TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Monday, December 12, 2016

More On The Proposed Estate Tax Valuation Discount Regulations

Sloshed Santas Enjoy Tax Deduction For Participating In NYC Pub Crawl: 'Bringing Arts Events To Underserved Communities'

SantaConNew York Post, SantaCon Protesters and Revelers Clash During Bar Crawl:

SantaCon’s drunken Kris Kringles found coal in their stockings Saturday morning in the form of neighborhood activists jeering the annual Manhattan bar crawl.

Two protesters were ticketed — for using megaphones without a permit — at about 11 a.m. as about 1,000 Santas gathered around the Flatiron Building to begin their boozy trek through Gramercy, East Village and Midtown.

“I saw a sex act in Aisle Four of Duane Reade!” one yelled as Santas showered him with boos. “You guys are doing a bad thing, and it makes everyone sad.” ...

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December 12, 2016 in Tax | Permalink | Comments (0)

ABA's Proposed 75% Bar Passage Requirement Ignores Key Problem: Failure To Tie Student Loans To Job Outcomes

American Lawyer LogoThe American Lawyer:  The ABA Raises the Wrong Bar, by Steven J. Harper (Adjunct Professor, Northwestern; author, The Lawyer Bubble):

[I]n October, ...  the ABA's Section of Legal Education and Admissions to the Bar recommended a rule change that it thought was monumental. It's actually far too little coming far too late. The new rule would require at least 75 percent of a law school's graduates to pass a state bar exam within two years of receiving their degrees. The current standard requires a 75 percent pass rate within five years. Since 2000, only four law schools have faced difficulty under the current standard, and all were restored to full accreditation.

Plummeting national bar passage rates coupled with growing student debt for degrees of dubious value are the culmination of a dysfunctional market in legal education. That dysfunction is taking a cruel toll on a generation vulnerable to exploitation by elders who know better. Sooner or later, we'll all pay the price.

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December 12, 2016 in Legal Education | Permalink | Comments (26)

The IRS Scandal, Day 1313: The Koskinen-Trump Connection

IRS Logo 2Politico Morning Tax, Now That's Going Way Back:

Trump and Koskinen might decide that it’s best for the IRS chief to move along — but apparently they’ll do so after more than four decades worth of history. A New York Times article from May 1975 discusses the efforts of the president-elect, then a 28-year-old developer, to buy a hotel. The assets management company representing the bankrupt company that owned the hotel was represented by a 35-year-old executive — yup, John Koskinen.

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December 12, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Sunday, December 11, 2016

Death Of Hope Lewis (Northeastern), Age 54

Hope LewisNortheastern Mourns Loss of Hope Lewis, Law Professor and Human Rights Scholar:

Pro­fessor Hope Lewis, a member of the School of Law’s fac­ulty since 1992, died Tuesday after a long ill­ness. She was 54.

Born on May 14, 1962, Lewis was a grad­uate of the Bronx High School of Sci­ence, Har­vard Col­lege, and Har­vard Law School. A pas­sionate cham­pion of the poor and dis­ad­van­taged, Lewis focused her teaching and schol­arly work on human rights and eco­nomic rights in the global economy. She co-​​founded the law school’s Pro­gram on Human Rights and the Global Economy and served as the fac­ulty director of the law school’s Global Legal Studies program.

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December 11, 2016 in Legal Education, Obituaries | Permalink | Comments (0)

The Top 5 Tax Paper Downloads

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [652 Downloads]  Aggressive Tax Planning & the Ethical Tax Lawyer, by Heather M. Field (UC-Hastings)
  2. [339 Downloads]  The Up-C Revolution, by Gregg D. Polsky (Georgia) & Adam H. Rosenzweig (Washington University)
  3. [302 Downloads]  Estate Planning for Digital Assets: Assigning Tax Basis and Value to Digital Assets, by Elizabeth Ruth Carter (LSU)
  4. [280 Downloads]  IRS Issues Final and Temporary Debt-Equity Regulations Under Section 385, by David S. Miller (Proskauer, New York) & Janicelynn Asamoto Park (Proskauer, New York)
  5. [185 Downloads]  Were Trump's Fake Losses Legal as Tax Deductions?, by Calvin H. Johnson (Texas)

December 11, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

A Special Christmas Dinner

Yet another reason why I love Pepperdine:  last night, my wife and I were delighted to host a Christmas dinner in our home for two Muslim families. We were one of about a dozen Pepperdine families participating in an effort organized by a Pepperdine professor to build bridges of respect, understanding, and friendship between Muslims and Christians. In June, Muslim families hosted Pepperdine families for Iftar dinners during the Muslim holy month of Ramadan.

Photo 1

December 11, 2016 | Permalink | Comments (3)

Judge Denies Bond For Katherine Magbanua, Charged With First Degree Murder In Killing Of Dan Markel

MagnaubaTallahassee Democrat, Judge Denies Bond For Katherine Magbanua, One of Three Charged With FSU Law Professor Dan Markel's Murder:

Katherine Magbanua will remain in jail, for now.

At a day-long Friday bond hearing, prosecutors fought to keep the 31-year-old mother of two, believed to a key orchestrator in the shooting of Florida State law professor Dan Markel, in jail until her Feb. 27 trial.

Leon Circuit Judge James Hankinson sided with them, denying Magbanua’s motion for pretrial release.

The third person charged in Markel’s death, Magbanua sat quietly, whispering with her Miami attorneys, Christopher DeCoste and Tara Kawass, while her brother Erik Magbanua, who testified Friday, sat in the courtroom. ...

