TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Wednesday, November 30, 2016

Tax Policy In The Trump Administration

Monday, November 28, 2016

Trump’s Emolument Tax Problem

TrumpAndy Grewal (Iowa), The Trump Hotel Isn’t Unconstitutional, Yale J. on Reg.: Notice & Comment (Nov. 22, 2016):

Over the last few days, commentators have argued that President-Elect Trump’s business interests in the D.C.-based Trump Hotel may create constitutional problems under the Emoluments Clause. See, e.g., [Noah Feldman (Harvard)], Trump’s Hotel Lodges a Constitutional Problem, Bloomberg View (Nov. 21, 2016). As relevant here, the Emoluments Clause prevents a person holding a federal office from accepting any “present”  or “emolument” of any kind from any foreign country, unless Congress consents. Foreign diplomats have recently stayed at the Trump Hotel and this raises questions about whether, if this practice continues after inauguration, any lodging fees collected in connection with their stays would constitute the acceptance of a present (gift) or emolument by Trump.

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November 28, 2016 in Political News, Tax | Permalink | Comments (0)

Wednesday, November 23, 2016

Will Trump Treat The Presidency As A Part-Time Job For Tax Purposes?

White House LogoWashington Post: Will Trump Claim That Being President Is a Part-Time Job — For Tax Purposes?, by Allan Sloan:

Can you imagine anyone saying that being president of the United States is only a part-time job? Well, Donald Trump might have an incentive to say just that.

That sounds bizarre. But I think it’s within the realm of possibility for Trump to claim in future years that things such as living in Trump Tower rather than the White House and mentioning his properties at every opportunity are promotional activities. If he can show that he spends more than half his time developing, managing and promoting real estate, it could shelter millions of dollars of his non-real-estate income from federal income tax.

I’m not saying that Trump plans to play this particular tax game. But given that he won’t disclose his tax returns, as presidents and presidential candidates have done for decades — and given how aggressive he’s been about cutting his personal tax bill — it doesn’t seem so far-fetched. ...

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November 23, 2016 in Political News, Tax | Permalink | Comments (2)

Trump Foundation Form 990-PF Admits To Violating Ban On ‘Self-Dealing’

Sunday, November 20, 2016

129 College Presidents Send Letter Asking President-Elect Trump To Condemn 'Harassment, Hate And Acts Of Violence'

Trump (President Elect)Inside High Ed:

Dear President-elect Trump,

As do you, we “seek common ground, not hostility; partnership, not conflict.” In order to maintain the trust required for such productive engagement, it is essential that we immediately reaffirm the core values of our democratic nation: human decency, equal rights, freedom of expression and freedom from discrimination. As college and university presidents, we commit ourselves to promoting these values on our campuses and in our communities, and we stand alongside the business, nonprofit, religious and civic leaders who are doing the same in organizations large and small.

In light of your pledge to be “President for all Americans,” we urge you to condemn and work to prevent the harassment, hate and acts of violence that are being perpetrated across our nation, sometimes in your name, which is now synonymous with our nation’s highest office. In our schools, on job sites and college campuses, on public streets and in coffee shops, members of our communities, our children, our families, our neighbors, our students and our employees are facing very real threats, and are frightened.

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November 20, 2016 in Legal Education, Political News | Permalink | Comments (15)

Law Prof Submits Letter With 12,000 Lawyer Signatures Opposing President-Elect Trump's Selection Of Stephen Bannon As White House Strategist

Leong 2

Daily Kos, Over 12,000 Lawyers Sign Letter Opposing Steve Bannon:

Later today, a letter with over 12,000 signatures of attorneys from all over the country will be delivered to key members of Congress. The letter, originally drafted by University of Denver law professor Nancy Leong, has garnered such a huge number of signatures in just 60 hours of being online.  Leong drafted the letter because “Bannon is on a different level.  His website has enabled white supremacists and his public comments show he does not respect the democratic institutions that we as lawyers have sworn to uphold.”

The letter has signers from all types of legal work and all different political persuasions. As Leong described it, “It’s not a partisan issue to support our democratic institutions and oppose a white supremacist, and I hope that what this communicates to vulnerable communities is lawyers have your back in opposing this.”

Bloomberg Law, Meet the Law Prof Who Found 10,000+ Lawyers Opposed to Bannon:

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November 20, 2016 in Legal Education, Political News | Permalink | Comments (10)

Saturday, November 19, 2016

Reynolds:  Universities' Reactions To Presidential Election Constitute Microaggressions Against Students Who Voted For Trump

Following up on last Saturday's post, Law Schools React To Donald Trump's Election:  USA Today op-ed: 'Tolerant' Educators Exile Trump Voters From Campus, by Glenn Reynolds (Tennessee):

One of the more amusing bits of fallout from [the presidential] election has been the safe-space response of many colleges and universities to the election of the “wrong” candidate. But on closer examination, this response isn’t really amusing. In fact, it’s downright mean.

Donald Trump’s substantial victory, when most progressives expected a Hillary Clinton landslide, came as a shock to many. That shock seems to have been multiplied in academe, where few people seem to know any Trump supporters — or, at least, any Trump supporters who’ll admit to it.

The response to the shock has been to turn campuses into kindergarten. The University of Michigan Law School announced a “post-election self-care” event with “food” and “play,” including “coloring sheets, play dough (sic), positive card-making, Legos and bubbles with your fellow law students.” (Embarrassed by the attention, UM Law scrubbed the announcement from its website, perhaps concerned that people would wonder whether its graduates would require Legos and bubbles in the event of stressful litigation.) ...

