Friday, December 31, 2010
With family businesses and farms accounting for a significant percentage of the “wealth” of elderly Americans (those 65 years of age or older), the return of the estate tax starting on January 1st will force many families to divert resources into measures to minimize the tax, rather than grow their businesses, according to a new report released today and authored by Duquesne University Economist Antony Davies.
Published by the American Family Business Foundation (AFBF), the report finds that up to 67% of estates subject to the estate tax in 2011 would own small business assets, with more than 22,000 farms, 29,000 private corporations and 14,000 real estate partnerships likely to be affected if the owner dies.
Under the “compromise” tax plan signed into law just before Christmas, the estate tax will be reinstated next year at a rate of 35%, with a $5 million exemption.
“The more assets small business owners need to redirect toward preparing for the impact of the estate tax,” Davies stressed, “the fewer assets they have to create jobs.”
Indeed, he said, the historical data show that the size of small businesses increases as the size of the estate tax exemption increases – meaning that “higher exemptions encourage entrepreneurs to shift assets into small businesses rather than reserving the assets to protect against estate tax liabilities.”
While nearly 200,000 total U.S. households’ net wealth will exceed the $ 5 million threshold and could pay if the owner dies, Davies predicts that nearly 10,000 households will actually pay estate taxes in 2011, based on age and assuming a 5% mortality rate.
Antony Davies (Duquesne University, Donahue Graduate School of Business), The Effect of Estate, Inheritance, and Gift Taxes on the Survival of Small Businesses: A Panel Data Analaysis:
Proponents of estate, inheritance, and gift (EIG) taxes claim that the taxes prevent wealth from becoming concentrated in the hands of “generational dynasties” and so help to promote economic equality. This paper presents evidence that EIG taxes can have the reverse effect – encouraging the concentration of wealth – via a greater propensity for small (versus large) businesses to be liquidated for the purpose of paying the EIG tax. This study examines business census data for 50 states over the period 1988 through 2006. Applying generalized method of moments estimation in a panel data framework, the study finds a significant negative relationship between EIG taxes and the number of small firms. The relationship steadily declines as firm size increases such that the relationship becomes positive for the largest firms.
- Bradley T. Borden (Brooklyn Law School), Tax Issues for Real Estate Investors Considering a Mortgage Defeasance as Part of a Section 1031 Exchange Law, 28 J. Tax'n Inv. 3 (Winter 2011): "This article considers the tax treatment of mortgage defeasances and mortgage defeasances that occur as part of a Section 1031 exchange. It provides a general overview of the mortgage securitization and defeasance processes. It then examines how tax law should treat defeasance discounts and defeasance premiums on the sale of property as part of a mortgage defeasance. Drawing from those principles, the article considers how exchangers might structure an exchange of property that occurs as part of a mortgage defeasance to avoid the adverse tax consequences that may otherwise result from such transactions."
- Michael F. Lynch (Bryant University, Department of Accounting), David J. Beausejour (Bryant University, Department of Accounting) & David B. Casten (KPMG, Boston), Personal Goodwill: Three Recent Taxpayer Defeats Nevertheless Affirm Existence of a Sometimes Forgotten Asset, 28 J. Tax'n Inv. 29 (Winter 2011): "Personal goodwill remains a viable concept that can yield significant tax savings to a shareholder-employee when a closely held C corporation is sold. Taxpayer success in supporting favorable tax treatment, however, requires careful transaction planning, and this strategy will not work in every situation. This article reviews the potential for double taxation when a C corporation is sold, and highlights lessons from the case law that can help a shareholder-employee structure a sale—and help assure the taxpayer’s victory should the IRS challenge his position."
- James C. Koenig & LaVonda D. Napka (both of Thompson Hine, Cleveland), Changes to U.S. Taxation of Foreign Income: Impact of Education Jobs and Medicaid Assistance Act Revenue-Raising Provisions, 28 J. Tax'n Inv. 45 (Winter 2011): "The revenue raisers in the Education Jobs and Medicaid Assistance Act of 2010, which was signed into law on August 10, 2010, by President Obama, impose significant restrictions on the use of the foreign tax credit by U.S. multinational companies. Specifically, the Act contains provisions dealing with foreign tax credit splitting transactions, elimination of a portion of the foreign tax credit in a “covered asset acquisition,” elimination of the benefits provided by the “hop-scotch” rule of Section 956, and changes to the 80/20 rules, among other less significant changes. This article provides an overview of the changes made by the revenue raisers, including practical considerations for taxpayers that might be affected by these new provisions."
- Lorne H. Saltman (Cassels Brock & Blackwell, Toronto), GlaxoSmithkline: Transfer Pricing Law in Canada Clarified for Cross-Border Investors, 28 J. Tax'n Inv. 61 (Winter 2011): "In the recent Glaxosmithkline transfer pricing case, the Canadian Federal Court of Appeal established a realistic framework for applying the abstract rules promulgated by the OECD, by requiring an analysis of the taxpayer’s relevant circumstances, including the legal, financial, commercial and contractual circumstances that any arm’s length person “standing in the shoes of the taxpayer” would face in its economic relations with the relevant cross-border related parties. Although this case did not happen to involve a U.S. entity, given the extent of U.S.-Canada business investment—not to mention the ever-increasing exposure to transfer pricing adjustments in cross-border business transactions generally—U.S. taxpayers should find the analysis of great interest."
- John R. Wiktor (Horwood Marcus & Berk, Chicago), Reaching Potential: Planning for Families With Young Children, 28 J. Tax'n Inv. 73 (Winter 2011): "One of the most important non-tax aspects that drive clients to seek out advice is estate planning for minor children. Planning for the future is an important task for all parents, who strive daily to instill values in their children and also to provide them with the freedom to make choices with parental guidance. Unexpected events can upset parental visions of the future, but with careful advance planning, clients can provide a “roadmap” to smooth the way. This article addresses many of the issues associated with planning for families who have minor children, including naming a guardian, establishing a testamentary trust. establishing lifetime gift trusts, and investments of minors’ trusts."
- Robert N. Gordon & Mark Fichtenbaum (both of Twenty-First Securities Corp., New York), End-Run Around Constructive Ownership Fails—But Could Tweaks to Transaction Change Tax Result for Investor?, 28 J. Tax'n Inv. 83 (Winter 2011), In Advice Memorandum 2010-005, the IRS has taken a firm substance-over-form position to derail an “option transaction” designed to create deferred long-term capital gains. Once characterization of the investment as an option or some type of derivative was rejected, the investor—a hedge fund—faced taxation as the owner of securities."
- Erik Jensen (Case Western), Codification of the Economic Substance Doctrine, 28 J. Tax'n Inv. 87 (Winter 2011): "In March 2010, Congress codified a version of the economic substance doctrine, together with a stringent strict-liability penalty that applies if noncompliance with the doctrine leads to an underpayment of tax. This article provides guidance to investors and their advisors about the significance of the doctrine, discussing, among other things, the effects of codifcation, interpretive issues arising from the statutory language, and the lack of guidance about the transactions to which the doctrine applies. The article concludes that codification is something to which everyone must pay attention, but that many of the concerns raised by commentators about its scope have been overstated."
Nearly five hundred years of judicial decision-making has created evidentiary privileges where the courts are willing to forego the disclosure of evidence in the interest of promoting socially valuable relationships. Tax attorneys often tell their clients that their communications are protected by the attorney-client privilege. In truth, the attorney-client privilege for tax practitioners is much diminished. In recent years, aggressive enforcement campaigns by the federal government, often against tax shelter promoters, have enjoyed great success as a compliant judiciary has granted access to an ever-broader range of documents. Following an analysis of relevant judicial decisions, this Article articulates a public policy rationale and an effective legislative privilege that will limit an increasingly assertive central government and give assurance to tax practitioners and their clients as to when their communications will be privileged.
Thursday, December 30, 2010
- Joel Slemrod (University of Michigan, Ross School of Business), Location, (Real) Location, (Tax) Location: An Essay on Mobility's Place in Optimal Taxation, 63 Nat'l Tax J. 843 (2010)
- George R. Zodrow (Rice University, Department of Economics), Capital Mobility and Capital Tax Competition, 63 Nat'l Tax J. 865 (2010)
- David E. Wildasin (University of Kentucky, Martin School of Public Policy and Administration), State Corporation Income Taxation: An Economic Perspective on Nexus, 63 Nat'l Tax J. 903 (2010)
- John A. Swain (University of Arizona, Rogers College of Law), Misalignment of Substantive and Enforcement Tax Jurisdiction in a Mobile Economy: Causes and Strategies for Relaignment, 63 Nat'l Tax J. 925 (2010)
- Donald Bruce, William F. Fox 7 Zhou Yang (all of the University of Tennessee, College of Business Administration), Base Mobility and State Personal Income Taxes, 63 Nat'l Tax J. 945 (2010)
- Robert S. Chirinko (University of Illinois-Chicago, Department of Finance) & Daniel J. Wilsom (Federal Reserve Bank of San Francisco, Economic Research Department), Can Lower Tax Rates Be Bought? Business Rent-Seeking and Tax Competition Among U.S. States, 63 Nat'l Tax J. 967 (2010)
- LeAnn Luna & Matthew N. Murray (both of the University of Tennessee, Center for Business and Economic Research), The Effects of State Tax Structure on Business Organizational Form, 63 Nat'l Tax J. 995 (2010)
- Robin Boadway (Queen's University (Ontario), Department of Economics) & Jean-François Tremblay (University of Ottawa, Department of Economics), Mobility and Fiscal Imbalance, 63 Nat'l Tax J. 1023 (2010)
- James Alm & Edward B. Sennoga, Mobility, Competition, and the Distributional Effects of Tax Evasion, 63 Nat'l Tax J. 1055 (2010)
- Anja De Waegenaere & Richard Sansing, Inconsistent Transfer Prices and the Location of Mobile Capital, 63 Nat'l Tax J. 1085 (2010)
- John R. Graham (Duke University, Fuqua School of Businss), Michelle Hanlon (MIT, Sloan School of Management) & Terry Shevlin (University of Washington, Foster School of Business), Barriers to Mobility: The Lockout Effect of U.S. Taxation of Worldwide Corporate Profits, 63 Nat'l Tax J. 1111 (2010)
- Rosanne Altshuler (Rutgers University, Department of Economics) & Harry Grubert (U.S. Treasury Department, Office of Tax Analysis), Formula Apportionment: Is It Better Than the Current System and Are There Better Alternatives?, 63 Nat'l Tax J. 1145 (2010)
Rejecting an argument that the conduct of two former partners of the now-shuttered Jenkens & Gilchrist and three other non-law firm defendants lacked requisite willfulness, a federal judge has denied a motion to dismiss and put the case on track for a February trial.
Charged with conspiring to defraud the IRS, ex-partners Paul Daugerdas [right] and Donna Guerin are accused of helping clients generate some $4 billion in losses via bogus tax shelters that were never intended to be profit-making ventures. ... Meanwhile, the lawyers earned hefty fees for the firm by writing opinion letters that indicated the tax shelters were legitimate.
It is nevertheless possible to defend the new Act on two grounds. The first, and I think less important, is that it indicates the possibility of compromise between the Obama Administration and the resurgent, and increasingly conservative and assertive, Republican Party, though compromise will be more difficult come January when the Republicans take control of the House of Representatives and significantly increase their representation in the Senate. Second, and more important, estimates that GDP would grow by at least 3 percent in 2011 were premised on the expectation that the bulk, at least, of the Bush tax cuts would be continued. Given the weakness of the economy, a sudden tax increase in 2011, which would have been the effect of allowing those cuts to expire, could easily have knocked one or two percentage points off the GDP growth rate.
It would have been better to have just continued the tax breaks and not have cut the payroll tax and extended unemployment benefits. A small, and possibly (though not probably) temporary, tax cut is unlikely to stimulate much spending, and extending unemployment benefits can actually increase unemployment by making unemployed workers more picky in their search for a new job. These provisions of the Act are simply the Democratic quid pro quo for the tax breaks for the wealthy, favored by the Republicans.
Both supporters and opponents of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 usually confuse its short term-stimulus effects on the economy, and its long-term effects on economic growth. I would give it a grade of C+ as a short-term stimulus to the economy, and a grade of B+ for its effects on longer-term growth.
The Act provides for a one-year two-percentage point reduction in employee contributions to social security taxes at an estimated cost in tax revenue of over $100 billion. This will add a significant amount to the budgetary deficit for the year going forward, while providing very little short-term stimulus. Even the most simplistic Keynesian analysis recognizes that a one-year tax reduction will be mainly saved in order to spread out the added consumption from this additional “wealth” of households over more than a single year. In economics terminology, a one-year tax relief would be considered a transitory increase in income rather than a permanent increase. ...
The largest component of this Tax Relief Act is the extension of the Bush-era tax cuts on incomes, dividends, capital gains, and estates. This extension will have some relatively short-term benefits to the economy by stimulating investments and the formation and expansion of small businesses, but the main case for extending these tax cuts is their effects on longer-term economic growth. The growth rate in per capita incomes is determined mainly by the rates of investments in human and physical capital, and by technological progress. Both these drivers of economic growth are in good part in turn determined by tax rates on personal and business incomes.
I view the maintenance of the Bush tax cuts as only the first important move of the American tax code toward a more effective income tax structure. That structure would have a broad-based low rate flat tax on personal incomes, with little, if any, taxation of corporate incomes, and with dividends and capital gains taxed as ordinary income. As the majority report of the recent National Commission on Fiscal Responsibility and Reform proposed, the income base should be greatly broadened by eliminating the deductibility of interest on mortgages, and a variety of other special deductions that result from the political influence of various special interests. ...
A broad-based flat income tax could have a relatively modest tax rate- perhaps about 25%- and still raise as much revenue as the tax structure that would exist if the Bush tax cuts were allow to lapse. A flat consumption tax would be even better than a flat income tax since such a consumption tax would not distort the incentive to save. However, this type of consumption tax is unlikely to be introduced as a substitute for the income tax. It could play a role as a supplement to the income tax if that combination were necessary to prevent a narrow-based progressive income tax system from being imposed.
- Joe Biden (0.1% - 0.7%)
- George W. Bush (17.9%)
- Dick Cheney (5.5%)
- Hillary Clinton (1.2% - 14.7%)
- John McCain (5.8% - 28.6%)
- Barack Obama (0,4% - 6.5%)
- Sarah Palin (2.0% - 3.8%)
Liberals never tire of discussing their own generosity, particularly when demanding that the government take your money by force to fund shiftless government employees overseeing counterproductive government programs. ... This week, we'll take a peek at the charitable giving of these champions of the poor. ...
[Discussion of charitable giving by Joe Biden, George W. Bush, Dick Cheney, Al Gore, Ted Kennedy, John Kerry, John McCain, and Barack Obama.]
Elected Democrats crow about how much they love the poor by demanding overburdened taxpayers fund government redistribution schemes, but can never seem to open their own wallets. The only evidence we have that Democrats love the poor is that they consistently back policies that will create more of them.
The Supreme Court’s decision in Citizens United v. Federal Election Commission makes a Supreme Court challenge to the tax law rule that prohibits charities from involvement in political activities likely, and a reexamination of the political speech of charities necessary. Part I of the Article surveys the history of the political activities prohibition in order to emphasize that it was not a reactionary policy but quite considered, and that there are strong State interests supporting it. Part II of the Article analyzes Citizens United in detail and argues that if the Supreme Court considers a challenge to the political activities prohibition, Citizens United is distinguishable: the purpose of the political activities prohibition is not to suppress speech but to define charity; the legal setting is tax and not campaign finance; unlike the campaign finance rule, violation of the political activities prohibition is not criminal; and the political activities prohibition is by nature a rule associated with a tax status rather than a ban on corporate speech. Accordingly, the political activities prohibition, unlike the campaign finance rule, is not a burden on speech and therefore is constitutional. Part III of the Article discusses cautionary notes to the analysis of Part II, and explains that even if there is a constitutional defect to the political activities prohibition, the political activities limitation on the charitable deduction nonetheless would survive. Regardless of the constitutionality of the political activities prohibition, Part IV examines a number of possibilities for a charitable tax status in which political activity is allowed, and concludes that the current rule is the best option. Part V concludes that the prohibition represents the evolution of a century of wrestling with the subject of political activity and charity, and the wisdom that the two are not compatible. Such wisdom should not be contravened.
Three dozen of the University of California's highest-paid executives are threatening to sue unless UC agrees to spend tens of millions of dollars to dramatically increase retirement benefits for employees earning more than $245,000.
"We believe it is the University's legal, moral and ethical obligation" to increase the benefits, the executives wrote the Board of Regents in a Dec. 9 letter and position paper obtained by The Chronicle. ...
The executives fashioned their demand as a direct challenge to UC President Mark Yudof, who opposes the increase. "Forcing resolution in the courts will put 200 of the University's most senior, most visible current and former executives and faculty leaders in public contention with the President and the Board," they wrote. ...
They want UC to calculate retirement benefits as a percentage of their entire salaries, instead of the federally instituted limit of $245,000. The difference would be significant for the more than 200 UC employees who currently earn more than $245,000.
Under UC's formula, which calculates retirement benefits on only the first $245,000 of pay, an employee earning $400,000 a year who retires after 30 years would get a $183,750 annual pension. Lift the cap, and the pension rises to $300,000. ...
The executives say the higher pensions are overdue because the regents agreed in 1999 to grant them once the IRS allowed them to lift the $245,000 cap, a courtesy often granted to tax-exempt institutions like UC. The IRS approved the waiver in 2007.
Yudof wants the regents to rescind their original approval of the higher pensions, but withdrew his recommendation after receiving the letter. He did so to allow "time for further review by the regents," his spokesman said.
(Hat Tip: InstaPundit.)
According to public salary records, 52 University of California law school faculty earned $245,000 or more in total compensation in 2009.
- Michael S. Knoll (Pennsylvania), The Corporate Income Tax and the Competitiveness of U.S. Industries, 63 Tax L. Rev. 771 (2010)
- Kyle D. Logue (Michigan) & Joel S. Slemrod (Michigan), Of Coase, Calabresi, and Optimal Tax Policy, 63 Tax L. Rev. 797 (2010)
- Chris William Sanchirico (Pennsylvania), A Critical Look at the Economic Argument for Taxing Only Labor Income, 63 Tax L. Rev. 867 (2010)
- Kirk J. Stark (UCLA), Rich States, Poor States: Assessing the Design and Effect of a U.S. Fiscal Equalization Regime, 63 Tax L. Rev. 957 (2010)
Just how honest were law schools when they reported their data to U.S. News for our 2011 Best Law Schools rankings? Each year, we ask law schools to report the same statistical information to us that they report on the American Bar Association's (ABA) annual accreditation questionnaire. Despite some notable exceptions and data errors over the years, it turns out the schools are pretty reliable in their data reporting.
The basis for this conclusion comes from a recent study by Tom Bell, a law professor at the Chapman University School of Law in Orange, Calif. He has just published "Z-Scores in Model of 2011 USN&WR Law School Rankings" on his blog Agoraphilia. ...
The fact that Professor Bell was able to duplicate our methodology by using law school data he obtained directly from the ABA proves that the U.S. News rankings process is very transparent and can be duplicated using publicly available data. This exercise also establishes that U.S. News is calculating and weighting the ranking variables as stated in the posted methodology. Users of our law school rankings can be confident that the results are correct given the weights and rankings variables that U.S. News has chosen.
- Murray Roach, Combating the Phoenix Phenomenon: An Analysis of International Approaches (pp. 90-127)
- Jonathan Forman, Using Refundable Tax Offsets to Help Low-income Taxpayers: What Do We Know, and What Can we Learn from Other Countries? (pp. 128-61)
- Rodney Fisher & Cynthia Coleman, The Hardship Discretion – Building Bridges with the Community (pp. 162-74)
- Ann Hansford & Margaret McKerchar, Future Global Challenges to Achieve Fairness in Environmental Taxation: Moving Beyond the Dimensions of Horizontal and Vertical Equity (pp. 175-87)
- Xy Yan & Andrew Halkyard, The Impact of the Global Financial Crisis on Broadly Based Indirect Taxation: A Chinese Case Study (pp. 188-214)
- Neil Warren, Tax Devolution and Intergovernmental Transfer Policy Options in a Budgetary Crisis: UK Lessons from Australia (pp. 215-55)
ABA Seeks More Law School Transparency: 'If You Don't Use Creative Accounting in Reporting Data to U.S. News, You're a Chump'
L.A. Daily Journal, ABA Seeks More Law School Transparency:
At one end is the postcard boasting that 79 percent of USC Gould School of Law's graduates have jobs in private practice and are earning a median salary of $160,000. At the other end is the want ad for a small, Chicago general practice firm offering to pay a new associate minimum wage.
In between the glittering promise and the gloomy reality, lies the fury of law students and graduates at what they see as half-truths that lured them to take on the crushing debt of a legal education in the expectation of certain success.
"A lot of us feel we've been sold a bill of goods," said Kimber A. Russell, a 2008 graduate from DePaul University College of Law. Russell is the author of "Shilling Me Softly," one of dozens of blogs by law graduates that claim their schools, and the profession generally, tricked them with false promises of great careers with high pay.
By fall, applicants to some prominent law schools will be able to learn more about graduates' job prospects and, within a year or so after that, all accredited law schools are expected to post detailed information about the jobs held and salaries earned by recent graduates on their websites.
"I think most schools are looking for ways to provide more information," said Donald J. Polden, the dean of Santa Clara Law and the chair of a committee rewriting the ABA standards for law school accreditation "I'm very confident that there will be a rethinking of the information the ABA asks for from schools."
Meanwhile, change already has started elsewhere. The law school rankings powerhouse, U.S. News & World Report, announced earlier this month it will list much greater detail about law graduates' employment when it upgrades its rankings next year. ...
Many law school deans blame the U.S. News rankings for pushing schools into using what they described as "creative accounting."
William D. Henderson, an expert on the changing legal profession at Indiana University Maurer School of Law, noted as an example that the percentage of schools claiming 95% of new graduates had jobs rose from 26% of schools in 1997, when the nine-month employment data was added to the U.S. News rankings, all the way to 92% this year.
"If you don't do [creative accounting], you're a chump," Henderson said. ...
Another weakness in the data, said University of San Diego Law School Dean Kevin Cole, is that new graduates' first jobs may have little to do with their final careers. But, Cole said, "if you think it's hard to [reach alumni] at nine months...try five years out." Even so, Cole said that the ABA should focus on collecting salary data rather than details about job categories.
Prior TaxProf Blog coverage:
- ABA Committee Meeting on Law School Placement Data (Dec. 19, 2010)
- Solving the Law School Placement Data Problem: An ABA-NALP Partnership (Dec. 27, 2010)
Wednesday, December 29, 2010
- Peter R. Merrill (PricewaterhouseCoopers, Washington, D.C.), Corporate Tax Policy for the 21st Century, 63 Nat'l Tax J. 623 (2010)
- James Alm (Tulane University, Department of Economics), Testing Behavioral Public Economics Theories in the Laboratory, 63 Nat'l Tax J. 635 (2010)
- David Auerbach, Janet Holtzblatt, Paul Jacobs, Alexandra Minicozzi, Pamela Moomau & Chapin White (all of the Congressional Budget Office), Will Health Insurance Mandates Increase Coverage? Synthesizing Perspectives from Health, Tax, and Behavioral Economics, 63 Nat'l Tax J. 659 (2010)
- Joseph R. Antos, (Mis-)Using the Tax System to Subsidize Health Spending, 63 Nat'l Tax J. 681 (2010)
- Daniel N. Shaviro (NYU Law School), Rethinking Foreign Tax Creditability, 63 Nat'l Tax J. 709 (2010)
- Mihir A. Desai (Harvard Business School) & Dhammika Dharmapala (University of Illinois College of Law), Do Strong Fences Make Strong Neighbors?, 63 Nat'l Tax J. 723 (2010)
- Kimberly A. Clausing (Reed College, Department of Economics), Should Tax Policy Target Mlutinational Firm Headquarters?, 63 Nat'l Tax J. 741 (2010)
- Elaine Maag (Tax Policy Center), Simplicity: Considerations in Designing a Unified Child Credit, 63 Nat'l Tax J. 765 (2010)
- Douglas A. Shackelford (University of North Carolina, Kenan-Flager Business School), Daniel N. Shaviro (NYU Law School) & Joel Slemrod (University of Michigan, Ross School of Business), Taxation and the Financial Sector, 63 Nat'l Tax J. 781 (2010)
- Shanna Rose (NYU, Wagner School of Public Service), Institutions and Fiscal Sustainability, 63 Nat'l Tax J. 807 (2010)
Individuals who are nonresident aliens of the United States, but who receive U.S. source income from a U.S. trade or business including wages, commissions, interest, dividends, pensions, gambling winnings, etc., report and pay taxes on that income on U.S. Nonresident Alien Income Tax Returns (Form 1040NR). This income is also subject to income tax withholding. Nonresident aliens also file Form 1040NR to request refunds of amounts over withheld. There were approximately 598,000 Tax Year 2008 Forms 1040NR processed in 2009. Total tax withheld on these returns amounted to more than $2.4 billion and refunds amounted to more than $712 million. ... [A] judgmental sample of Tax Year 2007 and 2008 returns revealed significant control weaknesses in the processing of refunds claimed on Forms 1040NR. ... [A]dditional steps are necessary to ensure that questionable refunds claimed on Forms 1040NR are identified and stopped prior to issuance.
The partnership taxation rules of subchapter K are uniquely flawed, afflicted by a combination of flexibility, technically complex provisions, and low enforcement resources. As a result, partnerships remain the preferred vehicle for tax shelter activity, with extraordinary costs for the public at large.
Despite ample scholarship concerning tax shelters, little attention has been paid to the interaction between subchapter K and tax shelters. This article supplements the literature by proposing a solution targeted to subchapter K’s peculiar and deepening crisis. More specifically, I suggest that the Treasury revise one of subchapter K’s most infamous and least successful provisions - the partnership anti-abuse rule.
The Treasury promulgated this anti-abuse rule in 1994 amidst unprecedented controversy, and to this day, the regulation generates visceral reactions from scholars and practitioners alike. After tracing the remarkable history of the partnership anti-abuse rule, including its stunning failure, this article recommends that the Treasury revise the rule, returning it to its origins and correcting mistakes made in the six-month interval between the rule’s proposal and its issuance in final form. Doing so would free the partnership anti-abuse rule to more effectively challenge partnership tax shelters. Likewise, a revised partnership anti-abuse rule would provide urgently needed structural support for subchapter K as a whole. Indeed, a revised partnership anti-abuse rule could bring stability to this troubled and often overlooked corner of the federal income tax system.
2010 was a year in which a still-recovering economy generated a great number of major tax developments impacting taxpayers of all types: individuals, businesses, exempt organizations and more. Many of the developments were triggered by the passage of federal tax legislation; others by IRS rules and regulations; still others by important court cases. Some developments provide taxpayers with much-needed relief; others are aimed at helping the government collect needed revenues. This Tax Briefing provides a review of the key tax law developments of 2010 and their impact on taxpayers.
(Hat Tip: Ann Murphy.)
She graduated from Winona State University and later received her J.D. degree from Oral Roberts University and an LL.M. degree in tax law from the College of William and Mary's Marshall-Wythe School of Law. ...
From 1988 to 1993, Bachmann was a U.S. Treasury Department attorney in the US Federal Tax Court located in St. Paul. According to Bachmann, she represented the Internal Revenue Service "in hundreds of cases" (both civil and criminal) prosecuting people who underpaid or failed to pay their taxes. She left her government position to become a full-time mother. ...
Elected in 2006, Congresswoman Michele Bachmann is the first Republican woman to be elected to the U.S. House of Representatives from Minnesota. She served her first term from January 3, 2007, and January 3, 2009. Bachmann's third term will begin January 3, 2011.
- Wills, Trusts & Estates Prof Blog (96 votes)
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IRS employees made decisions to survey tax returns with Abusive Tax Avoidance Transaction (ATAT) issues without proper approval. From a statistical sample of 311 surveyed tax returns, TIGTA determined that 246 required the Planning and Special Programs function to concur with the group manager’s decision to survey the tax return. However, group managers did not follow guidelines and surveyed 238 (97%) tax returns without approval from the Planning and Special Programs function. Additionally, in 88 instances, TIGTA could not determine why the tax returns were surveyed because justification was not included in the case files or did not support the decisions to survey the tax returns. TIGTA projected the IRS could have examined 840 additional tax returns and proposed additional tax assessments totaling $1.7 million over a five-year period. For 278 (89%) of the 311 surveyed tax returns, TIGTA found that IRS employees did not follow procedures when surveying tax returns with ATAT issues. TIGTA projected 196 taxpayers’ rights could have been jeopardized under § 7605(b) because the IRS surveyed tax returns after contacting taxpayers.
The proposals for the University of California now being considered in Sacramento — limiting tuition and fees, freezing executive and faculty salaries and increasing legislative control over the UCs — are well intentioned. But they are a recipe for ruining a great public university system. ...
One proposal being discussed is freezing or decreasing executive and faculty salaries. But this is no answer. If the University of California is going to retain and attract high-level faculty, it must pay the same as comparable schools across the country. Over the last few weeks, I have negotiated salaries with superb professors we are attempting to recruit who are currently teaching at Harvard, Northwestern and Yale. The University of California must match their current salaries or they will not come. As much as I love living in Southern California, I could not have afforded to leave Duke University if it meant taking a substantial pay cut.
Most university professors make relatively modest salaries. In professional schools, salaries are higher because that is what the national market dictates. Paying significantly less than other schools will mean that the best faculty will leave and those with other choices will not come. The quality of teaching and research will steadily decrease and the university will spiral downward, as it will then be ever harder to attract excellent students and faculty.
For contrary perspectives, see:
- University Diaries, Today’s Shameless Award Goes to… "... the dean of the recently opened, totally unnecessary, school of law at the University of California Irvine. In response to the terrible crisis in that state’s public system, Erwin Chemerinsky warns darkly against freezing or decreasing executive and faculty salaries. ... Well, let’s get to it. How much do you make? How much do your law school colleagues make? How much do they teach? How many of your graduates get jobs as lawyers (the Irvine school opened despite the fact that California has a glut of lawyers, and large numbers of unemployed law school grads)? And, uh, didn’t you tell me, when justifying your unjustifiable new school, that your faculty would be all about turning out public interest lawyers? So… hard-nosed, hyper-capitalist, private sector salaries for our faculty, but of course! And crappy non-profit positions for our idealistic students. ... Listen to Kristin Luker, Chemerinsky. She’s a colleague of yours at Berkeley."
- Cloudminder (Dedicated to UC Alumni in Support of Reclaiming & Reforming the University of California): "Erwin Chemerinsky is dean of the UC Irvine School of Law, he said this: "Nor is there reason to believe that there are significant wasteful expenditures within the UC system." ... That quote (by a dean) does not help make the case for UC Irvine's controversial new law school or securing its hoped for future prestige. We need Deans who can look at waste, fraud and abuse news stories and confront the problems and implement real solutions-- not obfuscate, brush off real problems, spin."
- Roy Meddock: "Absolute nonsense. The UC President gets a salary of $800,000.00/yr plus amazing benefits such as $30,000.00 for a dog run. No more tution increases. Stop over paying faculty. Do not run Universities like Club Med."
(Hat Tip: Jack Chin.)
Update: Stephen Bainbridge (UCLA):
If you think California benefits from having someone who is one of the 100 most influential people in corporate governance doing award winning teaching at a public university, you're going to have to accept UCLA paying something near market price.
But then we come to this little nugget:
Nor is there reason to believe that there are significant wasteful expenditures within the UC system.
Sorry, Erwin, but you just went off the rails. The UC Merced campus was an unnecessary financial burden. And speaking of unnecessary UC programs, your law school at UC Irvine was documented to be completely unnecessary.
At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.
The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35% when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.
What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”
Merck & Co Inc., the second-largest drugmaker in the U.S., last year brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering- Plough Corp., securities filings show. Merck is also appealing a federal judge’s 2009 finding that Schering-Plough owed taxes on $690 million it had earlier brought home from overseas tax-free.
The largest drugmaker, Pfizer Inc., imported more than $30 billion from offshore in connection with its acquisition of Wyeth last year, while taking steps to minimize the tax hit on its publicly reported profit.
Disclosures in Switzerland and Delaware by Eli Lilly & Co. show the Indianapolis-based pharmaceutical company carried out many of the steps for a tax-free importation of foreign cash after its roughly $6 billion purchase of ImClone Systems Inc. in 2008.
“Sophisticated U.S. companies are routinely repatriating hundreds of billions of dollars in foreign earnings and paying trivially small U.S. taxes on those repatriations,” said Edward D. Kleinbard, a law professor at the University of Southern California in Los Angeles. “They devote enormous resources first to moving income to tax havens, and then to bringing those profits back to the U.S. at the lowest possible tax cost.”
With the exception of the Schering-Plough case, no authority has accused Merck or Pfizer or Lilly of paying less tax than they should have. While corporations have no obligation to pay any more than the legal minimum, “the question is what should that minimum be?” said Kleinbard, a former corporate tax attorney at Cleary Gottlieb Steen & Hamilton LLP and former chief of staff at the congressional Joint Committee on Taxation.
U.S. companies overall use various repatriation strategies to avoid about $25 billion a year in federal income taxes, he said.
President Obama is faced with a national debt at over $11 trillion and needs to fund projects such as National Health Care with an ever shrinking tax base. As the economy has slowed, so have tax revenues. It would then make sense for the government to re-examine tax carve outs which only benefit the wealthy. In fact, President Obama is on record saying he wants to eliminate tax loopholes. After almost 50 years, it would appear ripe to eliminate one of the only congressionally authorized tax loopholes -- the $30 billion Exchange Funds.
This article addresses the social equity arguments and the tax and economic theories to solve the perceived problem. The article thoroughly covers, through unique access to materials not previously seen before, including, fund private placement memorandum, the basics of fund details, fund formations, the tax rules, and the solutions to solve the social inequity.
This article not only proposes how to create legislation to tax the current arrangements but offers a creative solution utilizing current lode sections to tax these vehicles.
Tuesday, December 28, 2010
The Blawggies, which honor the best law-related blogs as determined from my personal and highly-opinionated perspective, were first unleashed on an unsuspecting blogosphere in December 2004 and are an annual tradition here at DennisKennedy.Blog. ...
The Blawggies have always had a spot for the best law professor blawg and now that I’m a contributing editor to the new Legal Skills Prof Blog on the great Paul Caron’s The TaxProf Blog and Jim Maul[e]’s Mauled Again. I like how they both cover tax law and tax developments, explain the practical implications, and branch out into the economic crisis, law school issues and much more. Both bloggers show how to write a blog with an academic focus and a a real world impact. I admire them greatly. Perhaps my highest compliment is that their blogs make me wish I could take a tax law class from them, which is no small feat when you consider that the late Martin Ginsberg was one of my favorite professors at Georgetown University Law Center.
As tests are increasingly important in education — used to determine graduation, graduate school admission and, the latest, merit pay and tenure for teachers — business has been good for [Caveon Test Security], a company that uses “data forensics” to catch cheats, billing itself as the only independent test security outfit in the country.
Its clients have included the College Board, the Law School Admission Council and more than a dozen states and big city school districts, among them Florida, Texas, Washington, D.C., and Atlanta — usually when they have been embarrassed by a scandal. “Every single year I’ve been in testing there has been more cheating than the year before,” said John Fremer, 71, a Caveon co-founder who was once the chief test developer for the SAT. ...
For the Law School Admission Council, which administers the LSAT four times a year to a total of more than 140,000 people, Caveon patrols the Internet looking for leaked questions on sites it calls “brain dumps,” where students who have just taken an exam discuss it openly. “There’s all kinds of stuff on the blogs after the test trying to guess which stuff will show up in the future; there’s a whole cottage industry,” said Wendy Margolis, a spokeswoman for the council.
Caveon, which declined to reveal what it charges clients, sends letters to the people who operate those Web sites requiring them to take down the material under the Digital Millennium Copyright Act.
(Hat Tip: Ann Murphy.)
The Government Accountability Office has released A Citizen's Guide to the 2010 Financial Report of the U.S. Government (268 pages):
For FY 2010, the Government Accountability Office (GAO) issued a disclaimer of audit opinion on the accrual-based Governmentwide financial statements for the fourteenth consecutive year.
Accounting Today, GAO Sees Problems in Government’s Financial Management:
The U.S. Government Accountability Office said it could not render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations. ...
The main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.
In addition, the GAO said last week it was unable to render an opinion on the 2010 Statement of Social Insurance because of significant uncertainties, primarily related to the achievement of projected reductions in Medicare cost growth. ...
“Given the federal government’s fiscal challenges, it’s imperative that Congress, the administration, and federal managers have reliable, useful, and timely financial and performance information,” [Acting Comptroller General Gene] Dodaro said. “Improved accuracy and transparency in financial reporting are urgently needed.”
(Hat Tip: InstaPundit.)
Law Librarian Blog, Command and Control at DePaul University: Is DePaul Law's New Dean a Glutton for Punishment?, by Joe Hodnicki:
As an alumnus of DePaul (not Law) and former full-time library employee (also not Law) at DePaul, I hope but am not holding my breath that the relationship between the University and its Law School will improve any time soon. We will just have to wait and see what the University promised its new Law dean to accept this appointment and whether it fulfills its promise to the new dean.
Celebrity lawyer Michael "Mickey" Sherman (husband of Fox News legal analyst Lis Wiehl), who represented Kennedy cousin Michael Skakel in his murder trial, was sentenced yesterday to one year in prison after pleading guilty to two misdemeanor counts of failing to pay $420,000 in federal income taxes.
House Seats Gained
House Seats Lost
New York (1)
South Carolina (1)
New Jersey (1)
- Putting the 'Value Added' in China's VAT, 58 Tax Notes Int'l 487 (May 2010): "Value added tax is a consumption tax imposed on the value added during the production and distribution chain. It is the most common form of domestic household consumption tax and has been adopted in over 135 countries, including all the OECD jurisdictions except for the United States (which has state-based retail sales taxes). The European Union, where the VAT was invented, has the longest experience with it. The People’s Republic of China introduced the VAT to its tax regime in the early stages of its economic open door reform, and the VAT system has been recently reformed by the government."
- No Taxation Without Representation: China’s Taxation History and Its Political-Legal Development, 39 Hong Kong L.J. 515 (2009): "China’s ancient tax system, primarily built on land tax, suited its huge agrarian economic basis, which remained little changed for several thousand years. A variety of other taxes and revenue-like sources including the monopoly of salt and iron and compulsory labour duties were imposed as supplements to formal taxation. Informal taxation existed along with the development of formal taxation because formal tax revenues often could not meet government needs particularly at local levels. An advanced “provincial and prefectural” political regime evolved, from the time of the Qin Dynasty, to enable emperors or rulers to control the large territory. Tax administration was managed by the powerful bureaucratic government which effectively controlled nearly all aspects of state power. Yet taxation appears to have had little or no effect on shaping China’s constitutional polity. Given the linkage between taxation and political-legal development in Western countries, this article examines the reason why, during the long period of China’s political-legal transition, taxation failed to play a similar role in helping create a more developed constitutional polity."
This Article addresses the role of physical presence in the taxation of cross-border personal services. For much of the last century, both U.S. internal law and bilateral treaties have used the service provider’s physical location as the touchstone for determining international taxing jurisdiction. Modern developments — in particular, the significant advances in global communication technology and the increasing mobility of individuals — raise important questions regarding the continued viability of this physical presence standard.
These modern developments have already facilitated the offshoring of numerous types of personal services, such as radiology, accounting, and legal services. As communication technology improves, the range of personal services that can be delivered remotely will follow. In order to address the issues raised by these developments, the Article focuses on the recent introduction of telesurgery, which permits surgeons based in one country to perform real-time procedures on patients located in another country.
The Article describes the significant problems that arise in attempting to fit these modern developments into an almost century-old framework of internal tax laws and international treaty principles. It then makes the normative case for de-emphasizing physical presence in determining the international tax consequences of cross-border personal services. While the arguments for change are strongest in the context of U.S. internal tax law — in particular, in the application of the foreign earned income exclusion — they also impact the principles underlying bilateral tax treaties.
Monday, December 27, 2010
Facing budget gaps and an aversion to new debt and taxes, states and local governments are slapping residents with an array of new fees—and some are applying them to nonprofits.
That marks a sharp departure from long-standing tax exemptions mandated by state law or adopted on the theory that churches, schools and charitable organizations work alongside governments to provide services to the community.
The issue is on display in Houston, where some flood-prone roads are in such disrepair that signs warn drivers, "Turn around, don't drown." Houston's taxpayers in November narrowly voted to adopt a "drainage fee" to raise at least $125 million a year toward the cost of improving roads and storm-water systems. The city will charge fees to property owners, and it won't grant exceptions to churches, schools and charities. ...
A number of groups—including schools, businesses, churches and senior citizens—are demanding exemptions. "We'll defeat this," says David Welch, of the Houston Area Pastor's Council, who plans to lobby state legislators in January. "This is really a tax. It is the first time that churches would not be exempt from property taxes," he says. ...
Some cities are charging religious groups property taxes on buildings no longer used for worship. Other localities are soliciting voluntary contributions. Albany, N.Y., recently passed an ordinance asking schools, hospitals and other nonprofits to contribute to city services. In Minneapolis, residents recently began paying a street-light fee that also applies to nonprofits, which in some places pay fees for elevator safety and fire inspection.
The tax consequences of rent-free use of corporate property by shareholders have received little attention from the courts since the 1950s and even less from commentators. The Code and regulations do not provide any specific guidance, but instead rely on general principles of income tax. However, an ostensibly similar type of transaction has received a tremendous amount of attention by courts, commentators and Congress. For a generation the courts struggled to come to grips with the taxation of interest-free loans from corporations to their shareholders. The courts for the most part rejected the analogy between rent-free use of property and interest-free use of money and refused to apply to the latter the principles that had guided them in dealing with the former. When the path they chose proved impassable, Congress provided a legislative solution for the taxation of interest-free loans.
This paper measures the relationship between an internship experience and subsequent professional performance of tax professionals employed at CPA firms. The study employs promotion velocity and employee turnover as proxies for professional performance. The findings suggest that there is a positive relationship between the internship experience and subsequently performance for tax professionals.
The Supreme Court decreed in Citizen’s United that "[n]o sufficient governmental interest justifies limits on the political speech of nonprofit or for-profit corporations." The Internal Revenue Code, however, imposes a variety of limits on different categories of tax exempt nonprofits, including tax exempt section 501(c)(4) entities such as Citizens United itself. Tax law also burdens for-profit corporations by denying them a deduction for lobbying and political expenditures. Nowhere does Citizens United acknowledge the tax limits on political speech or address their constitutionality. Supreme Court cases predating Citizens United have justified these tax limits on the grounds that government has no duty to subsidize political speech. To the extent that "no duty to subsidize" is and remains the justification, nothing in Citizens United explicitly threatens the current tax regime.
I had the great fortune of attending last week’s ABA Questionnaire Committee hearing in Florida. It’s tough to boil down seven hours of presentations and discussion about employment outcome transparency to a single, readable post. However, a few themes emerged that I think are worth highlighting. Additionally, some great ideas were tossed around at the end of the hearing that may have established a foundation for a new proposal.
- The committee members appear to understand the problem.
- The committee members appear to understand the implications of ignoring the problem.
- The committee members appear to be committed to helping to resolve these problems.
A Foundation for a New Proposal: ... [W]e focused on a very specific solution: leveraging NALP’s considerable salary data to create a centralized website that will help prospectives make accurate estimates of how much entry-level legal jobs pay. ... After NALP’s Executive Director Jim Leipold spoke at the end of the day, the appropriate partner for the ABA became apparent. If the ABA can effectively couple their reform efforts with NALP’s mass of salary data from across the United States, we will have a tenable solution. ...
One of the reasons that the ABA-NALP partnership solution is so attractive is that it can meet prospectives’ needs without increasing costs for schools too much (as always, reform will cost money) and without risking privacy norm violations. But even beyond a partnership, Mr. Leipold pointed out that the committee should not look beyond the NALP survey for the questions they ask. We’ve been saying this for a long time. The NALP survey data are very high quality because NALP has done a great job figuring out the right questions to ask and schools have done a great job responding. But schools can’t pretend they don’t have these data anymore. They do and the committee members know it.