A mountain of evidence in the murder case was presented at the hearing.

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December 11, 2016 in Legal Education | Permalink | Comments (10)

The IRS Scandal, Day 1312: Impeachment Averted, But Will Koskinen Resign Or Be Fired By President Trump?

IRS Logo 2Politico Morning Tax, Impeachment Averted:

There’s not a ton of bipartisanship in the House these days, but lawmakers apparently made an exception for quashing a Freedom Caucus effort to impeach IRS Commissioner John Koskinen.

In the end, only 72 House Republicans voted to essentially bring the impeachment resolution to the floor. ... But while almost 350 House members decided to refer the resolution to a Judiciary Committee that hasn’t been gung ho on impeachment so far, that shouldn’t necessarily be viewed as an endorsement of Koskinen — who avoids becoming the first executive branch official since Reconstruction to be impeached. Top Republicans like House Ways and Means Chairman Kevin Brady made it clear they were no fans of Koskinen’s work, but that using time for impeachment proceedings might be unnecessary because they don’t expect the IRS chief to stay on under President-elect Donald Trump. (Koskinen's term ends next November, no matter what.)


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December 11, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Saturday, December 10, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Hamilton By Harvard Economics Students

Continuing my obsession with interest in Hamilton (links below):

(Click on Vimeo button on bottom right to view video directly on Vimeo to avoid interruption caused by blog's refresh rate.)

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December 10, 2016 in Legal Education | Permalink | Comments (0)

The Tax Implications Of Trump’s Disposal Of His Businesses

Trump (President Elect)Following up on Wednesday's post, Could President Trump Sell His Businesses, Tax-Free?: Bloomberg Law, Tax Implications of Trump’s Business Decisions: A Primer:

Donald Trump must confront major tax issues when deciding what to do with his real estate empire and other businesses in order to avoid conflicts of interest as he assumes the presidency.

What will happen if he decides to divest his businesses or simply pass them outright to his children?

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December 10, 2016 in Tax | Permalink | Comments (0)

Fall 2017 Law School Applicants Down 5.1%

LSACLSAC, Three-Year ABA Volume Comparison:

As of 12/02/16, there are 81,710 applications submitted by 14,892 applicants for the 2017–2018 academic year. Applicants are down 5.1% and applications are down 1.7% from 2016–2017. Last year at this time, we had 28% of the preliminary final applicant count.


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December 10, 2016 in Law School Rankings, Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1311:  The IRS 'Scandal' Was Part Of GOP's Strategy To Bog Down Obama Administration

IRS Logo 2Salon, Tom Cotton and Trey Gowdy Vow Vigilance Over the Trump Administration — No, Seriously, Stop Laughing:

Considering how the Republican Party has fallen in line behind Donald Trump over the last few months, does anyone seriously think that this will ever amount to anything? The Chicago Tribune recently reported on Thursday:

Sen. Tom Cotton, R-Ark., and Rep. Trey Gowdy, R-S.C. . . . agreed that House and Senate committees must keep close tabs on Donald Trump’s new government starting next year — not because they want to stick it to a man that neither originally endorsed for president, but because doing so would help rebalance power between the three branches of government.

Sure thing. And I’ve got a bridge over the Potomac to sell you. ...

[A]fter the partisanship of the last eight years, why would anyone give Gowdy or Cotton the benefit of the doubt? Gowdy can complain all he wants about the deeply unfair perception, as he put it in remarks on Tuesday to a room full of Cotton’s fundraisers, that any subpoenas sent to Hillary Clinton or contempt-of-Congress votes held on former IRS bureaucrat Lois Lerner were “politicized.” But that perception existed because the investigations that Congress conducted into the Benghazi tragedy and the IRS “scandal” were in fact part of the GOP strategy to bog down the Obama administration and harm Clinton’s presidential ambitions.

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December 10, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Friday, December 9, 2016

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) discusses the estate tax advantages of cash basis farming.

KristanDeath takes all, but leaves the deductions.

Cash-basis accounting and the rule that adjusts the basis of inherited assets to their date-of-death value confounded the IRS in Tax Court yesterday.

Most businesses that produce things have to capitalize their input costs into the costs of their inventory. They wait to get the benefit of the costs on their tax returns as part of the cost of goods sold when they sell the inventory.

Farmers get a better deal. Assuming they are non-corporate farmers who are active in the business, they get to deduct their input costs when paid. This “cash basis” accounting allows farmers to buy seed, feed, and fertilizer at in December to reduce their taxable income, even when they don’t plan to use it until they plant next year’s crop or feed next year’s livestock. The tax planning opportunities are obvious, and jealously guarded by farm state congressmen.

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December 9, 2016 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (Chicago) reviews a new paper by Edward D. Kleinbard (USC), The Right Tax at the Right Time.

HemelEdward Kleinbard’s newest paper lays out the case for a “Dual Business Enterprise Income Tax,” or “Dual BEIT,” as an alternative to the existing patchwork of federal taxes on business income. Readers familiar with Kleinbard’s past work know that he is a powerful analyst and a crystal-clear writer, and this paper is no exception. For reasons I explain below, I am not sure that a Dual BEIT is the “right tax” for our time, but all can agree that Kleinbard’s proposal is an important contribution to the business tax policy debate.

In a prior paper, Kleinbard explained why he thinks the United States should tax capital income annually at a flat rate; the latest installment explains why he thinks a Dual BEIT is the best way to achieve that result. In brief, a Dual BEIT would consist of a flat-rate entity-level tax on profits and a flat-rate investor-level tax on “normal returns.”

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December 9, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

The 10 Most Underrated Law Schools In America

American Lawyer LogoFollowing up on last week's post, Law School Rankings By Job Placement:  American Lawyer, 10 Most Underrated Law Schools in America:

I've culled the data (I only considered schools ranked No. 50 or worse on U.S. News & World Report) to come up with the 10 most underrated law schools in the land:


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December 9, 2016 | Permalink | Comments (3)

TEDx Talk:  Tax Policy, Climate Change, And Innovation

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

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December 9, 2016 in Tax | Permalink | Comments (0)

Death Of Michael Rich (Elon), Age 41

RichFollowing up on my April 26 post, Michael Rich (Elon) On His Metastatic Kidney Cancer Diagnosis: Elon Law School Press Release, Death of Associate Professor Michael L. Rich:

One of Elon University School of Law’s most prolific teacher-scholar-mentors, beloved by students and colleagues alike, passed away Wednesday morning after a three-year battle with metastatic kidney cancer.

A memorial service will be held next week at St. Andrew’s Episcopal Church (2105 W. Market Street) in Greensboro. This announcement will be updated with more information once details are finalized.

"Let it suffice that Mike’s dedication, even against insurmountable odds, to Elon Law, his students, his work, and his colleagues should inspire and sustain us all,” said Elon Law Dean Luke Bierman. “We are better for knowing Mike but his passing leaves a profound void in our hearts and our community.”

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December 9, 2016 in Legal Education | Permalink | Comments (2)

The IRS Scandal, Day 1310:  Rep. Jim Jordan Is 'Frustrated' By House Passing On IRS Chief Koskinen's Impeachment

IRS Logo 2Newsmax, Rep. Jim Jordan 'Frustrated' by House Passing on IRS Chief Koskinen's Impeachment:

Rep. Jim Jordan said Thursday he is frustrated that the House passed on his bid to impeach IRS Commissioner John Koskinen, but pointed out the American public is also frustrated by Washington's actions.

'[They] voted a month ago, drain the swamp, clean the place up and hold people accountable, people like John Koskinen," the Ohio Republican told Fox News' "America's Newsroom" program.

The IRS, said Jordan, targeted people for their political beliefs with its increased targeting of conservative-based groups, and "you can't have that happen in a great country like ours. You cannot say, 'because you're a conservative we'll come after you.'"

On Tuesday, House members voted by a 342-72 margin to send Jordan's request to the House Judiciary Committee, which has not indicated it wants to prosecute the case. ...

Jordan and fellow Ohio Rep. Warren Davidson both voted against referring the matter to committee. Jordan and his fellow members of the House Freedom Caucus say Koskinen should lose his job for allowing evidence concerning former IRS official Lois Lerner to be destroyed, and for lying to Congress.

"We were told on Election Day to come here and clean this place up," Jordan said Thursday. "We had a chance to do it other day, but unfortunately we didn't get the votes."

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December 9, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Thursday, December 8, 2016

The American Dream Is Collapsing For Young Adults

Washington Post, American Dream Collapsing For Young Adults, Study Says, As Odds Plunge That Children Will Earn More Than Their Parents:

Rising income inequality has eroded the ability for American children to grow up to earn more than their parents, according to a new study from a team of researchers that could carry deep implications for President-elect Donald Trump's policy agenda.

The research from a group led by Stanford's Raj Chetty, and also including economists and sociologists from Harvard and the University of California at Berkeley, estimates that only half the children born in the 1980s grew up to earn more than their parents did, after adjusting for inflation. That's a drop from 92 percent of children born in 1940.


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December 8, 2016 in Tax | Permalink | Comments (8)

Graduate Sues University For $1.2 Million, Says 'Appallingly Bad' Teaching Prevented Him From Being A Successful Lawyer

Oxford (2016)American Lawyer, Graduate Sues Oxford University For Preventing Him From Becoming A Lawyer:

An Oxford graduate is suing the prestigious university for 1 million pounds ($1.27 million), claiming that its “appallingly bad” teaching prevented him from having a successful career as a lawyer.

Faiz Siddiqui, who graduated with a degree in modern history 16 years ago, told the high court he believes he would have had a career as an international commercial lawyer if he had been awarded a first-class degree, rather than the upper second-class he actually achieved. (Instead of using a GPA system, U.K. degrees are graded in four categories: first class, upper second class, lower second class and third class.)

Siddiqui, who trained as a solicitor after leaving university, claims that he underachieved due to “negligent” teaching.

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December 8, 2016 in Legal Education | Permalink | Comments (7)

Why Blue States Are the Real ‘Tea Party’

New York Times op-ed: Why Blue States Are the Real ‘Tea Party’, by Steven Johnson:

ImperfectWhen the modern Tea Party movement coalesced in the early days of the Obama presidency, its allusion to the political grievances of the protesters in Boston Harbor a couple of hundred years earlier seemed plausible enough: Its members felt that their taxes were too high and their interests not adequately represented by the remote authorities in Washington.

But the election of 2016 presents a challenge to that historical lineage. The home states to the Tea Party are actually doing great on the taxation and representation front. It’s the progressive blue states that should be protesting. ...

For complicated reasons — some of which have to do with rural poverty, some of which have to do with the basic physics of supporting infrastructure in low-density regions — a disproportionate amount of per capita federal spending and benefits now flow down to the low-density states. According to a study by the Tax Foundation conducted several years ago, for every dollar New Jersey pays in federal taxes, it receives 61 cents in benefits and other federal spending. For the same dollar of taxes Wyoming spends, it gets $1.11 back.

Put those two trends together and you have a grievance worthy of the original Tea Party: more taxation with less representation. The urban states are subsidizing the rural states, and yet somehow in return, the rural states get more power at the voting booth.

You can represent the injustice of this arrangement mathematically. Think of it as two different kinds of return on investment: how much does each state receive for every dollar it pays in taxes, and how much Electoral College influence does each state get for each vote cast. Take the average of those two data points and you have a measure of which states are getting shortchanged by the system. Call it the disenfranchisement index.

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December 8, 2016 in Tax | Permalink | Comments (11)

Anderson On The California Bar Exam Carnage: Law Schools Need To 'Cull The Herd Of Bloated Tenured Faculties'

TenureFollowing up on yesterday's post, Who Is To Blame For UC-Hastings 'Horrific' 51% Bar Pass Rate?: Robert Anderson (Pepperdine), The California Bar Exam Saga Continues:

The State Bar of California recently announced that the pass rate for the July 2016 California bar exam was 43%. This is a multi-decade low, and has affected virtually every law school in California. Even among ABA-accredited law schools' first time takers, the passage rate was only 62%. Particularly hard hit was UC Hastings, which apparently had a 51% passage rate.

Hastings Dean David Faigman reportedly took to email and wrote a letter to the UC Hastings Community in which he laid the blame on the State Bar. He expressed "incredulity" at the "shameful" and "unconscionable" conduct of the Bar. ... 

The primary reason that bar passage rates are declining is not because of the conduct of the State Bar, but because of the conduct of law schools. Law schools are admitting less and less qualified students in an effort to bolster their bottom lines. And why do their bottom lines need to be bolstered? Because they have too many faculty relative to student demand for the schools, and are either reluctant or unable to reduce the size of the faculty to "right size" the law school relative to present demand for the JD.

The blame for the current crisis lies squarely on the bloated tenured faculties of American law schools. In every institution, ineffective faculty members continue to collect a paycheck for decades after their "sell by" date has come and gone. Many faculty members at many institutions should have never been hired to teach law in the first place. But the instinctive response of most affinity groups is to circle the wagons when danger appears, and that is exactly what has happened in law schools.

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December 8, 2016 in Legal Education | Permalink | Comments (22)

Piketty, Saez & Zucman:  Economic Growth in the United States — A Tale of Two Countries

Thomas Piketty (Paris School of Economics), Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley), Economic Growth in the United States: A Tale of Two Countries (more here; PowerPoint slides here):

In a recent paper, the three authors of this issue brief attempt to create inequality statistics for the United States that overcome the limitations of existing data by creating distributional national accounts. We combine tax, survey, and national accounts data to build a new series on the distribution of national income. National income is the broadest measure of income published in the national accounts and is conceptually close to gross domestic product, the broadest measure of economic growth. Our distributional national accounts enable us to provide decompositions of growth by income groups consistent with macroeconomic growth.

In our paper, we calculate the distribution of both pre-tax and post-tax income. The post-tax series deducts all taxes and then adds back all transfers and public spending so that both pre-tax and post-tax incomes add up to national income. This allows us to provide the first comprehensive view of how government redistribution in the United States affects inequality. Our benchmark series use the adult individual as the unit of observation and split income equally among spouses in married couples. But we also produce series where each spouse is assigned their own labor income, allowing us to study gender inequality and its impact on overall income inequality. In this short summary, we would like to highlight three striking findings.

Our first finding—a surge in income inequality

Figure 2

Our second finding—policies to ameliorate income inequality fall woefully short

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December 8, 2016 in Tax | Permalink | Comments (0)

Chicago Tribune:  Valparaiso Law School Faces Two Bleak Choices — 'Admit More Unprepared Students Or Face Reality And Close'

Valpo (2019)Following up on my previous posts (links below): Chicago Tribune, Valparaiso University's Law School Might Face Bleak Choices:

Two weeks ago in a nearly unprecedented backhand, the American Bar Association punished two law schools 723 miles apart for similar indiscretions. One was put on probation for two years. The other was censured. ... The ABA said both schools were not doing any of their central jobs well enough during the assessment period to guarantee continued accreditation. Fix it, or else.

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December 8, 2016 in Legal Education | Permalink | Comments (4)

Maryland Law School Offers 10% Tuition Discount To Federal Employees Pursuing MSL, LLM Degrees

Maryland (2016)Press Release, Office of Personnel Management, Maryland Carey Law form Federal Employee Education Alliance:

The U.S. Office of Personnel Management (OPM) and the University of Maryland Francis King Carey School of Law announced an agreement to offer a Federal Employee (FEDEM) grant equivalent to a 10% tuition discount to Federal employees and their spouses admitted to the Master of Science in Law (MSL) or the Master of Laws (LL.M.) programs.

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December 8, 2016 in Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1309:  How Trump Got Yanked Into GOP's IRS Impeachment Fight

IRS Logo 2Politico, How Trump Got Yanked Into GOP's IRS Impeachment Fight:

John Koskinen's ouster was voted down after multiple conversations among Reince Priebus, the Freedom Caucus and House leaders.

House Freedom Caucus members were gearing up for a floor fight Tuesday to impeach IRS Commissioner John Koskinen when one of the group’s leaders, Rep. Jim Jordan, received an unexpected phone call from Reince Priebus.