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November 19, 2016 in Legal Education, Political News | Permalink | Comments (9)

Friday, November 18, 2016

What American Law Professors Forgot And What Trump Knew

Law ProfessorsChicago Tribune op-ed: What American Law Professors Forgot and What Trump Knew, by Stephen B. Presser (Northwestern; author, Law Professors and the Shaping of American Law (West 2016)):

It was lonely being a Donald Trump supporter in the legal academy. Of my thousands of colleagues teaching law in this country, I don't think more than a few dozen believed that he would have made a better president than Hillary Clinton, and not more than a handful of us were willing to go public with our support.

It has always been a risk to be a Republican teaching in a law school, where many teachers see a thin line between support for the GOP and bigotry or insanity. And yet, enough Americans liked what they saw in Trump to give him a smashing Electoral College victory.

How did it come about that law professors grew so out of touch with much of America?

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November 18, 2016 in Legal Education, Political News | Permalink | Comments (10)

Pomona President Denies Wrongdoing As IRS Complaint Filed Against College For Funding Anti-Trump Student Protesters

PomonaFollowing up on Wednesday's post, Pomona College May Have Violated 501(c)(3) Tax Status To Fund Anti-Trump Student Protesters:  The Claremont Independent, President Oxtoby Denies Wrongdoing as IRS Complaint Filed Against Pomona College, by Matthew Reade & Ross Steinberg:

The Claremont Independent has learned that a concerned individual has lodged a complaint with the IRS in response to Pomona College’s promotion and funding of an anti-Trump rally.

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November 18, 2016 in Legal Education, Political News | Permalink | Comments (3)

Wednesday, November 16, 2016

Pomona College May Have Violated 501(c)(3) Tax Status To Fund Anti-Trump Student Protesters

PomonaThe Claremont Independent: Pomona College May Have Violated 501(c)(3) Tax Status to Fund Anti-Trump Protesters, by Matthew Reade & Ross Steinberg:

By funding the transportation of students to and from anti-Trump rallies in the Los Angeles area with tuition dollars, Pomona College’s Draper Center for Community Partnership may have violated IRS regulations prohibiting tax-exempt educational institutions from engaging in partisan political activity. ...

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November 16, 2016 in Legal Education, Political News, Tax | Permalink | Comments (5)

Tuesday, November 8, 2016

Rosenthal:  Protecting Trump's $916 Million Of NOLs

Trump (2016-3)Steve Rosenthal (Tax Policy Center), Protecting Trump's $916 Million of NOLs, 153 Tax Notes 829 (Nov. 7, 2016):

This article describes how Republican presidential nominee Donald Trump generated $916 million of net operating losses, and how he preserved them for later use.

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November 8, 2016 in Political News, Scholarship, Tax | Permalink | Comments (0)

Johnson:  Trump Bought The Law In Wilkie Farr's Tax Opinion

WTCalvin H. Johnson (Texas), Bought Law:

In 1991, Donald Trump bought a tax opinion from Wilkie Farr, a New York law firm, that allowed him to avoid tax on roughly a billion dollars of income. The legal theory behind the opinion is that there was no reduction of deductions if the banks traded their Trump-depleted debt for a partnership interest. The theory has neither the literal wording of the statute nor any court case on its said. Nonetheless the theory called Trump to keep a billion dollars of fake tax losses to shelter a billion dollars' of luxury consumption from tax when nothing was lost as a matter of economics.

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November 8, 2016 in Political News, Scholarship, Tax | Permalink | Comments (1)

WSJ:  Law Professors Grapple With Trump—Some Use The S-Word And Even The C-Word

Trump (2016-3)Wall Street Journal, Law Professors Grapple With Trump:

When it comes to Donald Trump, University of Texas law professor Sanford Levinson doesn’t shy away from using the s-word or even the c-word. Secession. Coup.

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November 8, 2016 in Legal Education, Political News | Permalink | Comments (3)

Monday, November 7, 2016

Dilbert Creator Reiterates His Endorsement Of Trump Due To Clinton's Proposed 65% Estate Tax Rate

Dilbert TrumpFollowing up on my previous post:  Dilbert.com, I Don’t Want a Government Job:

My current tax rate is about half of my income when you add up all of the various taxes. I don’t have many deductions. Clinton proposes an estate tax that would take about half of what is left. In effect, Clinton wants my tax rate to be around 75% for every dollar I earn today.

That level of taxation would make me feel like a government employee. The vast majority of my time and energy would go toward making money that politicians would decide how to spend. That doesn’t feel like a rewarding life. If Clinton wins, I would think hard about retiring early and becoming a user of resources instead of a creator of resources. Because I don’t want a government job.

A Trump presidency, on the the other hand, makes me want to do something useful for the country that is good for me too. That’s a big part of why I have been blogging about Trump’s persuasion skills. I want voters to have a clear view of their options. If voters choose Clinton, I can live with that for six months until Kaine takes over. But I wouldn’t feel good about myself if I didn’t at least try to help people see the Trump option for what it is – an opportunity to “drain the swamp” as he says. ...

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November 7, 2016 in Political News, Tax | Permalink | Comments (1)

Pratt:  Two Tax Issues Disqualify Trump For The Presidency

Pratt (2016)TaxProf Blog op-ed:  Trump Tax Concerns Persist, by Katherine Pratt (Loyola-L.A.):

Just 24 hours before the presidential election, concerns about Donald Trump’s payment of his tax obligations persist.  Recent press coverage has focused on an issue that (at least so far, based on very limited information) probably does not disqualify him to be our president, and has not focused enough on two more fundamental tax issues that disqualify him to be our president.

