TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, September 26, 2018

Oei: The Offshore Tax Enforcement Dragnet

Shu-Yi Oei (Boston College), The Offshore Tax Enforcement Dragnet, 67 Emory L.J. 655 (2018). 

Taxpayers who hide assets abroad to evade taxes present a serious enforcement challenge for the United States. In response, the U.S. has developed a family of initiatives that punish and rehabilitate non-compliant taxpayers, raise revenues, and require widespread reporting of offshore financial information. Yet, while these initiatives help catch willful tax cheats, they have also adversely affected immigrants, Americans living abroad, and “accidental Americans.”

This Article critiques the United States’ offshore tax enforcement initiatives, arguing that the U.S. has prioritized two problematic policy commitments in designing enforcement at the expense of competing considerations: First, the U.S. has attempted to equalize enforcement against taxpayers with solely domestic holdings and those with harder-to-detect offshore holdings by imposing harsher reporting requirements and penalties on the latter. But in doing so, it has failed to appropriately distinguish among differently situated taxpayers with offshore holdings. Second, the U.S. has focused on revenue and enforcement, ignoring the significant compliance costs and social harms that its initiatives create.

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September 26, 2018 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, September 25, 2018

Drumbl Presents Improving Tax Credits for the Working Poor Today At Boston College

Drumbl (2018)Michelle Drumbl (Washington & Lee) presents Improving Tax Credits for the Working Poor (Cambridge University Press 2019) at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

The United States introduced the earned income tax credit (EITC) in 1975. The EITC is the most significant earnings-based refundable credit available in the Internal Revenue Code (Code).  The United States is the oldest example of a country using its domestic revenue system to deliver and administer social welfare benefits to lower-income individuals or families.  This approach is no longer unique to the United States: other countries, including the United Kingdom, the Netherlands, New Zealand, France, Canada, Australia, and Sweden have experimented with or incorporated analogous credits into their tax systems.  These other countries imported the concept from the United States. Might the U.S. be able to improve upon the administration of its EITC by importing the experiences and lessons learned in other countries?

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September 25, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Online Law School Classes Deliver Results For Law Students

Yvonne Dutton, Margaret Ryznar & Kayleigh Long (Indiana-Indianapolis), Assessing Asynchronous Online Learning in Law Schools: Students Say Online Classes Deliver, 96 Denv. L. Rev. ___ (2019):

This is the first article to provide empirical data on the effectiveness of distance education in law schools since the ABA this summer approved increasing the total number of credits that law students could earn through online classes from 15 to 30. Our data, composed of law student surveys and focus groups, reveal not only the success of distance education in their experience, but also the methods that are most effective for them.

Margaret Ryznar, Insights on Online Teaching:

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September 25, 2018 in Legal Education, Scholarship, Teaching | Permalink | Comments (0)

Henderson: Innovation Diffusion In The Legal Industry

William D. Henderson (Indiana), Innovation Diffusion in the Legal Industry, 122 Dickinson L. Rev. 395 (2018):

This article is adapted from a series of blog posts originally found in my recently-started blog entitled Legal Evolution. The foundational material set forth in this article (and in those blog posts) applies to the legal services market insights gained from disciplines other than law. This article begins by setting forth the well-established theory of an “innovation diffusion curve” and the research that has identified the factors that affect the rate of adoption of innovations. This article identifies why innovation in the legal services market is desirable and applies to the legal services field insights drawn from this research in other fields. In the course of presenting these theories, the article explains why and how research about things such as the speed of adoption of hybrid corn seed is directly relevant to lawyers and law firms. It also identifies factors that can promote innovation within a law firm and factors that can inhibit innovation within a law firm, including the challenges that firms face because factors that promote the initial stage of innovation may later hamper its widespread implementation.

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September 25, 2018 in Legal Education, Scholarship | Permalink | Comments (0)

Monday, September 24, 2018

Clausing Presents Profit Shifting Before And After The TCJA Today At UC-Irvine

Clausing (2017)Kimberly Clausing (Reed College) presents Profit Shifting Before and After the TCJA at UC-Irvine as part of its Tax Policy Colloquium Series:

In recent years, estimates of profit shifting by multinational companies have indicated substantial revenue costs to the U.S. government, likely in excess of $100 billion per year. The TCJA has changed the climate for profit shifting in several important ways: the lower U.S. corporate rate should lower the incentive to shift profits away from the United States, the adoption of a territorial tax system should raise the incentive to shift profits abroad, and several novel base protection measures, in particular the GILTI and BEAT provisions, are aimed directly at profit shifting. This paper evaluates these changes, discussing their likely effect on the magnitude of profit shifting.

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September 24, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Fennel Presents Money Matters Today At Loyola-L.A.

Fennell (2015)Lee Anne Fennel (Chicago) presents Money Matters at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katie Pratt:

This chapter from my forthcoming book, Slices and Lumps: Configuring Choice in Law, Markets, and Life (University of Chicago Press 2019), examines questions of lumpiness and granularity that arise in household budgeting and public finance contexts. People often have difficulty assembling the lumps of cash required to pay for indivisible goods like cars or down payments on homes. These difficulties can explain preferences that might otherwise seem puzzling, such as for lump sums rather than fragmented payment streams of higher present value. Seeming anomalies like the prevalence of income tax refunds and lottery play can be explained by the desire for lumpy consumption that would otherwise be difficult or impossible to finance. At the same time, better segmentation can help households achieve their goals, as studies showing the power of partitioning savings suggest.

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September 24, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Network Of Law Reviews: Citation Cartels, Scientific Communities, And Journal Rankings

Oren Perez, Judit Bar-Ilan, Reuven Cohen & Nir Schreiber (Bar-Ilan), The Network of Law Reviews: Citation Cartels, Scientific Communities, and Journal Rankings, 81 Mod. L. Rev. ___ (2018):

Research evaluation is increasingly being influenced by quantitative data. The legal field has not escaped the impact of such metrics. Law schools and legal journals are being ranked by multiple global rankings. The key rankings for law schools are the Times Higher Education and Shanghai University Subject Rankings for law and SSRN Ranking for U.S. and International law schools. Law Journals are measured by four different rankings: Clarivate Analytics Web of Science Journal Citation Reports (JCR), CiteScore from Elsevier, Scimago and Washington and Lee. Despite the opposition from the scientific community these metrics continue to flourish. The article argues journal rankings (as other metrics) are the consequence of theory-laden choices that can influence their structure and their pretense of objectivity is therefore merely illusory.

