TaxProf Blog

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

Thursday, January 4, 2018

A Simple Tech Upgrade At The IRS Could Transform The Economy

IRS Logo 2Tech Crunch, How a Simple Tech Upgrade at the IRS Could Transform the Economy:

Our credit system runs on the power of data. A simple IT upgrade at the IRS would put more of this power in your hands. ...

The IRS Data Verification Modernization Act of 2017, recently introduced in Congress by Rep. Patrick McHenry (R-NC) and Sen. Cory Booker (D-NJ), would set up an application programming interface (API) at the IRS.

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January 4, 2018 in Tax | Permalink | Comments (0)

Manns & Todd: The Tax Lifecycle Of A Single Member LLC

F. Philip Manns Jr. (Liberty) & Timothy M. Todd (Liberty), The Tax Lifecycle of a Single Member LLC, 36 Va. Tax Rev. 323 (2017):

The single-member LLC (SMLLC) is ubiquitous. Despite its ubiquity, the Internal Revenue Code (Code) does not squarely address its tax consequences nor even contemplate its existence. This article examines the tax lifecycle of an SMLLC through its formation, operation, and exit event (e.g., sale, gift, or deathtime transfer).

This article identifies and isolates a tax asymmetry that arises from the U.S. Tax Court’s decision in Pierre v. Commissioner. Despite the check-the-box regulations, which disregard the SMLLC, Pierre regards the SMLLC for federal gift tax purposes. This asymmetry has several tax consequences, including a potential prophylactic immunization of transfers to SMLLCs against application of section 2036 — which claws back into the federal gross estate transfers when the transferor retains an interest — in the family partnership context.

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January 4, 2018 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 3, 2018

Goldman Sachs Takes $5 Billion Hit From New Tax Law

Goldman (2017)Bloomberg, Goldman Takes One-Time $5 Billion Hit From New U.S. Tax Law:

Goldman Sachs Group said the U.S. tax reform will cut profit this year by about $5 billion, mainly because of a tax targeting earnings held abroad.

About two-thirds of the hit comes from the repatriation tax, while writing down U.S. deferred tax assets also contributed, the company said in a filing on Friday. The bank also accelerated the delivery of previously granted stock awards to many of its top executives to lower its taxable profit subject to this year’s higher rates.

While bank stocks have rallied on the tax bill’s lower corporate rates, the new law requires charges in the near-term as foreign earnings face taxation and the value of deferred tax assets declines. Citigroup Inc. said it expects a hit of as much as $20 billion, while Bank of America Corp. will take a $3 billion charge and Credit Suisse Group AG is at risk of posting a third consecutive annual loss.

Wall Street Journal, Goldman to Take a Big Charge Related to U.S. Tax Overhaul:

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January 3, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Barry: Taxation And Innovation — The Sharing Economy As A Case Study

Jordan M. Barry (San Diego), Taxation and Innovation: The Sharing Economy as a Case Study, in Cambridge Handbook on Law and Regulation of the Sharing Economy (Nestor Davidson, Michèle Finck & John Infranca, eds., Cambridge University Press 2018):

This chapter considers the relationship between the U.S. federal income tax system and innovation, using the sharing economy as a focal point for analysis. It makes two main points.

First, the tax system is currently a questionable tool for encouraging innovation. Regulators are understandably concerned that taxpayers will use tax incentive provisions in unanticipated ways, and thus are inclined to tightly limit such provisions’ scope. This reduces incentive provisions’ net benefit to taxpayers, and can even cause such provisions to miss their marks entirely. Moreover, small and new companies are key drivers of innovation, and evidence suggests that they are relatively unresponsive to tax incentives.

Second, innovation can help improve the tax system. To fix a problem, one must first identify it; innovation provides opportunities to see where tax law is achieving its goals and where it is falling short. The sharing economy experience suggests some strengths, such as the tax system’s definition of income, as well as weaknesses, such as the dividing line between independent contractors and employees.

January 3, 2018 in Scholarship, Tax | Permalink | Comments (0)

NY Times: Democrats In High-Tax States Plot To Blunt Impact Of New Tax Law

New York Times, Democrats in High-Tax States Plot to Blunt Impact of New Tax Law:

Democrats in high-cost, high-tax states are plotting ways to do what their states’ representatives in Congress could not: blunt the impact of the newly passed Republican tax overhaul.

Governors and legislative leaders in New York, California and other states are considering legal challenges to elements of the law that they say unfairly single out parts of the country. They are looking at ways of raising revenue that aren’t penalized by the new law. And they are considering changing their state tax codes to allow residents to take advantage of other federal tax breaks — in effect, restoring deductions that the tax law scaled back.

One proposal would replace state income taxes, which are no longer fully deductible under the new law, with payroll taxes on employers, which are deductible. Another idea would be to allow residents to replace their state income tax payments with tax-deductible charitable contributions to their state governments.

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January 3, 2018 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (8)

Tuesday, January 2, 2018

Blank Presents The Timing Of Tax Transparency At Hebrew University

Blank (2017)Joshua Blank (NYU, moving to UC-Irvine) presented The Timing of Tax Transparency, 90 S. Cal. L. Rev. 449 (2017) (review here), at Hebrew University in Jerusalem, Israel yesterday as part of its Tax Law Forum hosted by David Gliksberg (Hebrew U):

Fairness in the administration of the tax law is a subject of intense debate in the United States. As myriad headlines reveal, the Internal Revenue Service (“IRS”) has been accused of failing to enforce the tax law equitably in its review of tax-exempt status applications by political organizations, international tax structures of multinational corporations, and estate tax returns of millionaires, among other areas. Many have argued that greater “tax transparency” would better empower the public to hold the IRS accountable and the IRS to defend itself against accusations of malfeasance. Mandatory public disclosure of taxpayers’ tax return information is often proposed as a way to achieve greater tax transparency. Yet, in addition to concerns regarding exposure of personal and proprietary information, broad public disclosure measures pose potential threats to the taxing authority’s ability to enforce the tax law.

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January 2, 2018 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Herzig: States Pay The Price When You Buy Online

New York Times op-ed:  States Pay the Price When You Buy Online, by David Herzig (Valparaiso):

Can online retailers be compelled by law to collect a sales tax? According to the Supreme Court, no — but that could change if, in the next few weeks, it decides to take up a case challenging the current rule.

The court should reconsider the prohibition, because the law takes a hammer to the fiscal health of states, which lose out on millions, if not billions, of dollars in sales tax revenue. Staggering amounts of digital transactions occurred this year: an estimated $6.59 billion in digital transactions on Cyber Monday (which would be a record), and an estimated $100 billion for the holiday season.

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January 2, 2018 in New Cases, Tax | Permalink | Comments (0)

NY Times: What Explains The Dearth Of New Year's Babies? Taxes, Of Course

Tax Break BabiesNew York Times, To-Do List: Wrap Gifts. Have Baby.:

In the last 15 years, there has been a huge increase in the number of births that are induced with drugs or come by Caesarean section. In either case, parents or doctors can often schedule a baby’s arrival on a day of their choosing. ...

Over this same period — since the early 1990s — the federal government has been steadily increasing the tax breaks for having a child. For parents to claim the full amount of any of these breaks in a given year, a child must simply be born by 11:59 p.m. on Dec. 31. If the baby arrives a few minutes later, the parents are often more than a thousand dollars poorer.

Unless you’re a cynic, or an economist, I realize you might have trouble believing that the intricacies of the nation’s tax code would impinge on something as sacred as the birth of a child. But it appears that you would be wrong. ...

“It’s phenomenal what’s happening in late December,” said Amitabh Chandra, a Harvard economist who provided many of the numbers here. “December is not really a particularly busy time for babies to be born. So to see a spike that’s equal to September is astounding.” ...

So to see if taxes were truly the culprit, Mr. Chandra and another economist, Stacy Dickert-Conlin of Michigan State, devised some clever tests [Taxes and the Timing of Births]. They found that people who stood to gain the most from the tax breaks were also the ones who gave birth in late December most frequently. When the gains were similar, high-income parents — who, presumably, are more likely to be paying for tax advice — produced more December babies than other parents. ...

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January 2, 2018 in Tax | Permalink | Comments (0)

Invitation: Pepperdine Law School Reception At AALS

Pepperdine AALS

Pepperdine Law School invites law professors and deans to a reception
hosted by our new dean, Paul Caron, at the 2018 AALS Annual Meeting in San Diego:

Friday, Jan. 5, 5:30 - 7:30 p.m.
Del Mar Room | South Tower, Level 3
Marriott Marquis San Diego Marina
Please join us for hors d'oeuvres, a hosted bar, and some tunes from Hamilton!
RSVP

January 2, 2018 in Legal Education, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1699: Lois Lerner And Civil Service Reform

IRS Logo 2Wall Street Journal op-ed:  A Big, Beautiful Trump 2018 Issue, by Kimberley A. Strassel:

President Trump is on the hunt for a 2018 issue—a strong follow-up to his tax-cut victory that will motivate voters and gain bipartisan support. Democrats are pushing for an infrastructure bill, inviting the president to spend with them. House GOP leaders are mulling entitlement reform—a noble goal, if unlikely in a midterm cycle.

Fortunately for the president, there’s a better idea out there that’s already a Trump theme. It’s also a sure winner with the public, so Republicans ought to be able to pressure Democrats to join.

Let 2018 be the year of civil-service reform—a root-and-branch overhaul of the government itself. Call it Operation Drain the Swamp. ...

We live in an administrative state, run by a left-leaning, self-interested governing class that is actively hostile to any president with a deregulatory or reform agenda.

It’s Lois Lerner, the IRS official who used her powers to silence conservative nonprofits. ...

More broadly, it is a federal workforce whose pay and benefits are completely out of whack with the private sector. ...

Civil-service reform’s bipartisan appeal means it has a shot in the Senate. The Chuck Schumers and Elizabeth Warrens will fight for their federal union buddies. But will Democrats like Jon Tester, Claire McCaskill, Joe Manchin and Joe Donnelly —who represent conservative or right-to-work states—go to bat for the likes of Lois Lerner?

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January 2, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (5)

Monday, January 1, 2018

The Top 10 Tax Posts Of 2017

The IRS Scandal, Day 1698: Fallout From Tea Party Targeting Allegations Has Neutered IRS Oversight Of Nonprofits

IRS Logo 2Washington Post editorial, Scandal Has Overwhelmed the IRS:

Conservatives who long sought to restrain the Internal Revenue Service have managed to throw a wrench into an IRS division that is supposed to regulate tax-exempt nonprofits and charities, just at a time when these groups are becoming more partisan and complex.

In a Dec. 18 article in The Post, reporter Robert O’Harrow Jr. offered a disturbing picture of the besieged Exempt Organizations division of the IRS, which regulates charities and nonprofits such as those allowed under sections 501(c)(3) and 501(c)(4) of the tax code. The former may not directly or indirectly support a political candidate, but they are allowed to participate in educational debates about the issues; the latter are social-welfare groups that can be involved in politics only so long as it is not their primary activity. The number of applications from new charities has exploded in recent years, and the law is a bit of a gray zone — vaguely written and hard to enforce.

In recent years, overwhelmed by applications, the division and its then-leader, Lois Lerner, fell into the crosshairs of the conservative tea party movement for the slow pace of approvals of tea party groups, which they claimed was due to a conspiracy by the Obama administration to target them. Subsequent investigations found mismanagement — the IRS was taking shortcuts and using keywords to deal with the mountain of applications — but not deliberate targeting.

Still, the charges took a toll. The division seems to have lost its will to scrutinize charities. According to Mr. O’Harrow, last year the division rejected just 37 of the 79,582 applications on which it made a final determination. He reported that charities have now begun to recognize they face little or no chance of examination or sanction. The division’s budget has declined from a peak of $102 million in 2011 to $82 million last year. The number of division employees has fallen from 889 to 642. ...

There is more than enough blame to go around in this tale. The conservative groups, their allies in Congress and the IRS itself all bear responsibility. It is clear what the result will be. Voters will have less and less knowledge of who is paying for political activity in their democracy, even as many politicians hypocritically claim to favor transparency.

(Hat Tip: Bill Turnier.)

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January 1, 2018 in IRS News, IRS Scandal, Tax | Permalink | Comments (9)

Sunday, December 31, 2017

WSJ: The Most Popular People At New Year's Eve Parties? Tax Accountants

Happy New YearWall Street Journal, Who’s the Center of Attention at Holiday Parties? Your Tax Accountant:

When Mark Astrinos is asked what he does, the response is typically muted. “I’ll just say, ‘I’m a CPA,’ and the conversation will end,” said the certified public accountant and financial planner with Libra Wealth in San Francisco.

Not lately, though. Thanks to the sweeping tax-overhaul bill passed by Congress and signed this month by President Donald Trump, people now “light up and they’re so intrigued and they want to know how they’ll be affected,” he said.

In part because of the attention, Mr. Astrinos said, “It’s never been a better time to be a CPA.”

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December 31, 2017 in Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is #1 among 13,276 tax papers in all-time downloads:

  1. [41,057 Downloads]  The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation, by Ari Glogower (Ohio State), David Kamin (NYU), Rebecca Kysar (Brooklyn) & Darien Shanske (UC-Davis) et al.
  2. [506 Downloads]  The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule, by Itai Grinberg (Georgetown)
  3. [478 Downloads]  Tax Reform: Process Failures, Loopholes and Wealth Windfalls , by Stephen Shay (Harvard)
  4. [331 Downloads]  Once More, with Feeling: The 'Tax Cuts and Jobs' Act and the Original Intent of Subpart F, by Reuven Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2018, Michigan)
  5. [206 Downloads]  Heading Off a Cliff?, by Michael Graetz (Columbia)

December 31, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The IRS Scandal, Day 1697: Budgetary Evisceration After Tea Party Targeting Allegations Has Left The IRS Incapable Of Implementing The New Tax Law

IRS Logo 2New York Times editorial, Don’t Cheer as the I.R.S. Grows Weaker:

[A]s it prepares to implement the most sweeping tax overhaul in 30 years, the I.R.S. is perhaps weaker than it has ever been. In 1986, the last time Congress passed major changes in the tax code, it included a budget increase for the agency, allowing it to hire 2,100 more employees to carry out the changes. Earlier this year, as the agency struggled to do its job with a decimated staff, a shrinking budget and decrepit computers, its commissioner pleaded with Congress to at least give it time to prepare for the big tax overhaul Republicans wanted.

That didn’t happen. Instead, Republicans rushed hastily written legislation larded with amendments through both chambers. Even before this hash hit their desks, I.R.S. officials were warning about the potential for a catastrophic breakdown that could imperil our tax system. Then, at its busiest time of year, the agency was given a week before the tax law goes into effect to translate hundreds of pages of conflicting provisions, potential loopholes and unintended consequences into coherent guidance for taxpayers. ...

Americans should reserve their rage for Republicans, who have spent years targeting the I.R.S. for political gain. Since 2010, Congress has cut the agency’s budget by nearly $1 billion, or 18 percent, adjusted for inflation, as the I.R.S. processes about 10 million more tax returns. Its work force has been whacked by 21,000, or nearly one-quarter; taxpayers who need help — often individuals preparing their own returns — have a hard time getting anyone to answer the phone. ...

There is no permanent commissioner leading the I.R.S. Its last one, John Koskinen, left in November at the expiration of his term. Mr. Koskinen had spent a big chunk of his time on Capitol Hill, being lambasted by Republicans over allegations that the Obama-era I.R.S. unfairly targeted conservative political groups seeking tax-exempt status. A report released in October by the Treasury Department’s inspector general found that the I.R.S. had also scoured left-leaning groups’ applications for tax-exempt status as part of its effort to identify groups focused on politics, not “social welfare,” as the rules for tax-exempt status require.

The agency apologized for its improper audits, and a Justice Department investigation found mismanagement but no evidence of a crime. Though the audits occurred before Mr. Koskinen came aboard, Republicans clamored for him to be impeached, an action not taken against an administration official besides the president since the 1870s. The dumb and unsuccessful effort was led by legislators like Jason Chaffetz, then a Republican congressman from Utah, who view the I.R.S. as symbolic of “big government” and think that killing it outright might be a good idea. ...

Pounding a perennial punching bag like the I.R.S. scores easy political points among Americans who associate the agency with an unpleasant April deadline. We get it. But if the agency that collects more than 90 percent of the government’s money stumbles, all Americans pay, and they can look to Congress, not just the I.R.S., in assigning the blame.

(Hat Tip: Bill Turnier.)

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December 31, 2017 in IRS News, IRS Scandal, Tax | Permalink | Comments (17)

Saturday, December 30, 2017

This Week's Ten Most Popular TaxProf Blog Posts

Almost Everything Is Wrong With the New Tax Law

Wall Street Journal op-ed:  Almost Everything Is Wrong With the New Tax Law, by Alan S. Blinder (Princeton):

Dec. 20, 2017, should go down in political history as a day of infamy or absurdity, probably both. After passing a massive tax bill without a single Democratic vote—something highly unusual in itself—congressional Republicans gathered with President Trump on the White House steps that day to engage in an orgy of self-congratulation.

The president patted himself on the back so vigorously that he might have required physical therapy. One after another, Republican senators and representatives competed for the honor of offering the most unctuous praise for their Maximum Leader. But Sen. Orrin Hatch of Utah, who was previously thought to be level-headed, set a new standard for fawning by declaring that Mr. Trump may be the greatest president ever. Ever? Not Lincoln? Not Washington?

Was this love-fest because Republicans had just passed an economically sound and wildly popular tax bill that was winning praise from tax experts and scoring marvelously in public opinion polls? Not quite. Polls show that Americans hate this bill.

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December 30, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (5)

Friday, December 29, 2017

NY Times: The College Sports Tax Dodge

NCAA LogoNew York Times, The College Sports Tax Dodge:

New York University does not have much of an athletic program. But 70 years ago, it ran a profitable macaroni company, leading indirectly to a decision by Congress that college sports — if not a college-owned noodle business — should be exempt from taxation.

Today, as the hugely lucrative football bowl season wraps up, colleges fear that the new tax law signed by President Trump could derail their gravy train — two provisions target coaches’ high salaries and booster donations tied to ticket purchases. But they need not worry much.

There are no plans to start taxing television revenue and corporate sponsorships, two of the biggest income streams, which together transformed intercollegiate athletics into a multibillion-dollar business. Even with the legislative changes, collegiate sports remain largely tax exempt, the beneficiary of a public subsidy that is increasingly difficult to defend.

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December 29, 2017 in Tax | Permalink | Comments (2)

'Orwellian' Offshore Tax Will Hit Some Firms Harder Than Others

Bloomberg:  'Orwellian' Offshore Tax Will Hit Some Firms Harder Than Others, by Lynnley Browning:

The name that Republican tax writers gave to a new, multi billion-dollar business levy implies that it targets foreign earnings from “intangible” intellectual property — hitting tech firms and drugmakers like Apple and Pfizer.

But experts agree that the little-understood “global intangible low-taxed income” levy, or GILTI, will also apply to earnings that go far beyond patents, royalties and licensing, and could end up snaring many global firms that earn little such income. Private equity partnerships that aren’t publicly traded, including Bain Capital, stand to pay rates three times as high as corporate competitors’, tax lawyers say. Law and advertising firms with overseas offices may also be hit — as will many U.S. companies that make “excess” profit from foreign plants, equipment and inventory.

The name is “Orwellian,” said James Duncan, a tax partner at the law firm Cleary Gottlieb Steen & Hamilton, in a Dec. 20 webcast. “Its most significant effect is on income that is neither intangible nor low-taxed.”

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December 29, 2017 in Tax | Permalink | Comments (1)

Confusion Reigns As People Race To Prepay (And Deduct) Property Taxes By Year-End

IR-2017-210, Prepaid Real Property Taxes May Be Deductible in 2017 if Assessed and Paid in 2017:

The Internal Revenue Service advised tax professionals and taxpayers today that pre-paying 2018 state and local real property taxes in 2017 may be tax deductible under certain circumstances.

The IRS has received a number of questions from the tax community concerning the deductibility of prepaid real property taxes. In general, whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer makes the payment in 2017 and the real property taxes are assessed prior to 2018.  A prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017.  State or local law determines whether and when a property tax is assessed, which is generally when the taxpayer becomes liable for the property tax imposed.

The following examples illustrate these points.

Example 1: Assume County A assesses property tax on July 1, 2017 for the period July 1, 2017 – June 30, 2018.  On July 31, 2017, County A sends notices to residents notifying them of the assessment and billing the property tax in two installments with the first installment due Sept. 30, 2017 and the second installment due Jan. 31, 2018.   Assuming taxpayer has paid the first installment in 2017, the taxpayer may choose to pay the second installment on Dec. 31, 2017, and may claim a deduction for this prepayment on the taxpayer’s 2017 return.

Example 2: County B also assesses and bills its residents for property taxes on July 1, 2017, for the period July 1, 2017 – June 30, 2018. County B intends to make the usual assessment in July 2018 for the period July 1, 2018 – June 30, 2019.  However, because county residents wish to prepay their 2018-2019 property taxes in 2017, County B has revised its computer systems to accept prepayment of property taxes for the 2018-2019 property tax year.  Taxpayers who prepay their 2018-2019 property taxes in 2017 will not be allowed to deduct the prepayment on their federal tax returns because the county will not assess the property tax for the 2018-2019 tax year until July 1, 2018.

Victor Thuronyi, Can You Prepay 2018 Property Tax in 2017?:

It turns out this question get[s] more complex by the day. ...

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December 29, 2017 in IRS News, Tax | Permalink | Comments (11)

President Trump: 'I Know The Details Of Taxes Better Than Anybody. Better Than The Greatest CPA.'

From the New York Times thirty minute interview with President Trump:

"I know the details of taxes better than anybody. Better than the greatest C.P.A."

December 29, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Thursday, December 28, 2017

Feminist Judgments: Rewritten Tax Opinions

Feminist JudgmentsFeminist Judgments: Rewritten Tax Opinions (Bridget J. Crawford (Pace) & Anthony C. Infanti (Pittsburgh), eds.) (Cambridge University Press Dec. 28, 2017):

Could a feminist perspective change the shape of tax laws? Feminist reasoning and analysis are recognized as having tremendous potential to affect employment discrimination, sexual harassment, and reproductive rights laws - but they can likewise transform tax law (as well as other statutory or code-based areas of the law). By highlighting the importance of perspective, background, and preconceptions on reading and interpreting statutes, this volume shows what a difference feminist analysis can make to statutory interpretation. Feminist Judgments: Rewritten Tax Opinions brings together a group of scholars and lawyers to rewrite tax decisions in which a feminist emphasis would have changed the outcome, the court's reasoning, or the future direction of the law. Featuring cases including medical expense deductions for fertility treatment, gender confirmation surgery, tax benefits for married individuals, the tax treatment of tribal lands, and business expense deductions, this volume opens the way for a discussion of how viewpoint is a key factor in statutory interpretation.

Tax Prof contributors: 

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December 28, 2017 in Book Club, Scholarship, Tax | Permalink | Comments (0)

Tax Reform’s Growth Whisperer

ToomeyWall Street Journal, Tax Reform’s Growth Whisperer:

President Trump signed tax reform into law Friday, but in late November it almost had a heart attack in committee. Sens. Ron Johnson of Wisconsin and Bob Corker of Tennessee were balking, the former over the details of business taxation and the latter over the deficit. The GOP has a bare 12-11 majority on the Senate Budget Committee, and Democrats were united in opposition, so a single Republican dissenter would have stalled the bill. But Messrs. Corker and Johnson voted aye, and it advanced.

Much of the behind-the-scenes credit for tax reform belongs to Sen. Pat Toomey of Pennsylvania, who as a member of both the Budget and Finance committees helped persuade a rotating cast of Republican critics. When the GOP celebrated its victory at the White House this week, Nevada’s Dean Heller mugged for the cameras toward the front. Mr. Toomey stood less conspicuously a row back. He’s the player who doesn’t dance in the end zone but stays up watching game film.

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December 28, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

SSRN Tax Professor Rankings

SSRN LogoSSRN has updated its monthly rankings of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through December 1, 2017) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

 

 

All-Time

 

Recent

1

Reuven Avi-Yonah (Mich.)

74,442

Gladriel Shobe (BYU)

22,319

2

Michael Simkovic (USC)

38,095

Reuven Avi-Yonah (Mich.)

13,009

3

Paul Caron (Pepperdine)

33,900

D, Dharmapala (Chicago)

3569

4

D. Dharmapala (Chicago)

32,606

Lily Batchelder (NYU)

3519

5

Louis Kaplow (Harvard)

28,866

Richard Ainsworth (BU)

3443

6

Vic Fleischer (San Diego)

24,212

Michael Simkovic (USC)

3388

7

Ed Kleinbard (USC)

23,871

Michael Graetz (Columbia)

3020

8

James Hines (Michigan)

23,354

David Gamage (Indiana)

2895

9

Gladriel Shobe (BYU)

22,768

Andy Grewal (Iowa)

2878

10

Richard Ainsworth (BU)

22,690

Hugh Ault (Boston College)

2676

11

Richard Kaplan (Illinois)

22,477

David Weisbach (Chicago)

2579

12

Ted Seto (Loyola-L.A.)

22,388

Kyle Rozema (Chicago)

2532

13

Katie Pratt (Loyola-L.A.)

20,774

Daniel Hemel (Chicago)

2517

14

David Weisbach (Chicago)

19,999

Ed Kleinbard (USC)

2412

15

Robert Sitkoff (Harvard)

19,713

William Byrnes (Texas A&M)

2283

16

Chris Sanchirico (Penn)

18,905

Omri Marian (UC-Irvine)

2127

17

Brad Borden (Brooklyn)

18,887

Darien Shanske (UC-Davis)

1967

18

Carter Bishop (Suffolk)

18,513

Louis Kaplow (Harvard)

1895

19

Daniel Shaviro (NYU)

18,198

Chris Sanchirico (Penn)

1853

20

Francine Lipman (UNLV)

18,144

Steven Bank (UCLA)

1796

21

Bridget Crawford (Pace)

17,946

Daniel Shaviro (NYU)

1746

22

Jen Kowal (Loyola-L.A.)

17,867

Jordan Barry (San Diego)

1650

23

Dennis Ventry (UC-Davis)

16,676

Stephen Shay (Harvard)

1617

24

Steven Bank (UCLA)

16,046

Bridget Crawford (Pace)

1591

25

David Walker (BU)

15,860

Paul Caron (Pepperdine)

1508

Note that this ranking includes full-time tax professors with at least one tax paper on SSRN, and all papers (including non-tax papers) by these tax professors are included in the SSRN data.

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December 28, 2017 in Scholarship, Tax, Tax Prof Rankings | Permalink | Comments (0)

Harvard Business Review: Breaking Down The New U.S. Corporate Tax Law

Harvard Business Review LogoHarvard Business Review, Breaking Down the New U.S. Corporate Tax Law:

Mihir Desai, a professor of finance at Harvard Business School, breaks down the brand-new U.S. tax law. He says it will affect everything from how corporate assets are financed to how business are structured. He predicts many individuals will lower their tax burdens by setting themselves up as corporations. And he discusses how the law shifts U.S. tax policy toward a territorial system of corporate taxes, one that will affect multinationals and national competitiveness. Finally, Desai explains what he would have done differently with the $1.5 trillion the tax cut is projected to cost. ...

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December 28, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

Wednesday, December 27, 2017

New Tax Law May Give Big Edge To Pro Sports Teams In Florida, Nevada, Texas, And Washington

Washington Post, Florida, Texas May Attract Athletes After Tax Law Change:

Teams in Texas, Florida, Nevada and Washington state may have become more attractive destinations for free agents following the enactment of tax law changes.

Deductions for state and local taxes are capped at $10,000 in the year starting Jan. 1 for married couples filing jointly. That has a huge impact for athletes with seven- and eight-figure salaries.

“Obviously, the zero income-tax states have now more of an advantage than before,” said baseball agent Scott Boras, who is negotiating big-money deals this offseason for free agents J.D. Martinez, Eric Hosmer, Mike Moustakas, Jake Arrieta and Greg Holland. ...