In the past few days, press coverage has emphasized a technical business tax question:  what specific tax strategies did Trump use to generate and preserve $916 million of net operating losses (NOLs), despite massive debt discharge, and were those strategies legally questionable? A front page November 1 New York Times article on this topic asserts that the “stock for debt swap” part of Trump’s overall  tax strategy was a new tax “dodge” dreamed up by tax lawyers to avoid debt discharge income (COD) on the cancellation of debt. This characterization of such swaps as a new tax scam is inaccurate. My academic articles on corporate COD explain the long history and theory of the exception and its gradual repeal [Shifting Biases: Troubled Company Debt Restructurings after the 1993 Tax Act, 68 Am. Bankr. L.J. 23 (1994); Corporate Cancellation of Indebtedness Income and the Debt-Equity Distinction, 24 Va. Tax Rev. 187 (2004)]. Suffice it to say that “stock for debt swaps” in bankruptcy cases were relatively common in the 1980s and early 1990s. Unless there is more to be revealed, Trump’s use of the stock for debt exception to COD does not disqualify him to be president.

But Trump’s conduct regarding two other tax issues does disqualify him to be president.

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November 7, 2016 in Political News, Scholarship, Tax | Permalink | Comments (4)

Sunday, November 6, 2016

Chodorow:  Trump Should Pay The Political Price For Failing To Release His Tax Returns

Trump (2016-3)Slate:  Keep Harping Over Trump’s Tax Returns, by Adam Chodorow (Arizona State):

His refusal to release them no longer feels like a first-order concern. But it’s one more broken norm that Americans will rue.

It’s fairly evident by now why Trump wouldn’t want his returns to be public—as I’ve written several times throughout the election cycle. There’s no reason to think he’ll reverse course and finally release them in the next week. But this goes far beyond Trump. Every major candidate for the past 26 years has released his or her tax returns, and we risk undermining this important tradition if we allow Trump’s refusal to get lost amid his other scandals and outrageous statements or concerns about Clinton’s emails. Just as candidates now release medical records to assure voters that they are fit for office, tax records are critical because they reveal a candidate’s potential conflicts of interest and commitment to honesty and integrity.

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November 6, 2016 in Political News, Tax | Permalink | Comments (6)

Friday, November 4, 2016

More On Trump's $916 Million Of NOLs

Trump (2016-3)Following up on this week's posts:

Politico Morning Tax, Making Sense of Trump’s Maneuvers:

Ed Kleinbard, the former Joint Committee on Taxation chief of staff, said there was a reason few people were correctly guessing how Trump was able to list a $916 million loss on 1995 state returns. “None of us thought that the reason that Trump would have avoided discharge indebtedness income would have been a partnership equity-for-debt argument," said Kleinbard. "The reason none of us thought of that is because no such exception existed."

But Robert Willens, who said he worked on those kind of deals two decades ago, said they were more common than people might have thought — landing in that gray area where practitioners didn’t know whether it was allowed or not. “I'm a little surprised that the law firm gave such a weak opinion to him and his people back then,” Willens said about an opinion letter that Trump’s people received. “Because at the time I think we were a little more confident that the technique worked.”

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November 4, 2016 in Political News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1275: The Impact Of The IRS Scandal On The Investigation Of The Clinton Foundation

IRS Logo 2Dallas Observer, The Dallas IRS Office That's Quietly Determining the Fate of the Clinton Foundation:

The Earle Cabell Federal Building in downtown Dallas is an all purpose office complex, a bastion of federal bureaucracy located at 1100 Commerce St. Most people come for a passport or to get business done in front of a federal judge. But inside, a quiet review is underway that has direct ties to the raging presidential election: The local branch of the IRS' Tax Exempt and Government Entities Division is reviewing the tax status of the Bill, Hillary and Chelsea Clinton Foundation.

This IRS review has not generated similar waves as Department of Justice probes into the foundation, and has largely been forgotten in the campaign's melee. It's just not as sexy as private email servers, FBI infighting and charges of political pressure applied to law enforcement.

But even though this examination is less scrutinized and is harder to conceptualize, it's impact may be important. The report won't likely be done in time to influence the presidential campaign — even though the review started more than four months ago — but it could certainly influence the first term of a Hillary Clinton presidency.

As with anything tax related, the status of the foundation may be determined using rules few understand. And that makes understanding the work at 1100 Commerce St. in Dallas that much more important. 

In Washington, D.C., many things start with words printed on congressional letterhead. Earlier this year, 64 GOP members of Congress asked the IRS to investigate why the foundation can keep its nonprofit status. The letter includes “media reports” claiming pay-to-play relationships between former President Bill Clinton, who received large speaking fees, and decisions made by Hillary Clinton to approve choices that benefited foundation donors. The sources of these reports range from The New York Times to hit-piece investigative books.

In July, the IRS sent letters back to the Congress informing members the review had begun. The letter also noted that the Tax Exempt and Government Entities Division (TE/GE) office in Dallas would be conducting the review.

IRS spokespeople in Dallas and Washington won’t say why the review is being conducted in Dallas. Spokespeople claim even this information would violate rules — Code 6103, staff make sure to cite — that stop them from discussing ongoing examinations. IRS officials declined to provide details about the Dallas office, including its size, or comment on the TE/GE work in general. ...

The TE/GE focuses on nonprofit groups, which is specialty work that requires experience. “They are pretty much career people,” says Ben Stoltz, an attorney with Perliski Law Group, a Dallas boutique firm with half of its business representing nonprofit groups. “It’s a different side of the IRS than people are used to seeing. ... They're generally very cooperative, but they're also the watchdogs."

The mix of awareness and enforcement dovetails with cases that get publicity. "They have a limited budget, which is a problem, so they have to pick their targets wisely," Stoltz says. "Because this is a high profile case, they can make an example and show that no one is above the law.” ...

Instead of money changing hands, the IRS is looking to see if the Clintons traded money for preferential treatment. The IRS rules lay out what qualifies as inurement:

Any transaction between an organization and a private individual in which the individual appears to receive a disproportionate share of the benefits of the exchange relative to the charity served presents an inurement issue. Such transactions may include assignments of income, compensation arrangements, sales or exchanges of property, commissions, rental arrangements, gifts with retained interests, and contracts to provide goods or services to the organization.