We focus on the influential ranking of law journals in JCR and critically assess its structure and methodology. In particular, we consider the question of the existence of tacit citation cartels in the U.S. law reviews market and the attentiveness of the JCR for the potential influence of such tacit cartel. To examine this question we studied a sample of 90 journals included in the category of Law in the JCR: 45 U.S. student-edited (SE) and 45 peer-reviewed (PR) journals. We found that PR and SE journals are more inclined to cite members of their own class, forming two separated communities. Close analysis revealed that this phenomenon is more pronounced in SE journals, especially generalist ones. This tendency reflects, we argue, a tacit cartelistic behavior, which is a product of deeply entrenched institutional structures. Because U.S. SE journals produce much more citations than PR journals, the fact that their citations are directed almost exclusively to SE journals elevates their ranking in the Journal Citation Reports in a way that distorts the structure of the ranking. This distortion can hamper the production of legal knowledge. We discuss several policy measures that can counter the adverse effects of this situation.

Law Reviews

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September 24, 2018 in Legal Education, Scholarship | Permalink | Comments (0)

The Uneasy History Of Experiential Education in U.S. Law Schools

Peter A. Joy (Washington University), The Uneasy History of Experiential Education in U.S. Law Schools, 122 Dickinson L. Rev. 551 (2018):

This article explores the history of legal education, particularly the rise of experiential learning and its importance. In the early years of legal education in the United States, law schools devalued the development of practical skills in students, and many legal educators viewed practical experience in prospective faculty as a “taint.” This article begins with a brief history of these early years and how legal education subsequently evolved with greater involvement of the American Bar Association (ABA). With involvement of the ABA came a call for greater uniformity in legal education and guidelines to help law schools establish criteria for admissions and curricula. This article also discusses the influence of the ABA Standards, particularly Standard 302, in legal education. In the latter half of the 20th century, it became clear that a legal education without any professional development or practical training was deficient. A new ABA task force dedicated to “narrowing the gap” between practitioners and professors published the MacCrate Report, detailing the skills and values law students should develop before entering the profession. Lastly, although the ABA Standards have done a great deal in fixing these deficiencies, there is a great deal that law schools must do on their own.

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September 24, 2018 in Legal Education, Scholarship | Permalink | Comments (0)

Study: 1L Grades, Upper Level Bar Courses Better Predictors Of Bar Passage Than LSAT, UGPA

Amy Farley,  Christopher Swoboda, Joel Chanvisanuruk, Keanen McKinley & Alicia Boards (Cincinnati), Law Student Success and Supports: Examining Bar Passage and Factors That Contribute to Student Performance:

In recent years, law schools have experienced a decline in enrollment and bar passage. Higher education has been challenged to understand this new phenomenon and conduct research that can inform law student success practices and policies. This paper presents findings from research conducted at a large, Midwestern public university that investigated the factors and student characteristics most strongly associated with bar passage. Results suggest that bar passage can be predicted by a wide battery of variables. Despite some literature that suggests otherwise, however, LSAT and undergraduate GPA are weakly predictive, while information from the first year of law school – even the performance in just one first semester course – explains significantly more variation in bar passage. These preliminary results provide important first insights into bar passage.

UC2

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September 24, 2018 in Legal Education, Scholarship | Permalink | Comments (2)

Lesson From The Tax Court: The Substantial Substantiation Rules In §170

Tax Court (2017)The great philosopher George Carlin understands the problem of stuff.  My wife and I have too much stuff.  My wife, however, hates yard sales.  And we cannot afford a bigger house.  So we give a lot of stuff away. 

When Congress ratcheted up the substantiation requirements for deducting non-cash charitable contributions in 1993, we stopped giving to Goodwill.  That is because Goodwill did not change their pre-printed receipt form to say the now-required magic language “no goods or services were given in exchange for this donation.”  While some of our donations were below the $250 threshold, the aggregate value of our donations of similar items regularly exceeded that amount.  I remember one year I had to go up several layers of management to even get a letter with that language sent to me before I could file my taxes.  So we now favor other charities.

I was not just being picky in wanting a proper contemporaneous receipt, as the recent case of Estelle C. Grainger v. Commissioner, T.C. Memo. 2018-117 (July 30, 2018) demonstrates.  The taxpayer there was massively confused about the basic valuation rules for donations of property.  That’s one lesson here.  But I think another important lesson in this case is just how difficult the substantiation rules in §170 can be for substantial amounts of non-cash charitable contributions.  It was certainly an eye-opener for me, particularly the lesson about Form 8283.

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September 24, 2018 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure | Permalink | Comments (8)

Sunday, September 23, 2018

The Top Five New Tax Papers

SSRN Logo (2018)This week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list:

  1. [449 Downloads]  Compelled Subsidies and the First Amendment, by William Baude (Chicago) & Eugene Volokh (UCLA)
  2. [306 Downloads]  The New Non-Territorial U.S. International Tax System, Part 1, by Daniel Shaviro (NYU) (reviewed by David Elkins (Netanya) here)
  3. [220 Downloads]  The Charitable Contribution Strategy: An Ineffective SALT Substitute, by Andy Grewal (Iowa)
  4. [181 Downloads]   The Death of the Income Tax (or, the Rise of America's Universal Wage Tax), by Edward McCaffery (USC)
  5. [157 Downloads]  Taxing the Robots, by Orly Mazur (SMU)

September 23, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, September 22, 2018

Colinvaux: Defending Place-Based Philanthropy By Defining The Community Foundation

Roger Colinvaux (Catholic), Defending Place-Based Philanthropy by Defining the Community Foundation, 2018 BYU L. Rev. 1:

The article is about the changing role of the community foundation in conducting philanthropy in the United States. The historic place-based mission of the community foundation is under threat, in part because of competition with national charities that, like community foundations, sponsor donor advised funds (DAFs). The mass-market success of national DAFs is putting pressure on community foundations to conform to a national, passive, individual-based model of advised giving. Community foundations also have become caught up in a legal and policy debate that is directed primarily at national, commercially affiliated DAF sponsors. As a result, community foundations risk becoming subject to rules and regulations devised for others.

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September 22, 2018 in Scholarship, Tax | Permalink | Comments (0)

Sunstein & Pulliam: Universities (And Law Schools) Need To Hire More Republican Professors

Following up on my previous posts (links below): 

Cass Sunstein (Harvard), The Problem With All Those Liberal Professors:

The paucity of Republicans at many top schools hurts everyone.

Suppose that you start college with a keen interest in physics, and you quickly discover that almost all members of the physics department are Democrats. Would you think that something is wrong? Would your answer be different if your favorite subject is music, chemistry, computer science, anthropology or sociology?

In recent years, concern has grown over what many people see as a left-of-center political bias at colleges and universities. A few months ago, Mitchell Langbert, an associate professor of business at Brooklyn College, published a study of the political affiliations of faculty members at 51 of the 66 liberal-arts colleges ranked highest by U.S. News in 2017. The findings are eye-popping (even if they do not come as a great surprise to many people in academia).

Democrats dominate most fields. In religion, Langbert’s survey found that the ratio of Democrats to Republicans is 70 to 1. In music, it is 33 to 1. In biology, it is 21 to 1. In philosophy, history and psychology, it is 17 to 1. In political science, it is 8 to 1.

The gap is narrower in science and engineering. In physics, economics and mathematics, the ratio is about 6 to 1. In chemistry, it is 5 to 1, and in engineering, it is just 1.6 to 1. Still, Lambert found no field in which Republicans are more numerous than Democrats. ...

For two reasons, these numbers, and others like them, are genuinely disturbing.

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September 22, 2018 in Legal Education, Scholarship | Permalink | Comments (20)

Friday, September 21, 2018

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Crawford's Tax Talk And Reproductive Technology

This week, Michelle Layser (Illinois) reviews Bridget Crawford (Pace), Tax Talk and Reproductive Technology, 100 B.U. L. Rev. ___ (2019).

Layser (2018)As the U.S. fertility industry explodes, there is plenty of talk about surrogate miscarriages, freezer failures, unwieldy donor family trees, problems with privacy and anonymity, and the physical and emotional tolls of egg and sperm donation. What’s missing from the conversation? According to Professor Bridget Crawford, the answer is “tax talk.” Crawford’s article, which focuses on how egg donors talk about taxes with each other and their fertility clinics, is an empirically grounded exploration into the ways that talking about tax (or failing to do so) reflects and reinforces cultural norms.

The article begins by recounting the facts of a 2015 tax court case called Perez v. Commissioner. In that case, the taxpayer Nichelle Perez had received fees for her “time, effort, inconvenience, pain, and suffering in donating her eggs.” Perez earned her fees. She underwent a series of painful hormone injections that resulted in pain, bruising and burning. She submitted to general anesthesia and an invasive egg removal procedure that left her cramped, bloated, nauseous, fatigued and moody.

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September 21, 2018 in Michelle Layser, Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink | Comments (0)

Wells: Reform Of § 355

Bret Wells (Houston), Reform of § 355, 68 Am. U. L. Rev. ___ (2018):

Section 355 is one of the most important provisions in the US corporate tax laws because, after the 1986 Tax Reform Act, it remains the principle means of allowing for a tax-free spin-off and disposition of businesses in the publicly traded corporate context. Yet, the provision has received very limited scholarly attention. The article addresses a gap in the existing literature by addressing the normative goals of this provision and its deficiencies. Section 355 has had a curious and troubled history.

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September 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

Morrow: Noncompetes As Tax Evasion

Rebecca Morrow (Wake Forest), Noncompetes as Tax Evasion, 96 Wash. U. L. Rev. ___ (2018):

Al Capone famously boasted of his criminal empire: “Some call it bootlegging. Some call it racketeering. I call it a business.” Treasury Agent Frank Wilson and Prosecutor George Johnson put Capone behind bars not by disputing his characterization and pursuing murder or assault or RICO charges, but by accepting it and enforcing its tax implications. Irrespective of their legality, Capone’s businesses were profitable, and Capone had not reported their profits for tax purposes. A simple application of bedrock tax law achieved what other legal routes failed to achieve and sent Capone to Alcatraz. The trick was to see the tax argument.

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September 21, 2018 in Scholarship, Tax | Permalink | Comments (4)

Teaching Symposium: How A Law Faculty Stays Ahead Of The Curve

Indiana Indianapolis LogoSymposium, Upward! Higher: How a Law Faculty Stays Ahead of the Curve, 51 Ind. L. Rev. 413-70 (2018):

Full-time and part-time faculty of the IU McKinney School of Law convened together with campus and university partners from the IUPUI Center for Teaching and Learning and Indiana University e-Learning Design and Services for the second annual “Upward!” teaching symposium at the beginning of Fall Semester 2017. The two-day gathering involved panel discussions on topics including online teaching, online course design, teaching externships, designing lessons for the law school’s active learning classrooms, teaching international students, and teaching with an eye to the bar exam. Participants enjoyed a field trip to IUPUI campus offices supporting the university’s teaching mission, including the Center for Teaching and Learning and the recording studio. Panelists contributed to this joint publication, which includes sole- or joint-authored submissions by Professors Adams, Baker, Boyne, Huffman, Ryznar, Shope, and Sullivan; an introduction by Dean Klein and Professor Huffman; and reactions to the primary papers. These submissions reflect a variety of scholarly methods, drawing from empirical study, anecdotal observation, and theoretical analysis.

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September 21, 2018 in Conferences, Legal Education, Scholarship, Teaching | Permalink | Comments (1)

Engler: Goodwill Hunting Gone Bad — Tax Law's Outmoded Treatment Of Goodwill

Goodwill HuntingMitchell L. Engler (Cardozo), Goodwill Hunting Gone Bad: Tax Law's Outmoded Treatment of Goodwill, 96 Neb. L. Rev. 883 (2018):

Goodwill reflects the positive consumer association with a business. Goodwill thus overlaps with trademarks and other related assets. This close association impedes the separation of goodwill value from such related assets. Difficulties thus arise when the tax law treats goodwill more (or less) favorably than related intangible assets.