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December 27, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

Waiting Until Jan. 3 To Sign Tax Reform Would Not Have Delayed A PAYGO Sequestration

Yale Notice & CommentFollowing up on my previous posts:

Sam Wice, Waiting Until January 3 to Sign Tax Reform Would Not Have Delayed a PAYGO Sequestration, Yale J. on Reg.: Notice & Comment (2017):

In an earlier post, I suggested that Republicans should wait until January 2018 to pass tax reform so that they can delay a Pay-As-You-Go (PAYGO) sequestration.  President Trump appears to have taken this idea to heart and decided that if Congress did not waive the PAYGO sequestration, he would wait until January 3, 2018 to sign tax reform into law.  Although in a Festivus miracle Congress waived the PAYGO sequestration, for future reference I explain here why President Trump could not have delayed a PAYGO sequestration by merely waiting until 2018 to sign tax reform into law.  The plain meaning of PAYGO and prior Office of Management and Budget (OMB) practice indicated that no matter when President Trump signed tax reform, it must still have been included in the 2017 PAYGO annual report, which would have triggered an immediate sequestration. ...

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December 27, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

The Impact Of The New Tax Law On Law Firm Partners

Tuesday, December 26, 2017

Ono Academic College (Israel) Hosts Tax Policy Roundtable Today On Fairness in Taxation

OnoOno Academic College Faculty of Law (Israel) hosts a Tax Policy Roundtable today on Fairness in Taxation:

  • Moshe Asher (Commissioner, Israel Tax Authority)
  • Kamil Atila (Head of Fiscal Division, Israel Department of Treasury)
  • Yuval Elbashan (Dean, Ono)
  • Sagit Leviner (Senior Lecturer, Ono)
  • Mina Zemach (Public Opinion Expert)

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December 26, 2017 in Conferences, Tax | Permalink | Comments (0)

More On AT&T's $1,000 Tax Cut Bonus To Workers

AT&T LogoFollowing up on last week's post, AT&T's Tax Cut Bonus Isn't Just A Gimmick:

Wall Street Journal, Timing Is Vital as Companies Set Bonuses, Spending Before New Tax Law:

The timing of AT&T Inc.’s pledge this week to give $1,000 bonuses to more than 200,000 workers once President Donald Trump signs the tax overhaul may have saved it $28 million.

That is because committing to making the payment now could let it record the expense in 2017 for tax purposes. In AT&T’s case, that would mean a $70 million deduction under the existing 35% tax rate. By contrast, recording the bonus expense in 2018, when the new 21% corporate rate is in effect, would mean a $42 million deduction.

Similar calculations may be under way for other businesses that have also promised tax-bill bonuses or are considering charitable contributions or other year-end expenses ahead of the tax-law changes.

Wall Street Journal editorial, The Corporate Tax-Cut Dividend:

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December 26, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (1)

TaxProf Blog Holiday Weekend Roundup

Monday, December 25, 2017

A Hallelujah Christmas

A Pepperdine Christmas

Christmas And The Salvation of ‘Napalm Girl’

Fire RoadWall Street Journal op-ed:  The Salvation of ‘Napalm Girl’, by Kim Phuc Phan Thi (author, Fire Road: The Napalm Girl’s Journey through the Horrors of War to Faith, Forgiveness, and Peace (Oct. 2017):

You may not recognize me now, but you almost certainly know who I am. My name is Kim Phuc, though you likely know me by another name. It is one I never asked for, a name I have spent a lifetime trying to escape: “Napalm Girl.”

You have probably seen my picture a thousand times. Yes, that picture. The image that made the world gasp. Some called it a turning point in the Vietnam War—a Pulitzer Prize-winning photograph of me in 1972, age 9, running along a puddled roadway in front of an expressionless soldier. I was photographed with arms outstretched, naked and shrieking in pain and fear, with the dark contour of a napalm cloud billowing in the distance. ...

Those bombs have caused me immeasurable pain over the course of my life. Forty-five years later I am still receiving treatment for the burns that cover my arms, back and neck. But even worse than the physical pain was the emotional and spiritual pain. For years I bore the crippling weight of anger, bitterness and resentment toward those who caused my suffering. Yet as I look back over a spiritual journey that has spanned more than three decades, I realize the same bombs that caused so much pain and suffering also brought me to a place of great healing. Those bombs led me to Jesus Christ.

My salvation experience occurred on Christmas Eve.

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December 25, 2017 in Book Club, Legal Education, Tax | Permalink | Comments (0)

Where Jesus Would Spend Christmas

Lesbos 3New York Times op-ed:  Where Jesus Would Spend Christmas, by Stephanie Saldaña:

In the city of Mytilene on the Greek island of Lesbos, Christmas is approaching. A tree on the main square is alight in blue; a Nativity scene has Mary and Joseph standing vigil beside the baby Jesus. Locals are busily shopping for gifts and sipping coffee at cafes.

Just 15 minutes up the road, at the refugee and migrant camp called Moria, it is not Christmas but winter that is approaching. More than 6,000 souls fleeing the world’s most violent conflicts — in Syria, Iraq, Afghanistan, Yemen and the Democratic Republic of Congo — are crowded in a space meant for 2,330. The scene is grim: piles of trash, barbed wire, children wailing, rows of cheap summer tents with entire families crammed inside and fights regularly breaking out on the camp’s periphery. The stench is overwhelming.