Given this language, citing “gifts” and “quid pro quo benefits” in emails is a pretty bad move for anyone involved in a nonprofit group. Another bad move: When senior Clinton advisers like Doug Bland call the intersection of the foundation fundraising and the former president’s personal activities “Bill Clinton Inc.” ...

This all leaves the IRS investigation in Dallas as a sideshow to the main Clinton Foundation events playing out in the offices of other federal agencies. However, if other investigations expose pay-to-play schemes, the IRS could take that into consideration, strip the foundation of its nonprofit status and seek payment of back taxes.

Looking forward, there’s one last wrinkle: If the IRS gives the foundation a clean bill of health, it will likely resurrect charges that the tax exemption office operates with a political bias. In 2011 Lois Lerner, the IRS’ head of TE/GE, pleaded the 5th and left her position after a scandal broke surrounding the denial of nonprofit exemptions to right-wing groups.

A Department of Justice probe found "substantial evidence of mismanagement, poor judgment and institutional inertia leading to the belief by many tax-exempt applicants that the IRS targeted them based on their political viewpoints.” A Government Accountability Office report in 2015 found "there are several areas where EO’s controls were not well designed or implemented. The control deficiencies GAO found increase the risk that EO could select organizations for examination in an unfair manner — for example, based on an organization’s religious, educational, political, or other views."

The GAO said the expertise of the TE/GE staff could be a problem, if there are too few "gatekeepers" to pass along referrals for closer looks:

The specialization of the classifiers allows for in-depth knowledge of complex issues and for the opportunity to apply experience; however, internal control risks accompany this approach. First, for political activity, church, and high profile referrals, the classifier appears to serve as an initial gatekeeper for determining whether a referral is reviewed by a committee. Although committee reviews are intended as a safeguard against unfairness in the examination selection process, referrals that do not make it past the classifier do not undergo committee review. 

The GAO recommended a host of changes, much of it focused on better documentation, more training and an increase in staff rotations. The IRS agreed to them — without admitting any guilt. In a response letter by deputy commissioner John Dalrymple, he says the IRS agrees that "internal controls are necessary to ensure we are applying the tax law with integrity and fairness. Although the report says that a hypothetical risk exists that returns could be selected unfairly, the draft report did not find any evidence that this has happened. Nevertheless, Exemptions Organization is committed to further strengthen our internal controls to ensure we continue to select organizations for examination in a fair and consistent manner. "

The DOJ determined that no crimes had been committed but the damage had been done — for many, the TE/GE will forever be partisan. The ruling on the Clinton Foundation's status, either way, will lead some to see continued partisanship inside the IRS or overreaching in a high profile case to prove they are not partisan.

But there is actually a bigger issue at stake as politics batters the nonprofit tax world. After all, the whole point of the IRS' involvement is to ensure that donations are actually used for charitable work.  

“It boils down to the public trust,” Stoltz says. “This division is responsible for the integrity of the system. Americans donate more money to charity than anywhere else in the world. But for the public to donate, people have to believe that it’s legit.”

(Hat Tip:  Glenn Reynolds.)

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

Thursday, November 3, 2016

Donald Trump Channels John Edwards And New Gingrich, Avoids Paying Social Security, Medicare Taxes

Trump (2016-3)New York Times op-ed: Trump Probably Avoided His Medicare Taxes, Too, by Fred T. Goldberg, Jr. (Skadden) & Michael Graetz (Columbia):

In the final debate, Hillary Clinton said she would secure Social Security and Medicare by raising taxes on high-income earners, including herself and her opponent, Donald J. Trump, “assuming he can’t figure out how to get out of it.”

As we’ve learned in the past few weeks, Mr. Trump has used all kinds of extravagant maneuvers to get out of paying taxes. Without Mr. Trump’s returns, we can’t know for certain whether he figured out a way to get out of paying into Medicare and Social Security. But we have some clues.

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November 3, 2016 in Political News, Tax | Permalink | Comments (1)

Wednesday, November 2, 2016

Why Donald Trump May Never Pay Federal Income Tax Again

Trump (2016-3)Daily Beast: Why Donald Trump May Never Pay Federal Income Tax Again, by David Cay Johnston:

The alleged billionaire, last known to have paid up in 1977, may not have to until 2042—if then.

Donald Trump can enjoy income tax-free living for the rest of his life, my new analysis of his tax documents shows, adding to the reasons the Republican nominee for president should make his tax returns public before voting ends next Tuesday.

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November 2, 2016 in Political News, Tax | Permalink | Comments (5)

Tuesday, November 1, 2016

NY Times:  Trump’s Tax Dodge Stretched Law ‘Beyond Recognition’

Trump (2016-2)New York Times, Donald Trump Used Legally Dubious Method to Avoid Paying Taxes:

[N]ewly obtained documents show that in the early 1990s, as he scrambled to stave off financial ruin, Mr. Trump avoided reporting hundreds of millions of dollars in taxable income by using a tax avoidance maneuver so legally dubious his own lawyers advised him that the Internal Revenue Service would most likely declare it improper if he were audited.

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November 1, 2016 in Political News, Tax | Permalink | Comments (8)

Friday, October 28, 2016

The IRS Scandal, Day 1268: Sen. Whitehouse — Republicans Are Using Koskinen Impeachment To Bring IRS To Heel On Dark Money Campaign Financing

IRS Logo 2The Hill op-ed: The Republican Mission to Quell the IRS, by Sen. Sheldon Whitehouse (D-RI):

It looks like any other slick political ad on your TV. There’s ominous music, a dramatic voice-over, a grainy picture of President Obama. But this isn’t just another campaign commercial.

The news broke recently that a Republican mega-donor plans to spend about $1 million a week on ads calling on Congress to impeach John Koskinen, the commissioner of the IRS. It seems like an odd way to spend your millions. While it’s true that the IRS is the right’s favorite whipping boy, why the campaign-style ad blitz?