For instance, the tax law previously denied any depreciation deductions for goodwill. Business buyers thus often allocated their costs away from goodwill and towards related assets like depreciable customer lists. The IRS responded with the initial “goodwill hunting” wave, challenging taxpayers’ low goodwill valuations. Congress addressed this litigious area in 1993 with new, matching depreciation rules for purchased goodwill and related intangible assets.

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September 21, 2018 in Scholarship, Tax | Permalink | Comments (0)

Thursday, September 20, 2018

Viswanathan Presents A Worker-Centric Model For Sharing Economy Providers Today At Northwestern

Viswanathan (2017)Manoj Viswanathan (UC-Hastings) presents A Worker-Centric Model for Sharing Economy Providers at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

In light of ambiguities in the December 2017 tax legislation, this Article integrates tax, corporate, employment, and labor law to propose how sharing economy workers—and rideshare drivers in particular—might optimally structure their working lives. These workers already face challenging questions about employment conditions, collective bargaining, and their classification as employees or independent contractors. The new tax legislation has only created more questions about how this growing class of income earners should most efficiently structure their working arrangements for tax purposes.

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September 20, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Zolt: Tax Treaties And Developing Countries

Eric M. Zolt (UCLA), Tax Treaties and Developing Countries, 72 Tax L. Rev. ___ (2018):

Academics and others over the last 50 years have called for developing countries to hesitate or refrain from entering into bilateral tax treaties with developed countries. Tax treaties seek to facilitate cross-border transactions and investments by reducing tax barriers and providing greater certainty to foreign investors. But treaty provisions invariably result in countries yielding taxing rights. Since at least the 1920s, treaties have arguably provided greater taxing rights to the country where the investors reside (generally, capital-exporting developed countries) rather than the country where the economic activity takes place (often, capital-importing developing countries). Where capital flows are roughly equal between countries, rules that skew taxing rights towards residence-based taxation away from source-based taxation result in little or no revenue shifting. But where capital flows are less even, the tax revenue consequences may be substantial.

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September 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

Bridging The Red-Blue Divide: A Proposal For U.S. Regional Tax Relief

Reuven S. Avi-Yonah, Nir Fishbien & Haiyan Xu (Michigan), Bridging the Red-Blue Divide: A Proposal for the U.S. Regional Tax Relief:

Most large federal countries have explicit ways to reduce the economic disparities between more and less developed regions. In Germany, for example, federal revenues are distributed by a formula that takes into account the relative level of wealth of each state (the so-called Finanzausgleich, or fiscal equalization). Similar mechanisms are found in Australia, Canada, India, and other large federal countries. The United States, on the other hand, has no such explicit redistribution. Each state is generally considered equal and sovereign and the federal government does not distribute revenues to equalize their spending capacity. While the overall impact of the federal tax and transfer system may be to shift revenues from richer to poorer states, this is not acknowledged and to the extent it is discussed in the literature it is generally condemned as unfair to the states that send more revenues to Washington than they get back in federal transfer payments. Nor is it politically likely that the US will adopt a formal fiscal equalization mechanism.

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September 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

What Vet School Can Teach Us About Law School

Cornell VetTina L. Stark, What Cornell Veterinary School Taught Me About Legal Education, 15 Transactions  533 (2014):

Law schools continue to seek courses and curricula to prepare students for entry-level positions after graduation. This article examines the innovative pedagogy that Cornell Veterinary School instituted in 1993 and suggests it as a model for law schools. At most vet schools, students follow a specified series of lecture and lab courses; for example, gross anatomy, histology, immunology, diagnostic imaging, and physiology. To the extent these courses intersect, students must figure out the interrelationships on their own.

In contrast, Cornell’s “new” curriculum relies on interdisciplinary courses to teach students the foundations of veterinary medicine. Students study organ systems, using all the scientific disciplines available. To make theory real, students start their clinical skills training immediately. If they are studying the heart, they learn how to examine it. Cornell’s pedagogy also relies heavily on its tutorial courses which meet several times a week to work through real-world cases collaboratively. Importantly, students are not spoon fed the answers. They’re expected to research what they decide they don’t know.

This article imagines a fantasy world that takes the lessons from the Cornell curriculum and applies them to law school.

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September 20, 2018 in Legal Education, Scholarship | Permalink | Comments (3)

Grewal: When IRS Guidance Backfires

Andy Grewal (Iowa), When IRS Guidance Backfires, 36 Yale J. on Reg.: Notice & Comment (Sept. 7, 2018):

This week, the IRS tried to clarify how proposed regulations on state tax credit programs apply to Section 162(a) business deductions. But its attempted clarification has created only more problems.

Under the proposed regulations, a taxpayer who makes a transfer to a Section 170(c) organization must reduce her charitable contribution deduction by the amount of any state tax credits received. See Prop. Reg. § 1.170A-1(h)(3)(i). Some businesses contacted the IRS and presumably expressed concerns that transferred amounts might not be deductible at all. That is, if Section 170 deductions were denied for creditable transfers, then Section 162 deductions might be denied too.

In IR-2018-178 (Sept. 5, 2018), the IRS cryptically announced that “taxpayers who make business-related payments to charities or government entities for which the taxpayers receive state or local tax credits can generally deduct the payments as business expenses.” See also IRS State and Local Income Tax FAQ. The IRS did not provide any further guidance on when a transfer to a state tax credit program will qualify as “business related.”

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September 20, 2018 in IRS News, Scholarship, Tax | Permalink | Comments (0)

Borden: Rolling Real Estate Gain Into A Qualified Opportunity Fund — Comparison With § 1031

Bradley T. Borden (Brooklyn), Rolling Real Estate Gain into a Qualified Opportunity Fund: Comparison with § 1031, 34 Tax Mgmt. Real Est. J. 155 (Sep. 5, 2018):

As part of the 2017 Tax Cuts and Jobs Act, Congress enacted Section 1400Z-2, which allows property owners to reinvest gain from the disposition of property in qualified opportunity funds (QOFs) tax free. This article illustrates how this new provision is different from the most popular commercial real estate disposition nonrecognition provision—Section 1031. Section 1400Z-2 is attractive because it not only defers gain recognition, it allows property owners to exclude any post-acquisition gain that accrues by holding the property for at least 10 years. Section 1031 now only applies to real property, so property owners have greater re-investment alternatives in QOFs. The article also recognizes that Section 1400Z-2 does not appear to have been fully vetted, so it comes with some mistakes and many open issues. Looking past those shortcomings, the article presents a numerical example comparing a hypothetical Section 1031 exchange into real property to a reinvestment of gain into a QOF.