Priebus, the new chief of staff for President-elect Donald Trump, asked Jordan (R-Ohio) to hold off on the effort to remove Koskinen, sources close to the matter said. The impeachment drive had been a long-running source of tension between Republican leaders who feared it was an abuse use of congressional oversight, and conservatives who believed Koskinen lied to them and deserved to be punished.

In the frenzied hours as the impeachment showdown neared, multiple conversations ensued between Priebus and Freedom Caucus leaders. There are conflicting accounts of where the outgoing Republican Party chairman came down.

GOP leaders say Priebus remained opposed to Koskinen's impeachment. Freedom Caucus sources counter that Priebus called them back several times to retract any such opposition and say Trump's inner circle would remain neutral. ...

Freedom Caucus sources say the back-and-forth over Koskinen shows that party leaders will use Trump and his inner circle as a lever against them. They fear that after years of bucking Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) and their top lieutenants, GOP leaders will point to a Trump-run White House to justify their positions and try to steamroll the group as it tries to push the party’s agenda to the right. ...

According to multiple sources, Ryan staffers contacted Priebus and urged him to weigh in on the Koskinen dispute. Ryan and other top House Republicans said they were worried that impeaching Koskinen would trigger a Senate trial for the IRS commissioner in early 2017 that could eat up weeks of Senate floor time, potentially impeding Trump's early agenda. Plus, most of the House Republican Conference had no interest in voting on this sensitive matter, which many felt pitted them between their base and their conscience. ...

A source familiar with their conversations said Priebus called back later Tuesday to clarify that Trump's team was not against impeachment and would remain neutral. “It’s ludicrous to suggest a president who ran on draining the swamp would oppose the impeachment of an IRS commissioner who targeted some of the very same people who voted for him,” said a Freedom Caucus member.

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December 8, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wednesday, December 7, 2016

Grinberg Presents Issues To Consider In The EU State Aid Investigations Today At Pennsylvania

GrinbergItai Grinberg (Georgetown) presents Issues to Consider in the EU State Aid Investigations at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

  • Washington Will Not Let Brussels Have the Last Word on Apple, Financial Times op-ed, Sept. 1, 2016
  • EU State Aid Investigations Demand an Aggressive Response, 83 Tax Notes Int'l 611 (Aug. 15, 2016) (Abstract: This article is the first in a multi-part series addressing the concerns raised by the European Commission’s state aid investigations. In this installment, the authors provide background on the state aid investigations and describe the ways in which these investigations represent a sharp departure from past commission practice. Subsequent pieces will respectively address the tax, investment law, and trade law concerns raised by the commission’s investigations.)

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December 7, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

UMass Law School Gains Full ABA Accreditation, Needs To Double Enrollment (From 66 1Ls) To Be Financially Sustainable

UMass 2The ABA Section of Legal Education And Admissions to the Bar announced yesterday that it has granted the University of Massachusetts School of Law-Dartmouth full accreditation.  

Boston Globe, UMass Law School Gains Full Accreditation:

The school operates on about $9.3 million annually and is projected to run a $3.3 million deficit this year, down from $3.8 million last year. Since UMass took over the law school in 2010, the subsidy has totaled $15.3 million, according to UMass.

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December 7, 2016 in Legal Education | Permalink | Comments (1)

Americans Are Paying Apple Millions To Shelter Overseas Profits, Thanks To I.R.C. § 956(c)(2)

Apple TreasuryBloomberg: Americans Are Paying Apple Millions to Shelter Overseas Profits, by Andrea Wong:

Over the years, Apple Inc. has become the poster child for U.S. multinationals accused of sheltering overseas profits to avoid the IRS. What’s gone largely unnoticed is that it’s been paid more than half a billion dollars by the U.S. government to do just that.

Taking advantage of an exemption tucked into America’s Byzantine tax code, Apple stashed much of its foreign earnings—tax-free—right here in the U.S., in part by purchasing government bonds, according to people with direct knowledge of the matter. In return, the Treasury Department paid Apple at least $600 million and possibly much more over the past five years in the form of interest, a Bloomberg review of its regulatory filings shows.

The untold story of Apple and its taxes wends its way from Cork, Ireland, to New York and then Reno, Nevada. But according to tax experts interviewed by Bloomberg News, the maker of iPhones is hardly unique. Many of the biggest U.S. multinationals have seized on the same exemption, which lets them avoid or delay repatriation taxes by buying Treasuries with their overseas cash. (The top 10 alone hold over $100 billion of the bonds.) That, in effect, enables the companies to turn billions of dollars in potential tax liabilities into millions of dollars in taxpayer subsidies—all while they publicly bemoan the sky-high taxes that make it impossible for them to bring the money home.

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December 7, 2016 in Tax | Permalink | Comments (1)

Katherine Magbanua Pleads Not Guilty To First Degree Murder In Killing Of Dan Markel, Trial Set For February; Prosecutors Still Hope She Will Implicate Adelsons

MagnaubaTallahassee Democrat, Katherine Magbanua Pleads Not Guilty in Markel Killing:

Katherine Magbanua is not working with investigators, instead pleading not guilty and requesting a February trial date on charges of first degree murder in the shooting of Dan Markel.

Magbanua, a prime suspect in orchestrating the murder-for-hire plot of the renowned Florida State law professor, is the third person charged in his 2014 killing.