Well, in my years as a prosecutor, it’s become a habit to consider motive. So it got me thinking: What motive do the Republicans have to impeach the IRS commissioner? Maybe it’s just emotional acting-out against an agency they hate because it collects the taxes they hate. Maybe it’s an outbreak of political madness.

Or maybe there is method to their madness.

Let’s look at the Republican Party and how it is funded. While it raises a healthy amount for its campaign committees, Republicans and their allies depend increasingly on the super PACs and shadowy outside spending groups made possible by the Supreme Court’s 2010 Citizens United decision. ...

An under-funded and harried IRS has been unwilling to police the activities of powerful social welfare groups after an effort to separate out new applicants blew up in its face. In 2013, the IRS signaled it would begin the process of drafting a rule to better enforce our laws limiting dark money in elections. It later put the rulemaking process on hold after an especially loud outcry from conservative groups. The agency also came under heavy fire in the press from conservatives and Republicans in Congress who feared having the hose to their political oxygen crimped. And since Republicans took control of the House of Representatives in 2011, they’ve worked to slash the IRS budget. Funding in 2016 was $11.2 billion, or 17 percent below 2010 levels, adjusted for inflation.

So the dark-money floodgates remain wide open, deluging our politics in special-interest slime.

The GOP’s crusade against Commissioner Koskinen may seem overblown, but it makes a lot of sense when you consider motive: Republicans need dark money, and dark money needs a cowering IRS.

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October 28, 2016 in IRS News, IRS Scandal, Political News, Tax | Permalink | Comments (5)

Thursday, October 27, 2016

Yale Student Newspapers Risk 501(c)(3) Tax-Exempt Status To Endorse Hillary Clinton; 94% Of Yale Profs' Political Donations Go To Democrats, 95% Of Conservative Students Feel Their Opinions Are Unwelcome At Yale

YHRCDaily Caller, Tax-Exempt Yale Daily News Appears To Violate Law By Endorsing Hillary Clinton:

The Yale Daily News appears to have violated tax laws by endorsing Hillary Clinton on Wednesday, despite being prohibited from doing so as a tax-exempt 501(c)3 organization.

Yale Daily News, News’ View: Hillary Clinton Law ’73 for President:

In 1969, the same year Yale College went coed, a young woman entered Yale Law School. Like many of us, she was an idealist: She took on child abuse cases and provided free legal advice to the poor. Like many of us, she was a go-getter who worked at the Child Study Center and conducted research on migrant labor. Long before she became Secretary of State Hillary Clinton LAW ’73, Hillary Diane Rodham was working to make our country a better place. Almost four decades later, the News is proud to endorse her for president.

We do not endorse Clinton solely because of the disqualifying flaws of her opponent, Donald Trump, whose campaign has disgusted and astonished our board. Indeed, our endorsement of Clinton should come as no surprise: A recent survey conducted by the News found that a vast majority of students support her candidacy. We endorse her because we, as young people, recognize this election is a turning point for our country. And the choice couldn’t be more clear.

Voting for Clinton is our obligation to ourselves and to future generations. ... Like the young woman who arrived in New Haven in 1969, we have the power to realize a different future. That power lies in our vote. Let’s use it to elect Hillary Clinton.

Independent Journal Review, Non-Profit Yale Record Magazine Taunts IRS With Editorial 'Not Endorsing' Hillary Clinton:

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October 27, 2016 in Political News, Tax | Permalink | Comments (8)

Monday, October 24, 2016

Johnson:  Were Trump's Fake Losses Legal As Tax Deductions?

Trump 3Calvin H. Johnson (Texas), Were Trump's Fake Losses Legal as Tax Deductions?:

Trump claimed almost a billion of tax losses on his 1995 tax return. Trump did not lose anything like that in economic substance because he never put that much money into his transactions. If he never put it, he did not lose it. Trump must have treated part of the $3.4 bank debt as a cost and tax basis, while inconsistently, not correcting his cost when it turned out not be paid. Sheppard and Lipton have proposed an S corporation or Gitlitz theory, which if applicable would allow the fake loss as a tax deduction, but real estate developers did not use S corporations in the early and middle 1990’s because S corporations trapped all losses inside the corporation where they were wasted. Trump might have reduced basis in real property, rather than taking an immediate income or NOL reduction. In any event, the losses do not “impinge on the world” and courts take away fake tax losses when they see them.

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October 24, 2016 in Political News, Tax | Permalink | Comments (8)

Saturday, October 15, 2016

Presidential Campaign Tax News

Friday, October 14, 2016

Trump's Estate Tax Plan Would Raise GDP, Incomes By 1%; Clinton's Would Shrink GDP, Incomes By 1%

Clinton TrumpWall Street Journal op-ed: Killing the Death Tax Would Resurrect Growth, by Stephen J. Entin (Tax Foundation):

The death tax is an inevitable point of disagreement in a presidential campaign. Donald Trump would eliminate it to promote growth. Hillary Clinton would raise it—up to 65%, while lowering the exemption for estates to $3.5 million—to promote equality. The outcomes would be as different as their intentions. ...

Analysts at the Tax Foundation, where I work, have run the numbers using two models: one of the estate tax, based on historical filings, and another to estimate the economic effects on capital formation, GDP, profits, wages and federal revenue from those sources.