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September 20, 2018 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, September 19, 2018

Zelenak & Schmalbeck: The NCAA And The IRS — The Intersection Of College Sports And The Federal Income Tax

Lawrence Zelenak (Duke) & Richard Schmalbeck (Duke), The NCAA and the IRS: Life at the Intersection of College Sports and the Federal Income Tax, 91 S. Cal. L. Rev. ___ (2018):

Few organizational acronyms are more familiar to Americans than those of the National Collegiate Athletic Association (NCAA) and the Internal Revenue Service (IRS). Although neither organization is particularly popular, both loom large in American life and popular culture. Because there is a tax aspect to just about everything, it should come as no surprise that the domains of the NCAA and the IRS overlap in a number of ways. For many decades, the strong tendency in those areas has been for college athletics to enjoy unreasonably generous tax treatment—sometimes because of the failure of the IRS to enforce the tax laws enacted by Congress, sometimes because Congress itself has conferred dubious tax benefits on college sports. In just the past year, however, there have been signs of what may be a major attitudinal shift on the part of Congress—although so far there have been no signs of a corresponding change at the IRS. This article offers an in-depth look at the history and current status of four areas of intersection between the federal tax laws and college sports.

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September 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

Viswanathan: Tax Compliance In A Decentralizing Economy

Manoj Viswanathan (UC-Hastings), Tax Compliance in a Decentralizing Economy, 34 Ga. St. U. L. Rev. 283 (2018):

Tax compliance in the United States has long relied on information from centralized intermediaries — the financial institutions, employers, and brokers that help ensure income is reported and taxes are paid. Yet while the IRS remains tied to these centralized entities, consumers and businesses are not. New technologies, such as the “sharing” economy (companies such as Airbnb, Uber, and Instacart) and the blockchain (the platform on which Bitcoin is based) are providing new, decentralized options for exchanging goods and services. Without legislative and agency intervention, these technologies pose a critical threat to the reporting system underlying domestic and international tax compliance.

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September 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

Cracking Student Silos: Linking Legal Writing And Clinical Learning Through Transference

Mary Bowman (Seattle) & Lisa Ellen Brodoff (Seattle), Cracking Student Silos: Linking Legal Writing and Clinical Learning Through Transference:

Why do highly competent and hard-working law students struggle to apply what they learn in legal writing to later clinical courses and law practice? The authors of this article are uniquely qualified to answer this question and to provide strategies for helping students overcome these common struggles. The authors direct the nationally renowned legal writing and clinical programs at Seattle University School of Law, where they have engaged in cutting-edge collaborative teaching projects for nearly a decade. Even so, they found that their students, when faced with the messiness of real client representation, struggled with typical research and writing problems even as the legal writing faculty exclaimed "We know we taught them that!" So the program directors extensively studied the educational literature on transference, then spent nearly two years taking each other's courses to understand more deeply how we could help our students apply what is taught in each program to future client work. This article describes what we learned from these endeavors.

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September 19, 2018 in Legal Education, Scholarship, Teaching | Permalink | Comments (0)

Avi-Yonah: The International Provisions Of The TCJA: Six Results After Six Months

Reuven S. Avi-Yonah (Michigan), The International Provisions of the TCJA: Six Results after Six Months:

Over six months have passed since the enactment of the TCJA, so it is now possible to reach some preliminary conclusions on its impact. The main ones are:

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September 19, 2018 in Scholarship, Tax | Permalink | Comments (0)

Tuesday, September 18, 2018

Shaviro Reviews Zucman Et Al.'s The Missing Profits Of Nations

Jotwell (Tax) (2016)Daniel Shaviro (NYU), How Inevitable Is Corporate Tax Competition? (JOTWELL) (reviewing Thomas Tørsløv (University of Copenhagen), Ludvig Wier (University of Copenhagen) & Gabriel Zucman (UC-Berkeley), The Missing Profits of Nations (2018)):

How much profit-shifting, from high-tax to low-tax countries, do multinational companies (MNCs) engage in? The question is hard to answer, for both theoretical and empirical reasons. The “true” geographical source of profits earned by MNCs on their global production and sales activities would often be theoretically ambiguous even if their actions and decisions were completely transparent. In addition, however, not only is there a large gulf between what they know and what we (or the tax authorities) know, but relevant economic data may either be unavailable or reflect formalistic reporting conventions.

A recent literature review by Dhammika Dharmapala reports that, in the “more recent empirical literature, which uses new and richer sources of data, the estimated magnitude of [profit-shifting] is typically much smaller than that found in earlier studies.” James R. Hines goes further, asserting that profit-shifting is “notably small in magnitude,” and that any public (or even scholarly) impressions to the contrary merely reflect journalistically-driven over-excitement in response to a few “distasteful anecdotes of crass tax avoidance.”

But what if such conclusions—which are not, however, universal 3 —reflect data limitations? An important new National Bureau of Research Working Paper by Thomas Tørsløv, Ludvig Wier, and Gabriel Zucman (“Zucman et al”) makes novel use of macroeconomic data, comparing the wages and profits of MNCs’ foreign affiliates to those of local companies, both in tax havens and high-tax countries, to reach very different conclusions. Zucman et al find that forty percent of MNC profits are shifted to low-tax countries in a typical year, and that this estimate is conservative given the likely impact of statistical gaps. (P. 26.) ...

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September 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

Symposium: Legal Issues Surrounding Race, Religion, Gender And Class

Symposium, Finding Unique Ways To Solve Legal Issues Surrounding Race, Religion, Gender and Class, 18 U. Md. L.J. Race, Religion, Gender & Class 1-234 (2018):

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September 18, 2018 in Law School Rankings, Scholarship | Permalink | Comments (0)

Glogower: Requiring Reasonable Comp From A Corp

Ari D. Glogower (Ohio State), Requiring Reasonable Comp from a Corp, 160 Tax Notes 961 (Aug. 13, 2018):

This Article considers whether a reasonable compensation requirement can be applied when a corporation makes no payment in any form to the shareholder-employee, and the implications of this question for changes under the 2017 Tax Legislation.