Tuesday, she sat in the same Leon County courtroom as the suspected gunman and father of two of her children Sigfredo Garcia. The two did not make eye contact save for a quick glance after the 31-year-old Magbanua entered her plea alongside her two Miami attorneys. A trial date has been set for Feb. 27. She was indicted on first-degree murder charges last week. ...

Chief Assistant State Attorney Georgia Cappleman said she would like to strike a deal with Magbanua similar to one made with former defendant Luis Rivera that led to her arrest.

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December 7, 2016 in Legal Education | Permalink | Comments (7)

Kleinbard:  The Why And How Of The Dual Business Enterprise Income Tax ('Dual BEIT')

Edward Kleinbard (USC), Capital Taxation in an Age of Inequality:

The standard view in the U.S. tax law academy remains that capital income taxation is both a poor idea in theory and completely infeasible in practice. But this ignores the first-order importance of political economy issues in the design of tax instruments. The pervasive presence of gifts and bequests renders moot the claim that the results obtained by Atkinson and Stiglitz (1976) counsel against taxing capital income in practice.

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December 7, 2016 in Scholarship, Tax | Permalink | Comments (1)

Who Is To Blame For UC-Hastings 'Horrific' 51% Bar Pass Rate?

UC-Hastings Logo 3Above the Law, Who’s To Blame For School’s ‘Horrific’ Bar Results? Maybe The California Bar Examiners.:

The California Bar Examiners have sent letters to law schools informing them of their passage rates. For UC Hastings, acting Dean David Faigman was on the receiving end of “horrific” news. The July 2016 passage rate for first-time takers from Hastings was a mere 51 percent.

Holy hell.

Faigman certainly doesn’t sugarcoat it in a message sent to the Hastings community. He calls it unacceptable. He highlights that the school is 11 points below the state average. He outlines concrete efforts the school will make to help those who failed. He explains that he’s already taken steps designed to improve passage rates going forward. You can read his entire message and evaluate his proposals for yourself here. ...

Faigman makes one other subtle — but vitally important — point in his letter that he carefully notes isn’t an excuse, but that deserves attention nonetheless:

As an aside, let me express my utter incredulity with the conduct of the Committee of Bar Examiners of the State Bar of California. The pass-rate for first-time takers of ABA accredited California law schools was 62%. In comparison, New York’s bar-pass rate was 83%. The California Bar is effectively saying that 38% of graduates from ABA accredited law schools are not qualified to practice law. This is outrageous and constitutes unconscionable conduct on the part of a trade association that masquerades as a state agency.  [See also More On The California Bar Exam Carnage.]

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December 7, 2016 in Legal Education | Permalink | Comments (19)

Could President Trump Sell His Businesses, Tax-Free?

Trump (President Elect)Following up on my previous post, Trump’s Emolument Tax Problem:  Steven M. Rosenthal (Tax Vox), Could President Trump Sell His Business, Tax Free?:

Yesterday, President-elect Trump tweeted he would leave his businesses “in total” to reduce his potential conflicts as President. The Office of Government Ethics (“OGE”), tweeted its praise for his remarks, and encouraged him to divest his interests rather than merely transfer control. But could Trump avoid paying tax on any profits from the sale of his businesses? Surprisingly, the answer may be yes. The law is ambiguous, a 50/50 proposition in my view.

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December 7, 2016 in Tax | Permalink | Comments (1)

The IRS Scandal, Day 1308:  House Votes To Send Koskinen Impeachment Back To Judiciary Committee

IRS Logo 2Wall Street Journal: House Turns Aside Vote on IRS Chief Impeachment: Vote Demonstrates Lack of Appetite Among Republicans For Pursuing Case Against John Koskinen, by Richard Rubin:

The House of Representatives turned aside an attempt by conservative hard-liners to impeach IRS Commissioner John Koskinen for his handling of congressional investigations into the tax agency.

Instead, in a 342-72 vote, the House sent the issue back to the Judiciary Committee, which hasn’t held a formal impeachment hearing or voted on the matter.

The vote demonstrated the lack of appetite among rank-and-file House Republicans for pursuing Mr. Koskinen’s impeachment, and Judiciary Committee Chairman Bob Goodlatte (R., Va.) said the move would ensure Mr. Koskinen gets due process.

A senior Republican aide said officials from the incoming administration of President-elect Donald Trump told members of the House Freedom Caucus, a group of conservative members who helped push the vote, that they wanted to avoid a showdown over to IRS commissioner because of the potential impact on the legislative process.

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December 7, 2016 in IRS News, IRS Scandal | Permalink | Comments (3)

Tuesday, December 6, 2016

Amiram Presents Tax Avoidance At Public Corporations Driven By Shareholder Taxes Today At Columbia

AmiranDan Amiram (Columbia) presents Tax Avoidance at Public Corporations Driven by Shareholder Taxes: Evidence from Changes in Dividend Tax Policy (with Andrew M. Bauer (Illinois) & Mary Margaret Frank (Virginia)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

We exploit exogenous changes in country-level corporate-shareholder tax integration systems to identify the effect of investor-level taxes on corporate tax avoidance. Specifically, we rely on the elimination of imputation systems by European countries in different years, in response to supranational judicial rulings. Under an imputation system, lowering corporate tax payments does not increase the cash flows available to shareholders after dividend taxes, but it does so after their elimination. Using a difference-in-difference model with fixed effects, we find that the average firm affected by the change reduces its cash effective tax rate by 17% relative to the eliminating group’s average statutory tax rate. Additional placebo tests provide evidence that supports this effect is present only in the countries and years in which the elimination occurs. Our results are partially driven by shifting income to foreign countries. Lastly, as expected, our results are more pronounced in closely held firms, firms with lower foreign income and firms with higher dividend payout.