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October 14, 2016 in Political News, Tax | Permalink | Comments (16)

Tuesday, October 11, 2016

Presidential Campaign Tax News

Donald Trump And Hillary Clinton: I've Had The Time of My Life

Monday, October 10, 2016

Trump's Accountant/Lawyer Committed 'Grievous' Violation Of Legal And Professional Ethics In Discussing His Tax Returns With Media

Following up on Saturday's post, Trump’s Ex-Accountant Jack Mitnick: He’s No Tax Genius:  National Review, Confidentially Yours:  Even a Scoundrel Like Trump Deserves Ethical Legal Representation:

Is there anyone concerned at the ugly turn the election has taken with the release of a few pages of Donald Trump's taxes from 1995? The ugliness is not that Trump's taxes have been revealed, per se, but that it was done, in part it appears, by getting an elderly lawyer to violate his duty of confidentiality to his client. One might say that Trump deserves what he gets. But in this age of ever-eroding privacy, it is alarming when the official rules meant to guard privacy come under assault. ...

Mr. Mitnick has committed a grievous violation of legal and professional ethics.

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October 10, 2016 in Political News, Tax | Permalink | Comments (6)

Saturday, October 8, 2016

Trump’s Ex-Accountant Jack Mitnick: He’s No Tax Genius

The Daily Beast, Trump’s Ex-Accountant Jack Mitnick: He’s No Tax Genius:

This past week, Donald Trump's campaign surrogates attempted to argue that the candidate is a "genius" for turning a nearly $1 billion loss into a tax avoidance strategy for up to 18 years. But now the accountant who compiled Trump's 1995 tax return — and helped verify it for The New York Times — has refuted that narrative in a series of interviews. Jack Mitnick, who handled Trump's taxes until 1996, told Inside Edition on Tuesday, “I did all the tax preparation. He never saw the product until it was presented to him for signature." Pushing back at Trump's own suggestion that he "brilliantly" used tax laws to his own advantage, Mitnick added, “I’m the one who did all the work."

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October 8, 2016 in Political News, Tax | Permalink | Comments (7)

Thursday, October 6, 2016

How Hillary Clinton And Donald Trump Would Tax The 1 Percent

Vox, How Hillary Clinton and Donald Trump Would Tax the 1 Percent, in One Chart:

On Monday, Marc Goldwein of the Committee for a Responsible Federal Budget shared an updated analysis of how each candidate’s tax plans would affect the top 1 percent of American income earners:

VOX

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October 6, 2016 in Political News, Tax | Permalink | Comments (1)

Aprill & Mayer:  The Relationship Between The Trump Foundation And Trump’s Tax Returns

AM4TaxProf Blog op-ed:  Assigning a Tax Lesson: The Relationship between the Trump Foundation and Trump’s Tax Returns, by Ellen P. Aprill (Loyola) & Lloyd Hitoshi Mayer (Notre Dame):

As the debate between the Vice Presidential candidates Wednesday night made clear, Donald Trump’s refusal to release his tax returns remains an important campaign issue. The extraordinary tax losses that Donald J. Trump reportedly had in 1995 emphasize the need for him to fully disclose his tax returns for all years from then forward. Without disclosure of his federal income tax returns, we cannot begin to evaluate fully his claim on Tuesday that he has “legally” and “brilliantly” complied with all of our complicated tax laws.

The ongoing tax issues relating to his foundation came to light only because of the required disclosure of those returns. Those issues — and the foundation’s failure to register to solicit charitable contributions that has now resulted in a cease and desist order from the New York Attorney General — seem to demonstrate a woeful ignorance of the applicable law or a complete disregard of it, either of which would be of even greater concern if also reflected in his personal and business tax positions. And at least one issue raised by the foundation’s tax filings can be resolved only with full disclosure of Mr. Trump’s personal tax situation.

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October 6, 2016 in Political News, Tax | Permalink | Comments (4)

Wednesday, October 5, 2016

More Trump Tax News

Tuesday, October 4, 2016

Clinton, Obama, Trump, And Congress Wage Estate Tax War

The Hill, War Over the Estate Tax Returns:

Battles are flaring over the estate tax, with the issue receiving increased attention from the presidential candidates, the Obama administration and Congress.

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October 4, 2016 in Political News, Tax | Permalink | Comments (3)

More Trump Tax News

Following up on my posts (here and here):  The Daily Beast: Art of the Steal: This is How Trump Lost $916M and Avoided Tax, by David Cay Johnston:

The big New York Times scoop that Donald Trump used $916 million of tax losses to enjoy many income tax-free years raised a question the newspaper didn’t try to answer: How did Trump do it?

Trump, the only major-party presidential nominee in four decades to keep all his tax returns secret, insists “there’s nothing to learn from them.”

Yet in one day I figured out how Trump’s advisers almost certainly arranged the massive tax losses, skipped out on a massive income-tax bill, and then fashioned a loophole with more valuable tax benefits than the already liberal tax breaks Congress gives big real-estate owners while sticking others with the bill.

Trump dumped the real costs of all this on investors who saw gold in his brand name, but who lost everything even as he was paid tens of millions of tax-free dollars.

All this came from subtle clues on the front pages of Trump’s 1995 Connecticut, New Jersey, and New York state income-tax returns. Which sums were on which lines in each state pointed to how Trump must have organized his affairs. Two of the most respected tax professors in America agree with my analysis. Edward Kleinbard of the University of Southern California and Martin J. McMahon Jr. of the University of Florida refined my view.

New York Times: The Trump Campaign’s Questionable Tax Return Justification, by Gretchen Morgenson:

Did Donald J. Trump have a fiduciary duty to keep the amount he personally owes in taxes to a minimum?

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October 4, 2016 in Political News, Tax | Permalink | Comments (7)

Monday, October 3, 2016

How The Left (NY Times) And Right (WSJ) View Sunday's Trump Tax Tempest

Trump Tax Return

Following up on yesterday's post, NY Times: Trump Reported $916 Million Tax Loss In 1995, Perhaps Resulting In Zero Tax Liability For 18 Years Under NOL Rules:

New York Times, How Donald Trump Turned the Tax Code Into a Giant Tax Shelter:

Now we know: Donald J. Trump racked up losses so huge in the early 1990s that he wouldn’t have had to pay federal or New York State income tax on nearly a billion dollars in income. ...

