TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Saturday, July 2, 2016

This Week's Ten Most Popular TaxProf Blog Posts

Chronicle:  Highly Ranked Law Schools Like Minnesota, Washington & Lee Cut Enrollments, Costs To Survive

MinnesotaChronicle of Higher Education:  Law Schools Cut Back to Counter Tough Financial Times, by Katherine Mangan:

For years they were considered the cash cows of academe, spinning off profits that could keep money-losing parts of the university afloat.

But most law schools today are struggling to break even, buffeted by plummeting applications, a shrinking job market, and the constant pressure to avoid slipping in national rankings. ... Because they rely so heavily on tuition and face a variety of other cost pressures, many and possibly most of those schools are operating at a deficit.

The growing number of universities that are subsidizing struggling law schools "are certainly not happy about the money running the other way," said Paul F. Campos, a professor of law at the University of Colorado at Boulder whose biting critiques of law schools in blogs and books have made him a polarizing but influential figure in legal education. He estimates that at least 80 percent of law schools are losing money — a figure that an ABA spokesman said could not be confirmed.

"The attitude of a lot of the universities is, OK — we’re willing to carry you guys for a while, but you have to shed a lot of costs or come up with other sources of revenue because we’re not going to subsidize you forever," Mr. Campos said. ...

Among the highly ranked law schools now grappling with deficits, the University of Minnesota Law School [#22 in U.S. News] has received subsidies from the university that are expected to total $16 million by 2019, according to a report the law school presented to university regents in 2014, two years after the subsidies began. Faced with a 49-percent decline in applications from 2010 to 2015, the law school trimmed its enrollment by about a third of its 2010 level. ...

Another law school that is making tough financial decisions is Washington and Lee University's School of Law [#40 in U.S. News], which last year announced a transition plan that would allow it to shrink its first-year class, reduce faculty and staff positions through retirements and attrition, and tap into its portion of the university endowment. The goal was to balance its budget by 2018-19.

[Tax Prof] Brant J. Hellwig worked on the plan as a faculty member and took over as dean shortly after it was enacted last year.  ... "I feel like we addressed the difficult questions early and head-on, and made the adjustments we needed to," he said.

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July 2, 2016 in Legal Education | Permalink | Comments (11)

Did Trump Violate IRS Rules By Using His Foundation's Money To Purchase Tebow-Signed Helmet (Now Worth $415) For $12,000?

Trump 2Washington Post, Donald Trump Used Money Donated for Charity to Buy Himself a Tim Tebow-Signed Football Helmet:

Did Donald Trump violate IRS rules, by using a charity's money to buy himself a signed football helmet?

Four years ago, at a charity fundraiser in Palm Beach, Donald Trump got into a bidding war at the evening's live auction. The items up for sale: A Denver Broncos helmet, autographed by then-star quarterback Tim Tebow, and a Tebow jersey.

Trump won, eventually, with a bid of $12,000. Afterward, he posed with the helmet. ... But Trump didn't actually pay with his own money. Instead, the Susan G. Komen organization — the breast-cancer nonprofit that hosted the party — got a $12,000 payment from another nonprofit, the Donald J. Trump Foundation.

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July 2, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Law Prof Network Blogger's Work Helps Get New Trial For Serial's Adnan Syed

SerialKudos to Colin Miller (South Carolina), editor of our EvidenceProf Blog, whose blogging (and Undisclosed Podcast) on the Serial Podcast on the 1999 prosecution of 17 year-old Adnan Syed for murdering his ex-girlfriend, 18 year-old Hae Min Lee, was cited by Maryland Judge Martin Welch in granting Syed a new trial on Thursday. See National Law Journal, Blogger's Obsession with "Serial" Case Leads to Retrial for Adnan Syed.

July 2, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1150

IRS Logo 2The Daily Signal, Conservative Leaders Rally Behind Stopping IRS Abuse of Donor Disclosures for Nonprofits:

Legislation that would prevent the Internal Revenue Service from requiring tax-exempt organizations to include the names, addresses, or identifying information of donors in yearly returns could end up on President Barack Obama’s desk.

The House passed the bill, introduced by Rep. Peter Roskam, R-Ill., by a vote of 240-182 earlier this month.

The White House Office of Management and Budget said the Obama administration opposes the Hosue legislation. The bill “would constrain the Internal Revenue Service’s ability to enforce tax laws and reduce transparency,” it said. ...

The Conservative Action Project, comprised of leaders at over 100 organizations working toward common goals within the conservative movement, recently issued a memo calling for a curtailment of IRS power. ...

Sen. Tim Scott, R-S.C., introduced on June 15 a companion bill to the legislation passed in the House. Scott’s legislation was referred to the Senate Committee on Finance. “The IRS’ targeting of groups based on their political beliefs is totally unacceptable, and we must take concrete steps to ensure it never happens again,” Scott said in a prepared statement.