September 18, 2018 in Scholarship, Tax | Permalink | Comments (0)

Monday, September 17, 2018

Hemel Presents Beyond The Marriage Tax Trilemma Today At Loyola-L.A.

Hemel (2018)Daniel Hemel (Chicago) presents Beyond the Marriage Tax Trilemma at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katie Pratt:

For decades, the famous “marriage tax trilemma” has played a central role in discussions of the tax treatment of the family unit. The “trilemma” refers to the mathematical impossibility of constructing a tax system that imposes the same tax liability across all married couples with the same income (couples neutrality), neither encourages nor penalizes marriage (marriage neutrality), and taxes higher income individuals at higher rates (progressivity). Numerous articles have proposed responses to the trilemma that choose two of the legs over a third or that seek to split the difference among the competing neutrality norms that the trilemma casts as desirable. Most casebooks, meanwhile, use the trilemma to introduce students to the policy debate over the taxation of marriage and the household.

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September 17, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Guillot Presents Who Paid The 75% Tax On Millionaires? Today At UC-Berkeley

GuillotMalka Guillot (Ph.D. 2018, Paris School of Economics) presents Who Paid the 75% Tax on Millionaires? Optimization of Salary Incomes and Incidence in France at UC-Berkeley today as part of its Robert D. Burch Center for Tax Policy and Public Finance Seminar Series:

Using several administrative datasets, I study the impact of temporary tax on top wage income earners, implemented for 2013 and 2014 only and known as the "75% tax above 1m euro''. The tax is nominally paid by the firms. The tax base is gross annual salary income above one million euros and the top marginal tax rate on wage earners increased from 64% to 74% because of the tax. About 400 employers paid the tax each year and about 1000 employees were concerned. I document that the tax was largely borne by employers, who paid 80% of the tax.

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September 17, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Lesson From The Tax Court: Distinguishing Property Settlement From (Indirect) Alimony

Tax Court (2017)Congress eliminated the deduction for alimony in the December 2017 Reconciliation Act (informally called the Tax Cuts and Jobs Act).  But the legislation grandfathered in alimony payments made pursuant to divorce or separation instruments executed on or before December 31, 2018. The question of whether a payment qualifies as alimony will thus still be important for many taxpayers for years to come.  The short lesson from the recent decision in Jeremy Adam Vanderhal v. Commissioner, T.C. Sum. Op. 2018-41 (Sept. 5, 2018) is thus worth blogging about.  Plus, it's nice to blog about one of those very rare wins for a pro se taxpayer.

This is mainly a drafting lesson: the tax effect of language in a divorce or separation instrument turns on what the language does more than what the language says it does. Here, Judge Carluzzo gives a very nice lesson on how not to be distracted by what the language says it is doing.

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September 17, 2018 in Bryan Camp, New Cases, Scholarship, Tax | Permalink | Comments (2)

Sunday, September 16, 2018

Morse: Seeking Comparables In Patent And Tax

Susan C. Morse (Texas), Seeking Comparable Transactions in Patent and Tax, 37 Rev. Litig. Brief 1 (2018):

Most business firms do not go around licensing their crown jewel intellectual property to unrelated third parties. This presents a problem for both patent law and tax law. In patent litigation, setting damages for a reasonable royalty under Georgia Pacific invites the use of a benchmark royalty rate that would have been agreed to had the litigating parties negotiated a market rate in advance. This counterfactual analysis repeats in tax law when firms allocate taxable income among affiliates located in different tax jurisdictions. Transfer pricing rules similarly seek a price, such as a royalty, that would have been agreed to had the related affiliates negotiated a market rate as adverse, or “arm’s length,” parties.

In their Article, Tax Solutions to Patent Damages, Jennifer Blouin and Melissa Wasserman argue that tax transfer prices can provide some of the data needed to set patent litigation damages. One could also ask the converse, which is whether patent litigation outcomes can provide some data that tax transfer pricing needs. If patent law looks to tax transfer prices, it sees the advantage that the tax transfer prices are set ex ante when IP developed by one affiliate was first used by another affiliate. This roughly aligns with patent law’s touchstone of a “hypothetical negotiation” that produces an “ex ante” license. If tax law looks to patent law, it sees the advantage that patent damages emerge from an adversarial process. Patent damages may be set ex post, but their validity is bolstered by the fact that they are contested.

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September 16, 2018 in Scholarship, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN Logo (2018)SSRN has updated its list of the Top 5 Recent Tax Paper Downloads for the first time in a month:

  1. [440 Downloads]  Compelled Subsidies and the First Amendment, by William Baude (Chicago) & Eugene Volokh (UCLA)
  2. [276 Downloads]  The New Non-Territorial U.S. International Tax System, Part 1, by Daniel Shaviro (NYU) (reviewed by David Elkins (Netanya) here)
  3. [209 Downloads]  The Charitable Contribution Strategy: An Ineffective SALT Substitute, by Andy Grewal (Iowa)
  4. [145 Downloads]   The Death of the Income Tax (or, the Rise of America's Universal Wage Tax), by Edward McCaffery (USC)
  5. [142 Downloads]  Taxing the Robots, by Orly Mazur (SMU)

September 16, 2018 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Friday, September 14, 2018

Weekly SSRN Tax Article Review And Roundup: Kleiman Reviews Shakow's Taxing Entities That Live On A Blockchain

This week, Ariel Jurow Kleiman (San Diego) reviews a new work by David J. Shakow (Penn), The Tao of The DAO: Taxing an Entity that Lives on a Blockchain, 160 Tax Notes 929 (Aug. 13, 2018).

StevensonMuch as governments have struggled for centuries to harness income flows transcending national borders, today governments face the novel challenge of taxing income flows that transcend the boundaries of the tangible world.  Specifically, blockchain technology has enabled cyberspace-based financial arrangements that trigger seemingly endless tax and regulatory quandaries. (See, e.g., here and here.)  David Shakow tackles one such quandary in his recent Tax Notes article, considering the tax treatment of income earned through a blockchain entity known as a decentralized autonomous organization (DAO).