America’s shared prosperity is under threat. Even as the Great Recession devastates the American middle class, the wealthy continue to prosper.
The tax cut deal, while perhaps the best the President could get, will not end this crisis of American democracy. It does too little to help the middle class. And it expects too little support from those who can afford to give the most. Ordinary citizens can, by acting together to create a shadow fiscal policy, correct this failure of government and set the country moving toward a just prosperity.
Here’s How. How Americans who have the means should collectively give back our Bush tax cuts by making donations to organizations that promote fairness, economic growth, and a vibrant middle class. Such joint action, by all visitors to this site, will begin to replicate good government policy, outside the government and free from the grip of obstructionists within it. Because contributions to all of the selected charities are tax deductible, donations made through this site draft the government as a partner in funding the projects that they support.
We can, in this way, begin to redeem candidate Obama’s promise that “we are the ones we’ve been waiting for.”
The site allows users to calculate their savings from the extension of the Bush tax cuts using the Tax Policy Center's methodology. The site allows users to donate the savings to one of four charities:
2011 $21,966.90 2010 $2,840,466.75 2009 $3,063,057.05 2008 $2,189,358.89 2007 $2,624,862.42 2006 $1,646,209.41 2005 $1,455,541.65 2004 $664,911.25 2003 $1,277,423.40 2002 $744,675.06 2001 $1,645,082.28 2000 $1,868,891.93 1999 $1,457,510.59 1998 $1,535,541.02 1997 $955,897.15 1996 $1,985,175.10
For further discussion of Give It Back for Jobs, see:
- Yale press release
- InstaPundit, Yale Law Professors Establish Website to Encourage Tax Cut Givebacks
- Legal Insurrection, Liberal Consciences Put to the Test
- The Right Coast, Thank You Tea Party
- Tax Update Blog, Your First, Buddy
Buckley ... has spent nearly four decades on the Hill participating in the development of federal tax legislation. He began his career as associate counsel in the Office of the House Legislative Counsel, after earning his J.D. from the University of Wisconsin Law School in 1973. He would go on to participate in the crafting of all major tax legislation enacted after 1974.
High taxes kill states. There can be no better evidence than the 2010 Census. The states that lost House seats -- because they're shrinking, relative to the nation -- had taxes 27% higher than the ones that gained seats.
Of the seven states that don't have a personal income tax, four (Texas, Florida, Nevada and Washington) account for eight of the 12 seats apportioned to the fastest-growing states.
New York and Ohio lost two more seats. Other losers -- down one each -- are Massachusetts, Missouri, Michigan, New Jersey, Pennsylvania, Illinois, Louisiana and Iowa. What do they all have in common? High taxes. ...
The states that lost seats ranked an average of 24th in taxes and had an average tax burden of $2,267 per capita. ... The states that gained seats ranked an average of 39th in taxes and had an average tax burden (weighted) of $1,788 -- 27% lower than the losing states. ...The trend is unmistakeable: The "losing" states drove out their high-income citizens (and middle-income jobs) with heavier tax burdens.
- 'Twas the Night Before Christmas (Legal Version)
- IRS Delays Start of Filing Season for Taxpayers With Itemized Deductions
- 2011-Inflation Adjusted Tax Tables
- Increasing Tax Rates on Top 1% Would Make Tax System Less Progressive
- Empirical Studies of Tax Perception
- Married Couple's Guide to the New Estate Tax Law
- Top 5 Tax Paper Downloads
- Bartlett: Cooking the Books -- The 2010 Deficit Was $2.1 (Not $1.3) Trillion
- CBPP: 'Democratic' Parts of Tax Cut Bill Boost Economy, 'Republican' Parts Add to Deficit
Sunday, December 26, 2010
Questions and answers on the new $10 million per couple federal estate tax break.
Wills, Trusts & Estates Prof Blog: Answers to Married Couples' Questions About New Estate Tax Law, by Gerry Beyer (Texas Tech):
- Does [portability] help me if my spouse died years ago?
- Does portability apply to lifetime gifts as well as assets that pass through an estate plan?
- Is portability automatic?
- Is the amount that's portable adjusted for inflation?
- Can I use my exemption instead to provide for children from a previous marriage?
- Is this a subject that should be covered in prenuptial agreements?
- Does portability also apply to the exemption from generation-skipping transfer tax?
- Do I still need a bypass trust?
- Is portability here to stay?
2. [326 Downloads] Oy Yes, the Healthcare Penalty is Unconstitutional, by Steven J. Willis (Florida) & Nakku Chung (J.D. 2010, Florida)
3. [284 Downloads] High Volatility, Negative Correlation, Roth IRA Conversions, and the Codified Economic Substance Doctrine, by Gregg D. Polsky (North Carolina)
4. [242 Downloads] Did Codification of Economic Substance Repeal the Partnership Anti-Abuse Rule?, by Howard Abrams (Emory)
If corporate accountants used government rules for their financial statements, they’d be jailed. That’s why we rarely see the real number of the federal deficit—a terrifying $2.1 trillion last year. ...
In principle, changes in the cost of long-term commitments should be included in the budget, as they would under accrual accounting. The Financial Report takes a stab at doing so and finds that it would have almost doubled last year’s budget deficit from $1.3 trillion to $2.1 trillion.
As a result of the tax cut-unemployment insurance legislation that President Obama signed into law last week, economic forecasters have substantially upgraded their outlook for 2011. ... An analysis of the compromise by Mark Zandi, the chief economist for Moody’s Analytics, indicates that this greater optimism stems largely from the longer extension of federal emergency unemployment insurance (UI) programs than forecasters had expected, the extension of various improvements enacted in 2009 in several tax credits for low- and modest-income families, and a reduction in the payroll tax. By contrast, the extensions of the upper-income Bush-era tax cuts and a substantially weakened estate tax will provide little or no boost to the economy in the short run; moreover, those extensions increase the risk that such measures will ultimately be made permanent and thereby deal a setback to efforts to restore long-run fiscal balance.
Saturday, December 25, 2010
The Wall Street Journal has published this wonderful editorial each Christmas since 1949, In Hoc Anno Domini:
When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.
Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.
But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?
There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?
Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.
And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God. Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me. And he sent this gospel of the Kingdom of Man into the uttermost ends of the earth.
Read the rest here.
Friday, December 24, 2010