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July 2, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Friday, July 1, 2016

Kleinbard:  The Trojan Horse Of Corporate Integration (With Shaviro's Commentary)

Edward D. Kleinbard (USC), The Trojan Horse of Corporate Integration:

The U.S. Senate Finance Committee has invested significant resources, including hearings and staff reports, to make the case for an unusual form of corporate dividend integration – a corporate dividends-paid deduction, combined with a universal shareholder dividend withholding tax collected from the firm. This proposal would not reduce the cash tax outlays of U.S. corporations in respect of distributed or retained earnings. It would not reduce the aggregate tax burdens imposed on most shareholders, and in many plausible circumstances would raise those tax costs. It is a poorly targeted response to design weaknesses in the U.S. international corporate tax system. Its efficiency gains are undeveloped and largely overstated.

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July 1, 2016 in Congressional News, Scholarship, Tax | Permalink | Comments (0)

The NLJ 500: A Robust Portrait Of Big Law

NLJ 2National Law Journal, NLJ 500: A Robust Portrait of Big Law:

Welcome to the inaugural NLJ 500. This year, we introduce the biggest-ever expansion of our annual NLJ 350 report—launched in 1978 with a ranking of 200 firms—to provide a more robust portrait of Big Law in the U.S. The additional 150 midsized law firms on the list bear watching as some grow into the large firms of the future, whether organically or through mergers with larger entities.

For the largest 350 firms on our list, head count numbers of attorneys in 2015 dipped slightly from the previous year, to about 146,600 lawyers, from 147,500 in 2014. That deflation flipped the 0.6 percent growth that took place in 2014. The overall numbers skew lower this year, in part because to the world’s largest law firm, Dentons, is no longer on the NLJ list. We explain why, and the impact of its absence, inside.

We also explore the numbers within the numbers in two stories: a Women’s Scorecard look at disappointing but unsurprising news that women lawyers at 254 responding firms comprise a mere 21 percent of partners; and a profile of a Bay Area firm that’s experienced notable growth riding the venture capital deal wave. Finally, there’s a wealth of charts in print and interactives online. We hope you enjoy reading the new NLJ 500 and welcome your feedback.

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July 1, 2016 in Legal Education | Permalink | Comments (0)

Weekly Tax Roundup

Weekly Legal Education Roundup

Weekly SSRN Tax Roundup

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July 1, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

The Influence Of State Taxes On NBA Free Agency

DurantNBA free agency kicked off at midnight.  How important are state tax considerations to players in choosing which team to join?  Kevin Durant reportedly is courting six suitors, two of whom are in states without an income tax: Miami and San Antonio (the others are Boston, Golden State, Los Angeles (Clippers) and Oklahoma City.)  Given his recent tax troubles, Durant may be particularly sensitive to tax considerations in making his free agency decision.  See Slam Online, The Influence of State Taxes on NBA Free Agency:

Modern athletes seem to be more financially literate and are aware of the so-called “Jock Tax” and state taxes. As such, more athletes are signing with teams that are located in states that don’t tax income, like the Miami Heat, the Houston Rockets and San Antonio Spurs.

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July 1, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Oxford 10th Annual Academic Tax Symposium

OxfordThe 10th Annual Academic Tax Symposium concludes today at the Oxford University Centre for Business Taxation:

Allison Christians (McGill University), Not So Soft Law: The OECD BEPS Regime
Discussant:  John Vella (Oxford University)

Dominika Langenmayr (KU Eichstatt-Ingolstadt & CESifo), Why The Current Tax Rate Tells You Little: Competing for Mobile and Immobile Firms
Discussant:  Johannes Voget (University of Mannheim)

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July 1, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

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July 1, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

What Really Matters In Getting Accepted To A Top Law School

Huffington Post, Getting Accepted To A Top Law School: What Really Matters:

As a current student at Stanford Law School, I find myself frequently talking to current prospective law students wanting to know what they should be doing now to get into a top law school. My immediate response is always the same: strengthen your GPA and crush the LSAT. ...

This chart indicates the GPA and LSAT ranges for admitted students at the top 14 law schools this past academic year.


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

Brown:  Domestic Abuse And The EITC

Fred B. Brown (Baltimore), Permitting Abused Spouses to Claim the Earned Income Tax Credit in Separate Returns, 22 Wm. & Mary J. Women & L. 453 (2016):

The subsidy provided by the earned income tax credit (EITC ) is of particular importance to individuals subjected to domestic abuse, given that such individuals are often impoverished, and the EITC can provide them with the financial resources necessary to improve, endure, or leave an abusive relationship. Despite the importance of the EITC, married individuals subjected to domestic abuse face serious difficulties in claiming the credit. Because married individuals are not permitted to claim the EITC in a married filing separate return, such individuals are left with three return-filing options for claiming EITCs: (1) file a joint return, (2) qualify and file as a single taxpayer, or (3) qualify and file as a head of household.

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July 1, 2016 in Scholarship, Tax | Permalink | Comments (1)

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July 1, 2016 in About This Blog, Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1149

IRS Logo 2Investor's Business Daily editorial, IRS Scandal: No End To Lois Lerner's Lawlessness:

Justice:  IRS official Lois Lerner didn't merely target conservative groups to take away their tax-free status, as first suspected, but also handed over more than a million pages of tax returns to the Justice Department. That's a crime.

It's now apparent, if it wasn't before, that the Internal Revenue Service -- which was created solely to collect revenues due the government, not to persecute the administration's political enemies -- has become a kind of rogue agency.

