conglomerate’s readers – such as corporate law, securities, contracts, business tax, finance, antitrust or law and economics – we would like to link to your paper and provide a forum for you to receive feedback on your paper before you publish it or present it at a job talk. We may also consider articles accepted for publication if the paper has not reached the final editing stage. We know that many new faculty members do not have the opportunity to present papers at national conferences and find it challenging to get others to read their work. Hopefully, this workshop will facilitate that process....
Call for Commentators: If you are a reader and would like to be a commentator for one of the papers presented, please let me know that as well. If you were a presenter in last year's workshop, then you may feel moved to repay the benefits you received by stepping into that role this year....
The Second Annual Junior Scholars Workshop will begin June 5, 2006. We will host one paper each week, with the paper and solicited comments posted each Monday afternoon.
Two tax papers were featured in last year's workshop:
There is a fascinating article in today's L.A. Times for those of us who have sat through mind-numbingly boring PowerPoint presentation in faculty colloquia and job talks: Making a (Power)Point of Not Being Tiresome, by Claire Hoffman:
- Bullet Points
- A Mysterious Jumble of Graphs and Charts
- Utter Boredom
But Cliff Atkinson, who runs a one-man, Los Angeles-based company called Sociable Media, wants to change all that. Atkinson published a book last year called Beyond Bullet Point about how to combat "PowerPoint fatigue": the deadening sameness of Microsoft Corp.'s commonly used presentation software. The book caught the eye of W. Mark Lanier, a Houston-based trial lawyer
What happened next sounds like an episode of a ripped-from-the-headlines TV crime drama. Lanier, who was suing Merck & Co. on behalf of a man who died while taking the painkiller Vioxx, hired Atkinson as a consultant to help with his opening argument. The resulting 253-slide presentation was so mold-breaking — so the opposite of boring — that it was dubbed "CSI: PowerPoint." Reporters covering the trial singled out the slides, with one calling them "frighteningly powerful." Jurors apparently agreed: They awarded the plaintiff's family $253 million, coincidentally $1 million per slide. (Merck is appealing that award.)
Check out Atkinson's 5 Ways to Reduce PPT Overload. (Hat Tip: Ellen Aprill.)
Interesting post by Michele Goodwin (DePaul) on blackprof.com, Forget Cheeseburger Lawsuits--Try The French Fry Tax:
A French fry tax, either a tax on the industry profiting from its contribution to the national health crisis, or a tax on the consumer who can go to the local market and buy a small bag of chips for twenty-five cents, while the healthier orange may cost fifty cents. The tax revenue generated could go directly into increasing existing public health coverage.
While it can be argued that this potato chip tax is paternalistic, might financially burden economically distressed communities, and government intervention where the government does not belong, this option is one possible answer to the question about resources to fund health care interventions. The precedent for this type of public policy and taxation has already been established with the cigarette tax. Why not expand it?
Public health impacts us all. The human, economic, and social tolls in African American communities are too great to ignore. Imagine if the French fry tax could do what the cigarette tax has already done—consumption might decrease, public health awareness would increase, and the revenues generated could expand coverage to the 45.5 million Americans who are presently without.
For more on such taxes, see:
In what may be a first, the North Carolina dean search committee has released MP3 files of the job talks made by the three dean candidates to have made campus visits thus far:
- UNC Professor Jack Boger (Campus Visit: April 10-11)
- UC-Davis Dean Rex Perschbacher (Campus Visit: April 12-13)
- Alabama Dean Kenneth Randall (Campus Visit: April 17-18)
The fourth candidate, Boston University Interim Dean Maureen O'Rourke, will visit UNC on May 1-2.
The committee explained the state of the search:
The committee consulted with the law school faculty and staff after Professor Erwin Chemerinsky and Teresa Roseborough withdrew as candidates in early March. Professor Davison Douglas (William & Mary) remains a viable candidate, but we decided to consider other strong candidates who also might be available and interested. The committee received more than 40 nominations -- most had not been nominated in the first round of the search. Each person was contacted and the committee conducted telephone interviews with eight candidates. The following four people emerged as the strongest candidates going forward.
Brian Leiter has published new 2006 Rankings of Law Schools by Student Quality, which ranks the Top 40 schools (47 with ties) by the 75th percentile LSAT (the top quarter) for the class that entered in fall 2005.
Biggest Increase in Student Quality (75th Percentile LSAT): 2006 v. 2005:
- +13 Illinois (20 in 2006, 33 in 2005)
- +6 Minnesota (18, 24)
- +6 Vanderbilt (20, 26)
- +6 Wake Forest (29, 35)
- +4 Boston University (27, 31)
- +3 Chicago (5, 8)
- +3 Washington-St. Louis (18, 21)
- Baylor (35, unranked)
- Florida (40, unranked)
- Maryland (40, unranked)
- Ohio State (40, unranked)
Biggest Decrease in Student Quality (75th Percentile LSAT): 2006 v. 2005:
- -7 Washington-Seattle (34 in 2006, 27 in 2005)
- -6 Hastings (36, 30)
- -3 Notre Dame (23, 20)
- -3 Washington & Lee (24, 21)
- -3 George Washington (25, 22)
- -3 Cardozo (26, 23)
- -3 Boston College (27, 24)
- Loyola-L.A. (unranked, 36)
- Colorado (unranked, 45)
- Connecticut (unranked, 45)
- Tulane (unranked, 48)
- Iowa (unranked, 49)
- Temple (unranked, 49)
Tax Prof and Associate Dean Ellen P. Aprill (Loyola-L.A.) offers some thoughts on the Tax Court case we blogged yesterday, Moloney v. Commissioner, T.C. Summ. Op. 2006-53 (4/17/06), which held that a law school graduate working in a public interest job must report income on the receipt of funds to help repay her student loans:
Section 108(f) of the Internal Revenue Code specifies that, contrary to the general rule, forgiveness of a student loan is not income if the forgiveness is made as part of a plan to encourage students to serve areas with unmet needs for a period of time. The code further states that "student loan" includes a loan made by an educational institution to refinance a loan, if the refinancing is part of a plan of the institution to encourage students to undertake such service.
Yesterday, the Tax Court decided a case, Moloney v. Commissioner, in which it concluded that a grant from a governmental program made by means of a dual-payee check to a law school graduate and to her lender to be used to repay her student loans could not constitute refinancing under section 108(f) and thus did constitute taxable income to the individual. My understanding from speaking to the Director of our Public Interest Department is that some law schools, not wishing or having the infrastructure to become lenders, have set up their public interest loan forgiveness program using such dual-payee checks. Although the Tax Court case is in a special category of cases for small claims that may not be treated as precedent for any other case (and which cannot be appealed), any school that has structured its public interest loan program in this way may wish to consider restructuring it or seeking a legislative solution.
The Government Accountability Office yesterday released Tax Administration: Opportunities to Improve Compliance Decisions and Service to Taxpayers through Enhancements to Appeals' Feedback Project (GAO-06-396) (4/18/06). See also the 1-page Highlights, which contains this neat chart of the IRS's appeals system: