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Monday, June 24, 2013

The Journal of Legal Tax Research Publishes New Issue

CoverThe American Tax Association Journal of Legal Tax Research has published Vol. 11, No. 1 (June 2013):

  • Christopher R. Jones & Yuyun Sejati, Improving Use-Tax Compliance by Decreasing Effort and Increasing Knowledge, 11 J. Legal Tax Research 1 (2013):  "We explore two remedies that could help states improve use-tax compliance. The first remedy is designed to reduce the amount of effort an individual must exert to pay the use tax by having the vendor give the individual an option to pay the use tax online. The second remedy focuses on increasing knowledge about the use tax by providing the individual with information about the use tax during the purchasing process. The results from two states, Florida and Illinois, indicate that providing an individual with the option to pay the use tax increases the likelihood that the person will comply with the use-tax law. Providing information about the use tax, however, increases the likelihood of compliance only in Florida. Finally, there is a marginally significant interaction effect between the two remedies in Illinois. This study makes three important contributions. First, this study offers policy makers two concrete and feasible solutions to the use-tax compliance problems for online transactions. Second, this study contributes to the academic literature by expanding the tax compliance literature into a relatively unexplored area. Finally, this study shows how use-tax compliance decisions and the effectiveness of potential remedies may vary from one state to another."
  • Claire Y. Nash & James O. Parker, The LLC Controversy: Classifying LLC Members as Limited Partners under Proposed Treas. Reg. §1.1402(a)-2, 11 J. Legal Tax Research 19 (2013): "The LLC entity form continues to be popular, and LLCs continue to seek definitive guidance regarding the classification of LLC members for purposes of §1402. Although a series of recent judicial decisions and Proposed Treas. Reg. §1.469-5(e), issued in November 2011, address when an individual will be treated as a limited partner for purposes of IRC §469, they exacerbate the uncertainty surrounding how LLC members should be classified for other purposes of the Internal Revenue Code. They do not address how LLC members should be classified for purposes of IRC §1402, or whether deference should be afforded Proposed Treas. Reg. §1.1402(a)-2. Through an analysis of the relevant statutes and related regulations, recent judicial decisions, and other recent developments, we show that Proposed Treas. Reg. §1.1402(a)-2 provides limited authority to support classifying LLC members as limited partners."
  • Glenn Walberg, The Impact of Accounting Methods, the Doctrine of Election, and Income Distortion on a Start-Up Election, 11 J. Legal Tax Research 33 (2013):  "A taxpayer with an existing business generally can establish return-signing positions to characterize the growth of its business as occurring either through an expansion of the existing business or the start of a new business. The selected character then determines the manner by which the taxpayer recovers costs associated with the growth. This article explores how the taxpayer's initial choice to characterize business growth as an expansion or start-up could become binding on the taxpayer and IRS under accounting method rules and/or the doctrine of election, which would permit a recharacterization only to avoid income distortion. The article concludes that those tax accounting concepts could unjustifiably make the initial characterization binding, irrespective of its accuracy, due to the difficulty of showing that a particular characterization causes income distortion."

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