Its chief, John Koskinen, is being threatened with impeachment for not telling the truth in testimony before Congress. But Lerner, more than even Koskinen, has become a symbol of IRS arrogance and illegality.

As Eliana Johnson of the National Review reported this week, Lerner transmitted some 1.25 million pages of tax returns of mostly Tea Party and conservative groups to the Justice Department in October 2010. In Johnson's words, this was "likely the largest unauthorized disclosure of tax-return information in history."

For some perspective, this took place at the start of a three-year period during which the same groups found their applications for tax-free status inexplicably held up, while those for liberal groups were more or less routinely rubber-stamped.

But the actual transmission of their tax returns as part of a fishing expedition by Lerner is the big problem here -- because she also transmitted IRS Schedule B data, which includes the names and addresses of contributors to those conservative groups. That's a big no-no.

Unfortunately for Lerner, tax returns are nearly sacrosanct under the law. Only an active investigation into criminal acts would allow the IRS to give the tax returns to the Justice Department. And then, by law, Justice would have to specifically request them. They didn't in this case.

By the way, a good-government group called the Cause of Action Institute has been dredging all this information up as part of its ongoing litigation in the case. We wish them luck.

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July 1, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (4)

Thursday, June 30, 2016

The End Of Summer (Tax)

As Pepperdine's summer session winds down, my wife and I hosted our third and final lunch today with my small but plucky tax class.  This summer has marked several firsts for me:  my first summer teaching at Pepperdine (after 11 summers teaching at San Diego); my first time teaching such a small (7 students) class; and my first time switching to a new casebook in 25 years of law teaching. 


June 30, 2016 in Legal Education, Tax | Permalink | Comments (1)

The Tax Lawyer Publishes New Issue

The Tax Lawyer (2013)The Tax Lawyer has published Vol. 69, No. 3 (Spring 2016):

2016 Erwin N. Griswold Lecture Before the American College of Tax Counsel

Selected Papers From the Inaugural International Taxpayer Rights Conference

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June 30, 2016 in ABA Tax Section, Scholarship, Tax | Permalink | Comments (0)

Faulhaber:  Patent Boxes And The Limits Of International Cooperation

Patent Box (2015)Lilian V. Faulhaber (Georgetown), The Luxembourg Effect: Patent Boxes and the Limits of International Cooperation:

This article uses patent boxes, which reduce taxes on income from patents and other IP assets, to illustrate the fact that the jurisprudence of the European Court of Justice has a longer reach than has previously been recognized. This article argues that, along with having effects within the European Union, the ECJ’s decisions can also have effects on countries outside of the EU. In the direct tax context, the ECJ’s jurisprudence has hampered the ability of both EU and non-EU countries to police international tax avoidance.

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June 30, 2016 in Scholarship, Tax | Permalink | Comments (0)

Johnston:  Barack Obama's Astonishing Tax Policy Legacy

Democracy Logo (2017)Democracy: A Journal of Ideas, Taxes: Fund the IRS!, by David Cay Johnston:

Will anyone remember the dramatic turnabout in tax policy that began when Barack Obama took office? Considering the awful economic conditions that prevailed, and the announced intention of Republican Congressional leaders to make his presidency fail, Obama’s successes in tax policy are nothing short of astonishing. They are also little known because of the generally poor quality of mainstream news coverage about his actions as well as Obama’s failure to toot his own horn.

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June 30, 2016 in Tax | Permalink | Comments (28)

Appeals Court Affirms Denial Of Accreditation Of Canada's First Christian Law School

Trinity WesternToronto Star, Ontario Appeal Court Upholds Decision Not to Accredit Evangelical Law School:

Ontario’s top court delivered a strong affirmation of LGBTQ rights on Wednesday when it upheld a decision not to accredit an evangelical Christian law school [Trinity Western University v. The Law Society of Upper Canada, 2016 ONCA 518 (June 29, 2016)].

The Court of Appeal ruled that the Law Society of Upper Canada (LSUC), which regulates lawyers in Ontario, was entitled in 2014 to deny accreditation to Trinity Western University’s proposed law school over its “community covenant,” which students must abide by and prohibits sex outside of heterosexual marriage.

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June 30, 2016 in Legal Education | Permalink | Comments (3)

Why Law Schools Need To Teach More Than Law To Thrive Survive

Legal RebelsABA Legal Rebels:  Why Law Schools Need to Teach More Than the Law to Thrive (or Survive), by Chad Asarch (Colorado) & Phil Weiser (Dean, Colorado):

The ongoing discussion on the future of legal education all too often misses the opportunities for innovation and re-invention.

In its most recent discussion of the topic, for example, the New York Times highlighted the impact of declining applications (down by around 40 percent from the peak six years ago), fewer jobs at larger law firms, and high tuition in an era of significant student debt. In the article, the Times asked when we will begin to see closings of law schools (in addition to the recent downsizing).

In another recent discussion of the topic, the New York Times profiled one common response to the challenges facing legal education [at the University of Minnesota Law School]: Cut back on the number of students, faculty, and staff. This approach, in other words, keeps the traditional model and mentality in place, but downsizes it. We believe that there is a far better approach than the retrenchment model focused on by the New York Times: Develop a more powerful value proposition (while holding the line on costs).