Shakow’s article begins with a mercifully clear explanation of the formation, structure, and eventual demise of a specific DAO, called “The DAO.”  Formed in 2016 on the Ethereum blockchain platform, The DAO collected $150 million to invest in startup enterprises.  Under The DAO’s terms, anonymous investors would vote on which enterprises to invest in and would share in the profits.  All transactions occurred without the need for human involvement via the operation of “smart contracts” recorded in the Ethereum blockchain.  Human interveners were only necessary to confirm the identities of startup companies that submitted proposals for investment by The DAO.

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September 14, 2018 in Ariel Stevenson, Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Stark: Implementation Negotiation

Tina Stark, a leader in transactional skills education for lawyers (Fordham, Emory, and Boston University), Implementation Negotiation: A Transaction Skill that Builds on and Transforms Classic Negotiation Theory, forthcoming, Transactions, The Tennessee Journal of Business Law.

Implementation negotiation is the specialized negotiation in which deal lawyers engage after the principals negotiate the business terms of the transaction. Classic negotiation principles guide these deal term negotiations. But once the parties agree, the dynamics, tone, content, and purpose of the negotiation change. Parties are no longer looking at whether they can find a way to agree. They do agree. Now, the lawyers must transform the clients’ bare bones agreed-on business terms into a contract that memorializes the parties’ joint vision. This is implementation negotiation, a new way of thinking about contract negotiations. Implementation negotiation theory does not displace classic negotiation theory. It simultaneously builds on that framework and transforms it to work in a different context. This article begins by reviewing classic negotiation theory and principles and then explains how implementation negotiation builds on and transforms those principles, including why BATNA recedes to the background, why seasoned negotiators know the parties’ interests and issues and the expected zone of agreement, even before negotiations begin. The article next details the multiple subcategories of implementation negotiation through narrative and a series of illustrative, simulated negotiations. It concludes by briefly discussing the implications of this new pedagogy for legal education.


When the business parties have agreed on the basic terms of a deal typically requiring far more complex documentation, it now falls upon the lawyers to get it done without blowing the deal.  This essay, chock full of examples, is in the tradition of James Freund's iconic Anatomy of a Merger, teaching both how to see the forest and how to deal with the trees.

September 14, 2018 in Legal Education, Scholarship, Teaching | Permalink | Comments (0)

Thursday, September 13, 2018

Hemel Presents Beyond The Marriage Tax Trilemma Today At Northwestern

Hemel (2018)Daniel Hemel (Chicago) presents Beyond the Marriage Tax Trilemma at Northwestern today as part of its Advanced Topics in Taxation Workshop Series hosted by Sarah Lawsky:

For decades, the famous “marriage tax trilemma” has played a central role in discussions of the tax treatment of the family unit. The “trilemma” refers to the mathematical impossibility of constructing a tax system that imposes the same tax liability across all married couples with the same income (couples neutrality), neither encourages nor penalizes marriage (marriage neutrality), and taxes higher income individuals at higher rates (progressivity). Numerous articles have proposed responses to the trilemma that choose two of the legs over a third or that seek to split the difference among the competing neutrality norms that the trilemma casts as desirable. Most casebooks, meanwhile, use the trilemma to introduce students to the policy debate over the taxation of marriage and the household.

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September 13, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Mehrotra Presents A Comparative History Of U.S. Resistance To The VAT Today At Boston College

Mehrotra (2017)Ajay K. Mehrotra (American Bar Foundation & Northwestern) presents The VAT Laggard: A Comparative History of U.S. Resistance to the Value-added Tax at Boston College today as part of its Tax Policy Workshop Series hosted by Jim Repetti, Diane Ring, and Shu-Yi Oei:

This project explores how and why the United States has historically rejected national consumption taxes. Nearly all developed countries, and many in the developing world, have some type of a national consumption tax, frequently in the form of a value-added tax (VAT). The United States is an exception. This project focuses on the fundamental question: why no VAT in the United States? To address this overall research question, this project explores three key historical periods.

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September 13, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Oei & Ring: Leak-Driven Tax Law

Shu-Yi Oei (Tulane) & Diane M. Ring (Boston College), Leak Driven Law, 65 UCLA L. Rev. 532 (2018):

Over the past decade, a number of well-publicized data leaks have revealed the secret offshore holdings of high-net-worth individuals and multinational taxpayers, leading to a sea change in cross-border tax enforcement. Spurred by leaked data, tax authorities have prosecuted offshore tax cheats, attempted to recoup lost revenues, enacted new laws, and signed international agreements that promote “sunshine” and exchange of financial information between countries.

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September 13, 2018 in Scholarship, Tax | Permalink | Comments (0)

Lateral Moves By BigLaw Partners: Age And Gender Implications

P. Cecchi-Dimeglio (Harvard) & H.A. Simons (Ropes & Gray, Boston), Lateral Moves: An Empirical Investigation of Cyclicality, Directional Mobility, and 5-Year Retention Rate by Gender and Age Cohort, 42 J. Legal Prof. 171 (2018):

The present empirical study examines the movements of lateral partners across Big Law firms in the context of what is known as "boundaryless career" movements. We provide statistical evidence on the patterns of the lateral moves of 2,353 partners who moved between AmLaw 100 firms between 2010 through 2012. Our research explores the cyclicality and directional mobility (upward versus downward in terms of new firm profit per partner (PPP) rank and absolute level of new firm PPP rank) of partner moves and their relationship to five-year retention rate (5 years from the initial move) from a gender and age cohort perspective.

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September 13, 2018 in Legal Education, Scholarship | Permalink | Comments (1)

Wednesday, September 12, 2018

Goldin Presents Complexity And Take-up Of The Earned Income Tax Credit Today At Michigan

Goldin (2017)Jacob Goldin (Stanford) presents Complexity and Take-up of the Earned Income Tax Credit (reviewed by Ari Glogower (Ohio State) here) at Michigan as part of its Tax Policy Workshop Series hosted by Reuven Avi-Yonah

Millions of low-income Americans fail to claim tax benefits for which they are eligible, possibly because the rules governing the benefits are extraordinarily complex. I consider efforts to increase tax benefit take-up in light of this complexity. A key fact is that the vast majority of tax filers today prepare their taxes with assisted preparation methods (APMs) like software or professional assistance. APMs eliminate some – but not all – of the barriers to claiming tax benefits for which one is eligible. With respect to claiming the Earned Income Tax Credit (EITC), I argue that most of the relevant complexity is the type that is eliminated by APMs. Consequently, efforts to increase EITC take-up should focus on inducing EITC-eligible individuals to file a tax return using an APM. In contrast, efforts aimed at increasing awareness of the credit (of the type widely employed by governments and nonprofits today) are less likely to be successful, except to the extent they themselves induce an increase in tax filing. Reforms that appear unrelated to a tax benefit may dramatically affect the benefit’s take-up by altering incentives to file a return.