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December 6, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Illinois Dean Offers Qualified Support For ABA's Proposed 75% Bar Passage Accreditation Requirement

ABA Section On Legal Education (2016)Vikram Amar (Dean, Illinois), Thoughts On The ABA’s Proposed Tightening Of Bar Pass Standards:

A number of law deans have recently weighed in on proposed changes to the ABA’s standards for bar passage outcomes that law schools would (if the proposals are enacted) need to satisfy to remain accredited. The proposal requires at least 75% of the students from each law school’s graduating class who take a bar exam to pass within two years of the date of graduation. ...

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December 6, 2016 in Legal Education | Permalink | Comments (1)

Hemel & Herzig:  The Art Of The (Budget) Deal—Using Reconciliation To Repeal ObamaCare And Pass Tax Reform

Daniel Hemel (Chicago) & David Herzig (Valparaiso), The Art of the (Budget) Deal, Yale J. on Reg.: Notice & Comment (Dec. 2, 2016):

Republicans on Capitol Hill are reportedly planning to use the filibuster-proof budget reconciliation process to repeal the Affordable Care Act and overhaul the tax code. Against that background, Sam Wice says that “the most powerful person in America” in 2017 will be Senate Parliamentarian Elizabeth MacDonough, the nonpartisan official who will “determine” how much of their agenda Republicans can pass through reconciliation. This, of course, is an exaggeration: like it or not, the most powerful person in America in 2017 will be Donald J. Trump, who will wield all the power of the imperial presidency. But Wice’s post helpfully directs our attention to the budget reconciliation process, the rules of which quite likely will determine whether the Republican leadership on Capitol Hill can repeal the ACA and reform the tax laws.

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December 6, 2016 in Scholarship, Tax | Permalink | Comments (0)

Mitchell Hamline Revamps Weekend J.D. Program To Require Students To Be On Campus Only 7 (Rather Than 13) Weekends Per Semester

Mitchell HamlineFollowing up on Sunday's post, Loyola-Chicago, Mitchell Hamline, And Seton Hall Offer Weekend J.D. Programs:  Mitchell Hamline announced yesterday that it has revamped its weekend J.D. program so that 

[students] only need to be present on campus seven weekends a semester instead of 13, which opens the program up to people who are working full-time and live in cities like Atlanta, Chicago, Denver, or anywhere that has direct flights to the Twin Cities.

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December 6, 2016 in Legal Education | Permalink | Comments (1)

Donald Trump:  'A Socratic Method Guy' — The 'Professor Kingsfield Of Presidents'?

CBS Face the Nation (Dec. 4, 2016):  Reince Priebus on Donald Trump:

He is a details guy. ...  I would say it’s he’s a Socratic method guy. It kind of reminds me of being back in law school. He asks a lot of questions, asks questions about questions. And he will keep going until he’s satisfied with the information that he’s getting.

Kingsfield Trump 2

December 6, 2016 in Legal Education, Political News | Permalink | Comments (0)

Business Income And Business Taxation: How The U.S. Could Kill The Corporate Tax

Conor Clarke (Ph.D. 2017, Yale) & Wojciech Kopczuk (Columbia), Business Income and Business Taxation in the United States Since the 1950s:

In theory, the U.S. tax system aims to attribute and tax all business income to individuals. But the tax treatment of this income varies. Pass-through income is taxed when earned; capital-gains income is taxed when realized; dividends when distributed; other forms of business income may escape taxation entirely. Business owners often have control over the timing and character of their income: They can often choose, for example, between reporting business income or deducting it as wages or fringe benefits. And laws change, changing the incentive and ability to shift income between the individual and corporate sectors.

We integrate a wide variety of tax data to document the large long-run changes in the structure of business income and business taxation in the United States. These changes include the degree to which business incomes are taxed on a realization versus an accrual basis, the extent to which taxation is deferred, and the share of business income that is ultimately subject to taxation. We highlight the evolving relevance of retained earnings in the changing corporate sector and their relationship to equity values and unrealized capital gains. We also document the evolution of individual income components — profits of pass-through entities, dividends, and capital gains (both taxable gains and those escaping taxation through step-up). As a result of these changes, business incomes are increasingly taxed through personal income taxes instead of a combination of corporate and personal taxes. In particular, this implies that the observability of business incomes on personal income tax returns has improved over time, a fact that has implications for measuring and understanding the income distribution

Bloomberg View: How the U.S. Could Kill the Corporate Tax, by Leonid Bershidsky:

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December 6, 2016 in Scholarship, Tax | Permalink | Comments (0)

39 Private College Presidents Earned > $1 Million In 2014 (Up From 32 In 2013)

ChronicleChronicle of Higher Education, 39 Private-College Leaders Earn More Than $1 Million:

A total of 39 leaders of private colleges earned more than $1 million during the 2014 calendar year. The number of leaders with compensation above $1 million was up from 32 the year before. The average pay of private-college leaders, including those who served partial years, was $489,927 in 2014. Among presidents who served the whole year, average pay was $512,987. Leaders who served full years in both 2013 and 2014 saw a pay increase of 8.6 percent.