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June 30, 2016 in Legal Education | Permalink | Comments (6)

Oxford 10th Annual Academic Tax Symposium

OxfordThe 10th Annual Academic Tax Symposium continues today at the Oxford University Centre for Business Taxation:

Annette Alstadsæter (NMBU), Accounting for Business Income in Measuring Top Income Shares: Integrated Accrual Approach Using Individual and Firm Data from Norway
Discussant:  Brian Bell (University of Oxford)

Jennifer Blouin (University of Pennsylvania), Investment and Tax Uncertainty: Evidence from Fin 48
Discussant:  TBA

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June 30, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Stanford Student’s Robot Lawyer Has Beaten 160,000 Parking Tickets In London And NYC

Kleinbard:  Searching For Our Fiscal Soul

Ted 2Edward D. Kleinbard (USC), Searching for Our Fiscal Soul (Presentation Slides):

This is an extended version of a presentation made at TEDx Livermore 2016, the theme of which was The Economics of Empathy. Searching for Our Fiscal Soul argues that democracy is an exercise in empathy towards fellow citizens we do not know, and, if we did, might not like. We express that empathy through government spending, because that is how we actualize values that are important enough that we are willing to pay for them. This is our fiscal soul in action. Whether measured against the values we all routinely recite, or against the social environments achieved by peer countries, the fiscal soul of the United States is in peril. The remedy lies in understanding the value of a complementary economy, in which government spending is properly reframed as purchasing investments and insurance that private markets do not, and cannot, reach.

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June 30, 2016 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 1148

IRS Logo 2National Review:  New Documents Suggest IRS’s Lerner Likely Broke the Law, by Eliana Johnson:

Recently obtained documents raise new questions about Lois Lerner’s role in sending confidential tax returns to the Justice Department.

It is likely the largest unauthorized disclosure of tax-return information in history: the transfer of some 1.25 million pages of confidential tax returns from the IRS to the Department of Justice in October of 2010. And it was almost certainly illegal.

The documents, which consisted chiefly of non-profit tax returns, were transferred to the DOJ’s criminal division from the IRS at the request of Lois Lerner, who wanted to get the information to the DOJ in advance of a meeting where she and several of the attorneys in the public integrity section of the department’s criminal division discussed their concerns about the increasing political activity of non-profit groups. ...

“It took an organization over 50 months of investigation and multiple lawsuits to get clarity on the IRS’s own compliance with the rules it enforces against others,” says Dan Epstein, the executive director of the Cause of Action Institute and a former attorney for the House Committee on Oversight and Government Reform. “The IRS, in the midst of its political targeting of groups engaged in policy advocacy, was engaging in the disclosure of millions of records aimed at ginning up prosecutions of these groups without going through the legally required channels.”

Federal law prohibits the IRS from sharing tax returns filed with the agency, with very limited exceptions. “The IRS has a special obligation to keep information confidential, that’s how our tax system works,” says Eileen O’Connor, who served as assistant attorney general for the tax division of the DOJ in the George W. Bush administration.

Documents suggest that Lerner’s massive document transfer to the DOJ didn’t meet any of those exceptions, including one that allows the agency to disclose returns for use in criminal investigations — if they’ve been requested in relation to “an actual investigation about a person to whom the investigation is related,” says O’Connor. Both Lerner and the DOJ were interested in figuring out how to prosecute non-profit groups they believed were engaging in improper political activity, and Lerner sent the documents over to the department days before an October 8 meeting with several of her IRS colleagues, an FBI agent, and attorneys from the DOJ’s public-integrity section. There they discussed their mounting “concern that certain 501(c) organizations are actually political committees ‘posing’ as if they are not subject to FEC law, and therefore may be subject to criminal liability,” according to a DOJ summary of the meeting. ...

It looks increasingly likely that the file sharing was part of a broader effort on the part of bureaucrats to push back against the Supreme Court’s ruling, an effort that not only almost certainly violated the law but undermined the spirit of the law and the purpose for which it was written in the first place.

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June 30, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (7)

Wednesday, June 29, 2016

Amidst 57% Enrollment Decline At Valparaiso Law School, 10 Tenured Faculty Accept Buyouts And 3 Junior Faculty Will Be Terminated

Valpo LogoIndiana Lawyer, Valparaiso Law School Reduces Faculty, Class Size to Prepare for a Different Future:

Valparaiso Law School is hardly the first to feel the pain of falling student applications, but as the subject of a recent profile in the New York Times, its troubles may be the most well-known.

In February, the northwest Indiana institution announced it was going to reduce its faculty and class sizes in response to fewer lawyers finding jobs and fewer students wanting to get a J.D. Valparaiso offered buyouts to all tenured faculty members. ...

Speaking recently to Indiana Lawyer, Dean Andrea Lyon, who will soon begin her third year at Valparaiso’s helm, was focused on the future. She said the worst is over for the school and she wants to look forward rather than second-guess past decisions. She noted remaining faculty was willing to roll up their sleeves to do the work that needs to be done.

Still, she acknowledged the past school year was very stressful with the most difficult part coming from the decision to cut employees. Ten tenured faculty members accepted the buyout and the school has given termination contracts to three junior tenure-track professors who will leave after the 2016-2017 academic year. Also, seven staff members were laid off.

Reducing personnel along with cutting other expenditures everywhere possible, the law school is slashing its annual budget by $4 million, which is roughly a third. Teaching loads for the remaining faculty will increase by one to two additional courses per semester. Also, the size of the incoming class this fall will number about 75 students compared to 130 in 2015 and 174 in 2014. ...

Paul Caron, Pepperdine University School of Law professor and writer of the popular TaxProf Blog, is surprised Valparaiso is getting so much attention. He noted other schools were equally slow to respond to the changes in the market and many chose the same course of lowering admission standards to keep class sizes the same.

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June 29, 2016 in Legal Education | Permalink | Comments (12)

CBO:  The 2016 Budget Outlook

Congressional Budget Office, The 2016 Budget Outlook (June 29, 2016):



June 29, 2016 in Congressional News, Gov't Reports, Tax | Permalink | Comments (2)

Floyd 'Money' Mayweather Sends Form 1099 To Strip Club After Making It Rain $20,000

FloydLarry Brown Sports, Floyd Mayweather Sends Strip Club $20,000 Tax Bill After Making It Rain:

Floyd Mayweather Jr. made it rain so hard at a Las Vegas strip club a couple years back that he thinks he deserves a tax break for it.

Tax documents obtained by the Daily Mail show that Mayweather’s company, Mayweather Promotions LLC, has sent Larry Flint’s Hustler Club a 1099 IRS form for more than $20,000 he spent on strippers on May 25, 2014. Apparently The Money Team believes the Hustler Club is responsible for paying taxes on the $15,000 in singles and additional $5,000 cash Floyd and his crew spent that night.

Not surprisingly, club owner Jason Mohney is furious. He says the Hustler Club didn’t receive a dime of the $20,323.18 and that it all went to the dancers, who are independent contractors.

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June 29, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Update On Murder-For-Hire Investigation Into Dan Markel's Death: Grand Jury To Reconvene Aug. 4 To Consider Additional Indictments

Markel 1WCTV, Grand Jury Will Reconvene in August to Review Markel Case Evidence:

A Leon County grand jury plans to reconvene later this summer to review evidence in the murder case of FSU law professor Dan Markel.

Prosecutors confirmed with WCTV that the grand jury will meet August 4.

Sigfredo Garcia and Luis Rivera were indicted last week in Markel's 2014 murder.

Tallahassee Democrat, Second Markel Suspect in Leon County Jail:

More arrests are expected in the case as investigators say they have linked the family of Markel’s ex-wife Wendi Adelson to the murder-for-hire plot.

Chiefly evidence points toward Wendy Adelson’s mother and brother, Donna and Charles Adelson.

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June 29, 2016 in Legal Education | Permalink | Comments (1)

Kamin:  Legislating For Good Times And Bad

David Kamin (NYU), Legislating for Good Times and Bad, 53 Harv. J. on Legis. ___ (2016):

Congress tends to move in fits and starts. Major policy changes are often followed by periods of legislative stasis. This means that, even as circumstances change and policies may no longer be appropriate in the new conditions, Congress may not respond. This is the problem of “policy drift.”

The academic literature has recognized this challenge and largely focused on one particular type of solution employed by Congress: empowerment of other institutions that can move more quickly, in particular administrative agencies or the courts. However, this view is far too limited. Congress can keep such authority in its hands and still address policy drift, sometimes even more effectively.

This article is the first to comprehensively consider the tools available to Congress to address such drift.

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June 29, 2016 in Scholarship, Tax | Permalink | Comments (0)

Law Students May Use Department Of Education's New Fraud Defense To Loan Repayment Aimed At For-Profit Colleges To Discharge Law School Loans

BuzzFeed News, Law School Grads Could Be Next To Have Student Loans Cancelled:

Law graduates, many with more than $100,000 in debt, could soon seek to have their loans cancelled. And some may have a convincing case.

They made misleading claims about how many of their students were likely to find a job, obscuring the grim reality of how few get employment in their field. They buried their graduates in piles of debt they could not reasonably repay, and admitted unqualified students in pursuit of tuition revenue. They often failed to educate their students well enough to pass the tests required to land a job. And the watchdog that oversees them is facing sanctions from the Education Department.

This might sound very much like the scandal-ridden world of for-profit colleges. But since the recession, it has also become an accurate way to describe some American law schools.

And just as for-profit schools are leaving taxpayers on the hook for potentially billions of dollars of student loans that may need to be cancelled, some law schools are now also on shaky footing. In proposing an expanded and relatively generous student debt forgiveness rule last week, the Education Department may have opened itself up to an onslaught of claims by law graduates — a group of highly indebted and legally savvy students with a history of being misled by their schools.

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June 29, 2016 in Legal Education | Permalink | Comments (30)

Oxford 10th Annual Academic Tax Symposium

OxfordThe 10th Annual Academic Tax Symposium continues today at the Oxford University Centre for Business Taxation:

Lily Batchelder (NYU), Accounting for Behavioral Biases in Business Tax Reform: The Case of Expensing
Discussant:  Michael Devereux (Oxford University)

Jan-Emmanuel De Neve (University of Oxford), Eliciting Taxpayer Preferences Increases Tax Compliance
Discussant:  Nadine Riedel (University of Bochum)

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June 29, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Federal Judge Allows Law Prof's Gender Discrimination And Retaliation Claims Against Law School And Dean In Tenure Denial To Go To Trial

HascallFollowing up on my previous posts:

The Legal Intelligencer, Law Professor’s Suit Against Duquesne, Gormley Can Proceed:

A Duquesne University law professor can proceed with her gender discrimination and retaliation claims against the university and incoming president Kenneth Gormley, a federal judge has ruled, at the same time tossing the rest of her claims, including one for religious discrimination for her teaching of Islamic law [Hascall v. Duquesne University of the Holy Spirit, No. 14-1489 (W.D. PA June 28, 2016)].

U.S. District Judge Cathy Bissoon of the Western District of Pennsylvania said there were sufficient factual disputes as to whether the university veered from typical practices in reviewing plaintiff Susan Hascall's bid for tenure, whether the school lobbied other professors to vote against Hascall being tenured and on what basis the university denied her tenure. ...

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June 29, 2016 in Legal Education | Permalink | Comments (0)

WSJ:  Judge Hands Entrepreneur Sam Wyly $1.1 Billion Tax Bill

WylyWall Street Journal, Judge Hands Entrepreneur Sam Wyly a $1.1 Billion Tax Bill:

A federal judge has ordered Texas entrepreneur Sam Wyly to pay $1.1 billion in taxes and penalties for committing tax fraud using offshore accounts, even though the former billionaire’s net worth has fallen to a fraction of that amount.

The payment demand from Judge Barbara Houser on Monday was made for federal taxes due as far back as 1992. In a court opinion filed last month, she admitted that the money “may now be more difficult for the government to collect given the passage of time and the dissipation of Sam’s wealth.”

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June 29, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

The IRS Scandal, Day 1147

IRS Logo 2Politico Morning Tax: What's Next For John Koskinen?, by Bernie Becker:

The good news for Republicans seeking to remove the IRS commissioner: A group of legal scholars all agreed that providing false testimony to Congress rises to the level of impeachable offense. But as our Katy O’Donnell noted, there wasn’t a groundswell of support for the case that Republicans like House Oversight Chairman Jason Chaffetz and Rep. Jim Jordan were pushing — that Koskinen only needed to commit a bad act, not have bad intent, to borrow the phrasing of one of the witnesses. “The House has never impeached anyone for gross negligence or I think anything akin to it, and I think opening the door to that is going to present all sorts of serious problems,” said Michael Gerhardt, a law professor at the University of North Carolina.

In any event, the House Freedom Caucus wants a floor vote on Koskinen’s impeachment for his handling of the investigation into the IRS’s improper scrutiny of tea party groups, as The Hill’s Naomi Jagoda reports.

At the same time, Chaffetz’s measure to censure Koskinen has already passed the Oversight Committee. The last time Congress censured a sub-Cabinet official was back during the Teapot Dome scandal of the Roaring '20s, according to the Congressional Research Service. (Apparently, Teapot Dome was once a plot point on “Downton Abbey.”)

Speaking of the IRS (and the Constitution):  Those GOP efforts to strip Koskinen of his salary via the appropriations process might not be standing on the most solid constitutional footing, according to Richard Rubin of The Wall Street Journal. In fact, it could be a bill of attainder — just like the GOP efforts to take away Koskinen’s pension through the censure process. “This does sound a lot like imposing a punishment without a trial,” said Richard Briffault of Columbia Law School.

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June 29, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, June 28, 2016

Herzig:  Tax Lawyers Kill $38 Billion Energy Transfer/Williams Merger

Williams EnergyThe Surly Subgroup:  Tax Lawyers Kill $38 Billion Merger, by David J. Herzig (Valparaiso):

I remember one of my first days at GT [Greenberg Traurig] we were advising on a corporate merger.  At the end of the process (of course), the M&A group asked tax to sign off on the deal.  Everything was done and this was supposed to be a rubber stamp.  Well, as you can guess by now, the tax consequences of the deal as structure were disastrous and the whole deal had to be restructured.  I remember vividly the corporate lawyers saying as they walked out the door, this is why we never ask tax anything!

Today, a judge killed the proposed $38 billion merger between Energy Transfer Equity (“ETE”) and the Williams Companies. Chancery Court Vice Chancellor Sam Glasscock ruled that ETE could back out of the deal because of taxes.  Latham & Watkins, actually, tax lawyers at three top firms (L&W, Gibson Dunn and Morgan Lewis and one law professor [Ethan Yale (Virginia)]) could not opine that the deal was tax neutral under 721 despite one law professor [Howard Abrams (San Diego)] and Cravath saying the deal worked.  This opinion is a rather big deal for M&A lawyers.  Usually, conditions precedent like this won’t allow one side to back out of a transaction. ...

I would love to hear others opinions here.  But some off the cuff reactions I had were:

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June 28, 2016 in New Cases, Tax | Permalink | Comments (0)

Why Won't Donald Trump Release His Tax Returns?

Vanity FairVanity Fair: The Great Trump Tax Mysteries: Is He Hiding Loopholes, Errors, or Something More Serious?, by Nicholas Shaxson:

Why won’t Donald Trump release his taxes? An investigation into the G.O.P. candidate’s finances—the extensive deductions he could claim, the F.E.C. filings from his Scottish and Irish golf resorts, and his declarations to the British government—reveals a disturbing pattern of mistakes, hype, and contradictions.

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June 28, 2016 in Political News, Tax | Permalink | Comments (5)

UC Berkeley Spends $1 Million To Refurbish Chancellor's Home; Assistant Claims She Was Fired For Refusing To Lie In IRS Reporting About Time Spent Doing Personal Chores

UC Berkeley Primary Logo Berkeley BlueSan Francisco Chronicle, UC Berkeley Spends Big on Chancellor’s Campus Fixer-Upper:

Over the past three years, UC Berkeley has spent more than $1 million sprucing up the official home of Chancellor Nicholas Dirks, school records show. ...

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June 28, 2016 in Legal Education | Permalink | Comments (2)

Will Artificial Intelligence Really Destroy Legal Jobs?

AIFollowing up on my previous posts:

Legal Tech News, The News of Attorneys' Demise Has Been Greatly Exaggerated (With Apologies to Mark Twain):

There has been a great deal of coverage about the possibility of Artificial Intelligence (AI) replacing the legal profession, stimulated in part by a recent conference at Vanderbilt Law School titled Watson, Esq.: Will Your Next Lawyer Be a Machine?

Some warn that the world’s first artificially intelligent attorney is imminent and that it is only a matter of time before technology gives rise to new ways of delivering professional services and ultimately replacing the traditional lawyer. Yet others think that the human element is critical to the practice of law and cannot be so easily replaced.

While AI has come a long way, replacing lawyers is not on the horizon. 

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June 28, 2016 in Legal Education | Permalink | Comments (2)

Kamin:  Legislating Crisis

David Kamin (NYU), Legislating Crisis:

For the last several years, the congressional budget process has jumped from self-created crisis to self-created crisis. Debt limit, shutdown, sequester, potential withholding of congressional pay, and others beyond that — all of these crises coming in quick succession and requiring Congress to take action to avert a problem. There is a common element to each of these crises. In particular, Congress sets an undesirable event to occur at a later time — hence, prompting the possible crisis. This chapter represents an exploration of these devices, and a modest defense of some of them, despite the recent chaos in Washington.

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June 28, 2016 in Scholarship, Tax | Permalink | Comments (0)

Oxford 10th Annual Academic Tax Symposium

OxfordThe 10th Annual Academic Tax Symposium kicks off today at the Oxford University Centre for Business Taxation:

Reuven Avi-Yonah (University of Michigan), Evaluating BEPS
Discussant:  Henk Vording (Leiden University)

Niels Johannesen (University of Copenhagen), The Role of Tax Havens in International Trade With Services
Discussant:  Katarzyna Habu (Oxford University)

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June 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

California Law School To Close Unless A Buyer Is Found

California Southern 2ABA Journal, For-Profit Law School With $39K Total Tuition Bill Set to Close:

Tuition is about $39,000—total—at California Southern Law School, and if you’re interested, now is the time. Owners of the non-accredited Riverside institution say that after fall 2016, they won’t be taking new students.

Elwood Rich, a Riverside County Superior Court judge who opened the school in 1971, died last year. His sons Greg and Brian Rich, who serve as assistant to the dean and registrar, are ready to retire.

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June 28, 2016 in Legal Education | Permalink | Comments (7)

Feld:  Federal Taxation Of State Tax Credits

Alan Feld (Boston University), Federal Taxation of State Tax Credits, 151 Tax Notes 1243 (May 30, 2016):

This article analyzes the Federal income tax treatment of state incentive tax credits. It considers whether and when refundable credits should be included in income and discusses their appropriate character as capital gain or as ordinary income.

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June 28, 2016 in Scholarship, Tax | Permalink | Comments (0)

NY Times:  Tax Dodging On The High Seas

CruisingNew York Times:  Tax Dodging on the High Seas, by Gail Collins:

While many of the biggest cruise lines appear to be headquartered in Florida, they are, for tax purposes, actually proud residents of … elsewhere. “Carnival is a Panamanian corporation; Royal Caribbean is Liberian,” said Ross Klein, who tracks the industry through his Cruise Junkie website.

Although, of course, if one of the ships needs help, it will often be the American taxpayer-funded Coast Guard that comes to the rescue. The Coast Guard doesn’t charge for its services, a spokesman said, because “we don’t want people to hesitate” to summon help when passengers are in danger. This attitude is commendable. But the no-taxes part is not.

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June 28, 2016 in Tax | Permalink | Comments (4)

The IRS Scandal, Day 1146

IRS Logo 2Politico Morning Tax: How Strong Is That Koskinen Case?, by Bernie Becker:

Koskinen, Round Two: The House Judiciary Committee’s exploration of the potential impeachment of IRS Commissioner John Koskinen plods forward today, with a hearing examining the standards for impeachment.

