TaxProf Blog

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

Monday, November 6, 2006

Halloween and Taxes, Part II

Halloween_1My Halloween and Taxes post elicited a lot of commentary on the TaxProf Discussion Group, in the tax blogosphere, and in private correspondence:

  • Beau Baez:  "Don't forget the possible tax planning for the candy payor. If a deduction isn't available under Section 212, at a minimum the taxpayer should be able to increase the adjusted basis in their home by the amount of "trick" forbearance bribes."
  • David Elkins:  "Shouldn't we question whether the bag of goodies collected door to door is income? Assuming that we can consider a pile of empty calories, food coloring and cavities accession to wealth and assuming that the threat of "trick or treat" rules out the possibility of describing it as a gift, can the IRS be far behind? Now that's a scary thought."
  • Linda Galler:   "My husband reports that Mike and Mike on ESPN Radio discussed yesterday what they refer to as the Halloween Tax. In simple terms, they regard Halloween as the perfect time to teach one's children about tax. The payment, of course, is in candy which the taxpayers, i.e., the children, are required to pay to their parents."  This generated two responses:
    • David Elkins "Interesting to find out the theory upon which the parents demanded the candy tax: benefit theory ("I drove you around"), redistribution ("You have candy and I don't"), or realpolitik ("I'm bigger than you are")."
    • Jim Maule:  "Not their idea. My parents not only appropriated payment, they also made us share with our younger siblings, who could not walk as far, carry a loaded pillowcase, or be out until 10. Wealth redistribution, in addition to reimbursement of parents who provided loot acquisition materials, was part of my early training."
  • Jim Maule:  "I'm answering the door tonight dressed as a tax lawyer. Ought to frighten the living money out of the kids .... I'm bored with the inflatable pumpkins and inflatable ghouls. Anyone know where I can get an inflatable Internal Revenue Code?" ... I saw not even one UNICEF box. Has that practice disappeared? (Not off topic, because it raises charitable contribution substantiation issues.)
    • Bryan Camp responded to the last point:  I personally <munch> HATED trick-or-treating for UNICEF as a kid. I only got to <munch> <munch> <gulp> go out for candy ONE year <munch> and it has warped my view <gulp> of Halloween ever since, causing me <munch> to try and make up for all that lost candy <gulp> <smack> each year since I've had kids ... Don't do it to yours! "
  • Joel Newman:  Two belated Halloween items:
    • Jesse Helms proposal to amend section 501(c)(3) so that no funds could be used to support Satanism or witchcraft (see my casebook p. 538)
    • GCM 36993 (1977) holds that an organization formed for the practice of witchcraft is not only a religious organization under 501(a) but is a church under 170(b)(1)(A)(i).

Halloween_2006_006_2 But the Halloween Prize goes to the clerks at the Tax Court of Canada, who wore tax-themed costumes to work on October 31 (the judges reportedly loved it (they wear some pretty nifty costmes themselves)):

Back Row (from left to right): Captain Income Splitting, Canada Revenue Agency Collections Agent, the Proposed Tax Credit for Child Fitness, Scientific Research Deduction, and Farmer Gunn (of Gunn v. R., 2006 FCA 281). Front row (left to right): Valuation Day 1971, Tax on Royalties, and the Competent Authority for the Canada-Barbados Tax Treaty.

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