It’s hard to imagine a starker contrast with the vast number of Americans who struggle to both pay taxes and make ends meet, or a more damning indictment of a tax code that makes that possible.

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October 3, 2016 in Political News | Permalink | Comments (9)

Sunday, October 2, 2016

NY Times:  Trump Reported $916 Million Tax Loss In 1995, Perhaps Resulting In Zero Tax Liability For 18 Years Under NOL Rules

Trump Tax Return

New York Times, Trump Tax Records Obtained by The Times Reveal He Could Have Avoided Paying Taxes for Nearly Two Decades:

Donald J. Trump declared a $916 million loss on his 1995 income tax returns, a tax deduction so substantial it could have allowed him to legally avoid paying any federal income taxes for up to 18 years, records obtained by The New York Times show.

The 1995 tax records, never before disclosed, reveal the extraordinary tax benefits that Mr. Trump, the Republican presidential nominee, derived from the financial wreckage he left behind in the early 1990s through mismanagement of three Atlantic City casinos, his ill-fated foray into the airline business and his ill-timed purchase of the Plaza Hotel in Manhattan.

Tax experts hired by The Times to analyze Mr. Trump’s 1995 records said that tax rules especially advantageous to wealthy filers would have allowed Mr. Trump to use his $916 million loss to cancel out an equivalent amount of taxable income over an 18-year period.

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October 2, 2016 in Political News, Tax | Permalink | Comments (26)

Friday, September 30, 2016

Tax Profs Weigh In On The Trump Foundation's Tax Issues

Washington Post, How Donald Trump Retooled His Charity to Spend Other People’s Money:

Trump 2

New York Times op-ed: An Uncharitable Foundation, by Linda Sugin (Fordham):

In addition to being the Republican nominee for president, Donald J. Trump is president of the relatively small Donald J. Trump Foundation and chairman of the relatively large Trump Organization. Although the foundation is a charitable organization, it appears to have been used for less than charitable purposes.

According to exhaustive reporting by David A. Fahrenthold of The Washington Post, Mr. Trump may have used the foundation to pay expenses for his business, to buy himself gifts and to make a political contribution. These things are all clearly prohibited under both federal and state charities law. No competent lawyer would advise a charitable foundation that such payments were allowable, and only someone with no respect for charity would so flagrantly violate these basic rules. ...

Americans who give to, volunteer with, or depend on charities should know that politicking and self-dealing by charities are never acceptable. The candidate’s apparent disregard for the law does not bode well for a Trump administration.

Slate:  What Is the Trump Foundation? It’s Supposed To Be A Charity. It Looks A Lot More Like A Personal Piggy Bank, by Adam Chodorow (Arizona State) 

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September 30, 2016 in Political News, Tax | Permalink | Comments (8)

Tuesday, September 27, 2016

Hillary Clinton's Proposed 65% Estate Tax Rate Causes Dilbert Creator Scott Adams To Switch His Endorsement To Trump

TrumpFollowing up on Friday's post, Hillary Clinton Proposes Raising Estate Tax Rate From 40% To 65%:  Dilbert.com, Why I Switched My Endorsement from Clinton to Trump:

As most of you know, I had been endorsing Hillary Clinton for president, for my personal safety, because I live in California. It isn’t safe to be a Trump supporter where I live. And it’s bad for business too. But recently I switched my endorsement to Trump, and I owe you an explanation. So here it goes.

Clinton proposed a new top Estate Tax of 65% on people with net worth over $500 million. Her website goes to great length to obscure the actual policy details, including the fact that taxes would increase on lower value estates as well. See the total lack of transparency here, where the text simply refers to going back to 2009 rates. It is clear that the intent of the page is to mislead, not inform.

So don’t fall for the claim that Clinton has plenty of policy details on her website.

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September 27, 2016 in Political News, Tax | Permalink | Comments (14)

Monday, September 26, 2016

Batchelder:  Trump Plan Raises Taxes For Millions Of Low- And Middle-Income Families

Trump (2016-2)Lily L. Batchelder (NYU), Families Facing Tax Increases Under Trump's Latest Tax Plan:

Donald Trump’s latest tax plan would cost more than $5 trillion over 10 years. Trump claims his plan would cut taxes for every income group, with the largest tax cuts for working- and middle-class families. But despite its enormous price tag, his plan would actually significantly raise taxes for millions of low- and middle-income families with children, with especially large tax increases for working single parents.

This paper explains why Trump’s latest tax plan raises taxes on so many families and provides examples of how large these tax increases would be. I conservatively estimate that Trump’s plan would increase taxes for roughly 7.8 million families with minor children. These families who would pay more taxes represent roughly 20% of households with minor children and more than half of single parents. They include roughly 25 million individuals and 15 million children.

Washington Post, A New Study Says Trump Would Raise Taxes for Millions. Trump’s Campaign Insists He Won’t.:

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September 26, 2016 in Political News, Scholarship, Tax | Permalink | Comments (2)

Friday, September 23, 2016

Hillary Clinton Proposes Raising Estate Tax Rate From 40% To 65%

Clinton KaineWall Street Journal, Hillary Clinton Proposes 65% Top Rate for Estate Tax:

Democratic presidential candidate Hillary Clinton would levy a 65% tax on the largest estates and make it harder for wealthy people to pass appreciated assets to their heirs without paying taxes, expanding the list of tax increases she would impose on the top sliver of America’s affluent.

The estate-tax increase and other new proposals that Mrs. Clinton detailed on Thursday would generate $260 billion over the next decade, enough to pay for her plans to simplify small business taxes and expand the child tax credit, according to the nonpartisan Committee for a Responsible Federal Budget [more here], which advocates fiscal restraint.