From the looks of things, the proceedings will turn on the question of bad faith. Michael Gerhardt, a law professor at UNC, is expected to testify that ill intent has always been a prerequisite for impeachment in the United States. But some of Koskinen’s biggest detractors have argued that “gross incompetence” is more than sufficient. Rep. Jim Jordan (R-Ohio), chairman of the House Freedom Caucus — which forced the Judiciary hearings on impeachment — said last month that impeachment should follow “gross negligence, dereliction of duty and breach of public trust.”

Jordan told POLITICO on Tuesday that he “was very pleased to see that the Judiciary Committee asked Andrew McCarthy to serve as a witness" and is looking forward to the hearing. No wonder — McCarthy’s written testimony suggests the 2013 nonprofit scandal is worse than former President Richard Nixon’s “largely unsuccessful” “endeavor” to abuse IRS powers. But even McCarthy, a former assistant U.S. attorney and a contributor at the conservative magazine National Review, notes the framers of the Constitution rejected “maladministration” as an impeachable offense. So it may fall to Republicans to prove Koskinen intended to obstruct Congress’ investigation of the targeting controversy — something they’ve failed to do so far. ...

Rep. Elijah Cummings of Maryland, the top Democrat on the House Oversight Committee, called out GOP efforts to impeach and/or censure Koskinen as “either pointless or unconstitutional.” Cummings cites several legal experts who said that House Oversight Chairman Jason Chaffetz (R-Utah) overstepped his bounds in saying that his censure resolution required that Koskinen forfeit his pension — because that would be an unconstitutional bill of attainder. Katy made a similar point last week and even Chaffetz acknowledged to reporters that the censure resolution can’t actually force Koskinen to lose his pension.

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June 28, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Monday, June 27, 2016

NY Times:  The United States Of Inequality

New York Times:  The United States of Inequality, by Teresa Tritch:

It will come as little surprise that income inequality in the United States is greatest in New York and Connecticut. Those states are home base for Wall Street, where the income gains of the few have been amplified by outsized growth in the financial sector and protected by taxpayer-provided bailouts.

But forces of rising inequality are operating throughout the United States, as a new study by researchers at the Economic Policy Institute makes clear [Income inequality in the U.S. by State, Metropolitan Area, and County].

The study, which measures income inequality by state, metro area and county, shows that inequality has risen in every state since the 1970s. It also shows that rising inequality is entrenched. Recessions in recent decades have temporarily slowed income growth among the top 1 percent, but they have not altered the basic pattern in which the rich have gotten much richer while nearly everyone else has seen income stagnate or decline.

Between 2009 and 2013, for example — a period that encompasses most of the post-Great Recession era – the top 1 percent captured all of the income growth in 15 states (Connecticut, Florida, Georgia, Louisiana, Maryland, Mississippi, Missouri, Nevada, New Jersey, New York, North Carolina, South Carolina, Virginia, Washington and Wyoming). In another 9 states (Arizona, California, Illinois, Kansas, Massachusetts, Michigan, Oregon, Pennsylvania and Texas), the top 1 percent captured half to nearly all of the income growth.

Figure A

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June 27, 2016 in Tax | Permalink | Comments (5)

University Of Houston Files Trademark Infringement Lawsuit Against South Texas's Rebranding Itself Houston College Of Law

UHHCOLFollowing up on my prior posts (links below) on South Texas College of Law's rebranding itself Houston College of Law:   Press Release, University of Houston Files Trademark Infringement Lawsuit Against South Texas College of Law:

The University of Houston System has filed a trademark infringement lawsuit against South Texas College of Law (STCL).  The suit, filed Monday in U.S. District Court in Houston, alleges STCL’s announced name change to Houston College of Law and its adoption of UH’s red and white color scheme constitutes “intentional and willful infringement of UH’s intellectual property and unfair competition,” which results in “confusion in the marketplace and damage” to the university and its brand.

“This is about protecting our reputation and our business,” said Tilman Fertitta, chairman of the UH System Board of Regents.  “We’ve earned our standing as a nationally ranked law center, and we won’t allow someone else to change their name and colors and market themselves on our success.”

“The University of Houston Law Center’s brand is associated nationwide with top-notch faculty and lawyers,” said Tony Buzbee, principal of The Buzbee Law Firm, which is representing UH as lead counsel in addition to Sutton, McAughan, Deaver, PLLC.  “UH didn’t take shortcuts to achieve this recognition.  We believe the attempted renaming of South Texas College of Law is nothing more than an improper shortcut to take advantage of the success UH has achieved.”

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June 27, 2016 in Legal Education | Permalink | Comments (1)

Skyrocketing Housing Costs, 'Endless' Taxes Prompt Exodus Of Californians; Inequality Worsens As Middle Class Jobs Are 'Vaporized'

California GoodbyeSan Jose Mercury News, California's Skyrocketing Housing Costs, Taxes Prompt Exodus of Residents:

A growing number of Bay Area residents -- besieged by home prices, worsening traffic, high taxes and a generally more expensive cost of living -- believe life would be better just about anywhere else but here.

During the 12 months ending June 30, the number of people leaving California for another state exceeded by 61,100 the number who moved here from elsewhere in the U.S., according to state Finance Department statistics. The so-called "net outward migration" was the largest since 2011, when 63,300 more people fled California than entered. ... "California has seen negative outward migration to other states for 22 of the last 25 years."

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June 27, 2016 in Tax | Permalink | Comments (4)