Here are the ten most highly compensated private college presidents:

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December 6, 2016 in Legal Education | Permalink | Comments (3)

The IRS Scandal, Day 1307: Group Seeks Summary Judgment On Claim That Rev. Rul. 2004-6 Is So Vague That It Allows The IRS To Target Conservative Groups

IRS Logo 2Plaintiff's Reply Brief in Support of its Motion for Partial Summary Judgment, Freedom Path v. Lerner, No 3:14‐CV‐1537‐D (D.C. N.D. TX) (citations omitted):

The Government argues that the jeopardy for any group facing the “facts and circumstances” test is neither (1) being subjected to an unconstitutionally vague process nor (2) a chilling of its constitutionally‐protected speech. But the Government is incorrect in both respects, and even a cursory analysis of the “facts and circumstances” test reveals a regulatory test that is unconstitutional under the First and Fifth Amendments to the United States Constitution.

Over the years, the Internal Revenue Service has made clear that social‐welfare organizations, which are organized under § 501(c)(4) of the Internal Revenue Code, may make political communications so long as those communications are not “the primary purpose” of the organization. Those political communications are speech, and the ability to engage in it is an enormous benefit to social welfare organizations. Yet it is the IRS, which employs an unconstitutional test to analyze these organizations’ activities, that plays gatekeeper for such speech. And because the “facts and circumstances” test of Revenue Ruling 2004‐6 is so vague and overly broad, it allows the IRS—whether purposeful or not— to provide the benefit of speech for groups whose political persuasions the IRS prefers and to deny it to groups whose political persuasions the IRS dislikes. ...

Finally, the Government notes that Freedom Path, or any other social‐welfare organization or tax‐exempt applicant, may appeal any adverse determination the IRS may make in the future. But an appeal that adjudicates results created by an unconstitutional process—especially without the opportunity to first challenge the process itself—is, in fact, no remedy at all.

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December 6, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Monday, December 5, 2016

Markovits Presents Meritocracy And Its Discontents Today At NYU

MarkovitsDaniel Markovits (Yale) presents Meritocracy and Its Discontents at NYU today as part of its High-End Inequality Colloquium Series (more here) hosted by Robert Frank (Cornell) and Dan Shaviro (NYU):

Aristocracy and meritocracy are commonly considered opposed, even opposite, ideals. According to the common view, where aristocracy entrenches fixed accidents of birth, meritocracy promotes equality of opportunity. And where aristocracy allocates advantage according to morally arbitrary heredity, meritocracy allocates advantage to track morally meaningful contributions to the social product, or common good.

In fact, the meritocratic achievement that we celebrate today, no less than the aristocratic virtue acclaimed in the ancien régime, is again a sham. What is conventionally called merit is actually an ideological conceit, constructed to launder a fundamentally unjust allocation of advantage.

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December 5, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (2)

Chronicle Of Higher Education Special Report:  Faculty Retirement Incentives

ChronicleChronicle of Higher Education Special Report, Retirement Incentives:

How to help faculty members view retirement as an opportunity, not a threat.

CHEGreasing the Retirement Wheel at UCLA:

Senior scholars, of course, can benefit a college with their deep knowledge and research. But colleges are under pressure to encourage turnover in their faculty ranks. Tighter budgets, especially at public universities, are made even tighter by the higher salaries and health-care expenses of older faculty members. And efforts to bring in a younger and more diverse faculty may depend on older professors’ leaving their jobs to create open positions.

To help encourage retirement, colleges have usually focused on money, offering buyouts and other financial packages. But at UCLA and many other colleges, there is an increasing recognition that administrators also need to deal with the psychological barriers to retirement — to help faculty members know that retiring isn’t necessarily the end of their relationship with the university, or of their own scholarly identity. Retirement, the administrators say, must not be seen as stepping off the edge of an academic cliff. ...

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December 5, 2016 in Legal Education | Permalink | Comments (0)

IRS Releases Final Report On Richest 400 Americans

Forbes 400For the final time, the IRS has released its annual analysis of the richest 400 American taxpayers (The 400 Individual Income Tax Returns Reporting the Largest Adjusted Gross Incomes Each Year, 1992–2014):

This release contains four tables which contain information from the Top 400 Individual Income Tax Returns for each of Tax Years 1992 through 2014. Table 1 contains frequencies, money amounts, and average dollar amounts for the major income, deduction, and tax credits reported as part of the Form 1040 (U.S. Individual Income Tax Return). Table 2 shows ranges of marginal tax rate for the various statutory rates (including the alternative minimum tax rates) that were in effect for Tax Years 1992 through 2014 while Table 3 shows the range of average tax rates up to 35 percent and over, computed as total income tax divided by adjusted gross income.

The data in Tables 1–3 are based on the individual returns with the largest adjusted gross income reported each specific year shown and do not necessarily reflect the same taxpayers over the 23-year time period reflected. Therefore, Table 4 is available to present the number of times an individual return appeared among the 400 largest adjusted gross incomes for each of tax years 1992 through 2014.

Beginning with Tax Tear 2014, the annual October release of Individual Income Tax Return percentile data now includes a new table (Table 3) that contains all of the item content found in the top 400 data release. In addition, this new table shows data at the .001 percentile level—which in 2014 represented the top 1,396 returns. This is a more analytically useful tabulation compared to the top 400 tabulation in that it provides a longitudinally consistent data point relative to the entire percentile distribution.  As the number of returns increases with the growth of the economy, the number of returns in the .001 percentile will increase proportionally as well thus allowing for a consistent high-income data series.

As a consequence, the top 400 data series will be discontinued after Tax Year 2014.

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December 5, 2016 in IRS News, Tax | Permalink | Comments (0)