In all, Mrs. Clinton would increase taxes by about $1.5 trillion over the next decade, increasing federal revenue by about 4%, though that new burden would be concentrated on relatively few households. There is at least a $6 trillion gap between her plan and the tax cuts proposed by her Republican rival Donald Trump.

The Clinton campaign changed its previous plan—which called for a 45% top rate—by adding three new tax brackets and adopting the structure proposed by Sen. Bernie Sanders of Vermont during the Democratic primaries. She would impose a 50% rate that would apply to estates over $10 million a person, a 55% rate that starts at $50 million a person, and the top rate of 65%, which would affect only those with assets exceeding $500 million for a single person and $1 billion for married couples.

CRFB

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September 23, 2016 in Political News, Scholarship, Tax | Permalink | Comments (6)

Thursday, September 22, 2016

Utah Law Prof: Impeach Trump Immediately If He Beats Clinton

Trump (2016-2)Christopher Peterson (Utah), Trump University and Presidential Impeachment:

In the final weeks of the 2016 Presidential campaign Donald J. Trump faces three lawsuits accusing him of fraud and racketeering. These ongoing cases focus on a series of wealth seminars called “Trump University” which collected over $40 million from consumers seeking to learn Trump’s real estate investing strategies. Although these consumer protection cases are civil proceedings, the underlying legal elements in several counts that plaintiffs seek to prove run parallel to the legal elements of serious crimes under both state and federal law. This essay provides a legal analysis of whether Trump’s alleged behavior would, if proven, rise to the level of impeachable offenses under the presidential impeachment clause of the United States Constitution.

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September 22, 2016 in Legal Education, Political News, Scholarship | Permalink | Comments (9)

Tuesday, September 20, 2016

Trump Violated Tax Law In Using $258,000 From His Charity to Settle Legal Problems

Trump (2016-2)Washington Post, Trump Used $258,000 From His Charity to Settle Legal Problems:

Donald Trump spent more than a quarter-million dollars from his charitable foundation to settle lawsuits that involved the billionaire’s for-profit businesses, according to interviews and a review of legal documents.

Those cases, which together used $258,000 from Trump’s charity, were among four newly documented expenditures in which Trump may have violated laws against “self-dealing” — which prohibit nonprofit leaders from using charity money to benefit themselves or their businesses.

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September 20, 2016 in Political News, Tax | Permalink | Comments (6)

Sunday, September 18, 2016

Trump Tax Plan 3.0

Friday, September 16, 2016

NY Times:  Tax Lawyers — The Big Winners In Hillary Clinton’s 'Fiendishly Complicated' Tax Plan

Clinton KaineNew York Times: One Beneficiary of Clinton’s Complex Tax Plan: Tax Lawyers, by James B. Stewart:

It’s hard to imagine a tax code more complicated than the one we already have.

Hillary Clinton has come up with one.

“This isn’t tax reform,” said Douglas Holtz-Eakin, an economist who served as director of the Congressional Budget Office and is now president of the American Action Forum, a conservative, pro-growth advocacy group. “It’s anti-reform. She’s layering on even more complexity.”

His views were echoed by a number of tax experts I spoke to this week about Mrs. Clinton’s tax plans, as I did earlier about Donald J. Trump’s.

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September 16, 2016 in Political News, Tax | Permalink | Comments (3)

Saturday, September 3, 2016

NY Times:  If Trump Gets His Way, Real Estate Will Get Even More Tax Breaks

Trump (2016-2)New York Times: If Trump Gets His Way, Real Estate Will Get Even More Tax Breaks, by James B. Stewart:

It’s hard to imagine a tax code more favorable to real estate developers than the one we already have.

Donald Trump has come up with one.

Thanks to some major loopholes in the existing tax code that treat real estate developers as a special privileged class, it’s entirely possible (even likely) that Mr. Trump pays little or no federal income tax.

But Mr. Trump’s new tax proposal doesn’t just preserve those breaks, it piles on new ones for real estate developers like Mr. Trump himself — at an estimated cost of more than $1 trillion in tax revenue over a decade.

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September 3, 2016 in Political News, Tax | Permalink | Comments (0)

Friday, August 26, 2016

Mike Pence, Law School Cartoonist

Thursday, August 25, 2016

More On Donald Trump's Tax Returns

Clinton, Trump, Taxes, And Silicon Valley

Silicon ValleyBloomberg: Trump’s Offshore Tax-Cut Pitch Falls Flat in Silicon Valley, by Lynnley Browning:

Republican Donald Trump is proposing a big tax cut for companies like Apple Inc., which would see its tax rate slashed on about $200 billion of profit it keeps offshore. Yet Apple’s boss is co-hosting a fundraiser on Wednesday for Trump’s Democratic opponent for the White House.

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August 25, 2016 in Political News, Tax | Permalink | Comments (0)

Tuesday, August 23, 2016

Clinton Proposes Small Business Standard Tax Deduction

Hillary Logo (2016)Factsheet, Hillary Clinton Will Make Life Easier for Small Business at Every Step of the Way:

Work to create a new standard deduction for small businesses—like the one available to individual filers. This proposal will vastly simplify filing for small businesses and entrepreneurs—whether they’re running a business out of their own home, managing a shop on Main Street, or selling online through platforms like Etsy and eBay. Rather than having to track and file forms documenting their overhead costs—potentially including transportation, computer and phone use, maintaining an office, and more—a small business would be offered the option of taking a single, simple deduction. Hillary will ask her Treasury Department to bring together small business owners and leading experts to design this new standard deduction, including its limits and parameters, which existing expenses could voluntarily be replaced, and measures to prevent gaming and abuse—all to advance the goal of making it far easier for small businesses to file their taxes. This proposal would be focused on true small businesses, with restrictions preventing larger businesses or high-income taxpayers from claiming it. Small businesses could still opt to track and deduct their expenses individually, just like individual filers.

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August 23, 2016 in Political News, Tax | Permalink | Comments (0)