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September 12, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Stark Presents State Charitable Tax Expenditures Before And After The TCJA Today At Minnesota

Stark (2014)Kirk Stark (UCLA) presents State Charitable Tax Expenditures Before and After the TCJA at Minnesota as part of its  Perspectives on Taxation Lecture Series hosted by Kristin Hickman:

Many states have long provided 100% tax credits for gifts to certain state-designated transferees, while other states recently have enacted similar but less generous credits for gifts to state-established funds. Both types of credits raise the question whether a donor may claim a full charitable contribution deduction for such gifts or instead must reduce the deduction amount by the value of the state tax savings arising from the gift. If a full deduction can be claimed despite the state tax savings, as the IRS has long allowed, then donors can effectively convert nondeductible taxes to deductible gifts.

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September 12, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Tuesday, September 11, 2018

Brunson Presents God And The IRS At UC-Irvine

BrunsonSam Brunson (Loyola-Chicago) presented God and the IRS: Accommodating Religious Practice in the Tax Law (Cambridge University Press 2018) yesterday at UC-Irvine as part of its Tax Policy Colloquium Series:

Seventy-five percent of Americans claim religious affiliation, which can impact their taxpaying responsibilities. In this illuminating book, Samuel D. Brunson describes the many problems and breakdowns that can occur when tax meets religion in the United States, and shows how the US government has too often responded to these issues in an unprincipled, ad hoc manner. God and the IRSoffers a better framework to understand tax and religion. It should be read by scholars of religion and the law, policymakers, and individuals interested in understanding the implications of taxation on their religious practices.

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September 11, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Crawford & Waldman: The Unconstitutional Tampon Tax

Bridget J. Crawford (Pace) & Emily Gold Waldman (Pace), The Unconstitutional Tampon Tax, 52 U. Rich. L. Rev. ___ (2018):

Thirty-six states impose a sales tax on menstrual hygiene products, while products like spermicidal condoms and erectile dysfunction medications are tax-free. This sales tax — commonly called the “tampon tax” — represents an expense that girls and women must bear on top of the cost of biologically-necessary items that they need in order to go to school, work, and otherwise participate in public life. This Article explores the constitutionality of the tampon tax and argues that it is an impermissible form of gender discrimination under the Equal Protection Clause. First, menstrual hygiene products are a unique proxy for female sex, and therefore any disadvantageous tax classification of these products amounts to a facial classification on the basis of sex. There is no “exceedingly persuasive justification” for taxing menstrual hygiene products, and so the tax must fail intermediate scrutiny. Even assuming arguendo that the tampon tax is not viewed as a tax on female sex, it is still unconstitutional because it cannot pass rational basis review.

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September 11, 2018 in Scholarship, Tax | Permalink | Comments (1)

Using Performance Tests To Enhance Student Engagement While Furthering Assessment, Bar Passage, and Other ABA Accreditation Objectives

Sara Berman (AccessLex), Integrating Performance Tests into Doctrinal Courses, Skills Courses, and Institutional Benchmark Testing: A Simple Way to Enhance Student Engagement While Furthering Assessment, Bar Passage, and Other ABA Accreditation Objectives, 42 J. Legal Prof. 147 (2018):

This article explores ways to weave performance tests into the law school curriculum to enhance student engagement and active learning, and to further ABA-mandated assessment and accreditation objectives. Some options include using them as discrete simulation exercises in doctrinal courses, as content for certain dedicated skills courses, or as possible institutional benchmark testing.

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September 11, 2018 in Legal Education, Scholarship | Permalink | Comments (0)

Wright & Zucman: The Exorbitant Tax Privilege

Thomas Wright (University of Sheffield) & Gabriel Zucman (UC-Berkeley), The Exorbitant Tax Privilege (data):

We estimate and attempt to explain the evolution of the taxes paid by U.S. multinationals on their foreign profits since 1966. In the oil sector, taxes paid to oil-producing States have been contained, allowing U.S. firms to earn high after-tax returns. Foreign taxes fell abruptly after the first Gulf War. In sectors other than oil, the effective foreign tax rate has fallen by half since the late 1990s. Almost half of this decline owes to the rise of profit shifting to tax havens. The low foreign taxes paid by U.S. multinationals can explain half of the U.S. cross-border return differential.

Zucman

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September 11, 2018 in Scholarship, Tax | Permalink | Comments (0)

Monday, September 10, 2018

Cauble: Taxing Selling Partners

Emily Cauble (DePaul), Taxing Selling Partners, 94 Wash. L. Rev. ___ (2018):

Under current law, when a partner sells a partnership interest, the resulting gain or loss is treated as capital gain or loss, except to the extent that the partnership holds certain items whose sale would result in gain or loss that was not capital. The purpose of the current regime appears to be to prevent taxpayers from obtaining more favorable treatment by selling an interest in a partnership than what would result if the partnership were to sell its underlying assets. Given this apparent aim of legislators, current law produces results for taxpayers that are both unduly favorable and unduly unfavorable. In particular, despite current law’s aim to equate the tax treatment of the sale of a partnership interest with the tax treatment of the sale of underlying assets (at least with respect to the character of income recognized), differences persist. Sometimes sale of a partnership interest produces more favorable tax treatment than the sale of underlying assets. Other times, sale of a partnership interest triggers less favorable tax treatment than a sale of underlying assets.

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September 10, 2018 in Scholarship, Tax | Permalink | Comments (0)

Thimmesch, Shanske & Gamage: Wayfair And The Retroactivity Of Constitutional Holdings

Adam B. Thimmesch (Nebraska), Darien Shanske (UC-Davis) & David Gamage (Indiana), Wayfair and the Retroactivity of Constitutional Holdings, 88 State Tax Notes 511 (May 7, 2018):

This essay analyzes the issue of retroactivity with respect to the Supreme Court case of South Dakota v. Wayfair.

September 10, 2018 in Scholarship, Tax | Permalink | Comments (0)