I have visited many refugee camps in the Middle East, but never have I seen anything like Moria, a place Pope Francis has likened to a concentration camp. I have also never understood the true meaning of Christmas — a story in which Jesus was born into a family that became refugees — until I visited the people who are now forced to call it home. ...

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December 25, 2017 in Legal Education, Tax | Permalink | Comments (0)

In Hoc Anno Domini

The Wall Street Journal has published this wonderful editorial each Christmas since 1949, In Hoc Anno Domini:

When Saul of Tarsus set out on his journey to Damascus the whole of the known world lay in bondage. There was one state, and it was Rome. There was one master for it all, and he was Tiberius Caesar.

Everywhere there was civil order, for the arm of the Roman law was long. Everywhere there was stability, in government and in society, for the centurions saw that it was so.

But everywhere there was something else, too. There was oppression -- for those who were not the friends of Tiberius Caesar. There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or to fill the hungry treasury from which divine Caesar gave largess to the people. There was the impressor to find recruits for the circuses. There were executioners to quiet those whom the Emperor proscribed. What was a man for but to serve Caesar?

There was the persecution of men who dared think differently, who heard strange voices or read strange manuscripts. There was enslavement of men whose tribes came not from Rome, disdain for those who did not have the familiar visage. And most of all, there was everywhere a contempt for human life. What, to the strong, was one man more or less in a crowded world?

Then, of a sudden, there was a light in the world, and a man from Galilee saying, Render unto Caesar the things which are Caesar's and unto God the things that are God's.

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December 25, 2017 in Legal Education, Tax | Permalink | Comments (0)

Sunday, December 24, 2017

'Twas The Night Before Christmas (Legal Edition)

Twas 6

Check out the original and legal versions of the classic poem, 'Twas the Night Before Christmas [click on chart to enlarge]:

Twas_the_night_before_christmas_pag

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December 24, 2017 in Legal Education, Tax | Permalink | Comments (0)

The Top Five New Tax Papers

SSRN LogoThis week's list of the Top 5 Recent Tax Paper Downloads is the same as last week's list. The #1 paper is already #1 (by over 25,000 downloads) among 13,266 tax papers in all-time downloads:

  1. [37,967 Downloads]  The Games They Will Play: Tax Games, Roadblocks, and Glitches Under the New Legislation, by Ari Glogower (Ohio State), David Kamin (NYU), Rebecca Kysar (Brooklyn) & Darien Shanske (UC-Davis) et al.
  2. [477 Downloads]  The Senate Introduced a Pragmatic and Geopolitically Savvy Inbound Base Erosion Rule, by Itai Grinberg (Georgetown)
  3. [443 Downloads]  Tax Reform: Process Failures, Loopholes and Wealth Windfalls , by Stephen Shay (Harvard)
  4. [290 Downloads]  Once More, with Feeling: The 'Tax Cuts and Jobs' Act and the Original Intent of Subpart F, by Reuven Avi-Yonah (Michigan) & Nir Fishbien (S.J.D. 2018, Michigan)
  5. [191 Downloads]  Heading Off a Cliff?, by Michael Graetz (Columbia)

December 24, 2017 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, December 23, 2017

This Week's Ten Most Popular TaxProf Blog Posts

The New Tax Law Is 'Manna From Heaven' For Tax Lawyers, Especially Young Tax Lawyers

Law 360, Tax Bill Like ‘Manna From Heaven’ For Work-Hungry Firms
National Law Journal, Brew a Pot of Coffee, This Big Law Tax Attorney Is Burning the Midnight Oil:

[T]ax attorneys have already been hard at work ever since the bill started down the fast track in Congress, according to corporate tax lawyer David Miller, a partner at Proskauer Rose in New York. ... We asked Miller about how the tax bill has already impacted his work life, and the legal business that tax lawyers expect to see once Congress passes the new law. ...

On a scale of one to five, with five being the busiest, what’s your prediction for your practice next year?
For me and tax lawyers generally, definitely a five. The tax bill represents the most significant change in the federal tax laws in the last 30 years, and businesses will seek advice on how to restructure to take advantage of the new regime, and help implement the changes. ...

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December 23, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Friday, December 22, 2017

Weekly SSRN Tax Article Review And Roundup: Glogower Reviews Hasen's The Tax Treatment Of Gifts

This week, Ari Glogower (Ohio State) reviews a new work by David Hasen (Florida), How Should Gifts Be Treated Under the Federal Income Tax?, 2018 Mich. St. L. Rev. __ (forthcoming). 

Glogower (2016)David Hasen’s new work revisits the question of how gifts should be treated under the income tax.  His essential point:  It depends.

Consider the simple case of donor A making a gift to donee B. There are three plausible treatments under the income tax: (1) single donor tax (no deduction to A and B excludes), which is the treatment under current law, (2) single donee tax (A deducts and B includes), and (3) double tax (no deduction to A and B includes). 

How is one to choose? Hasen argues that there is no clear answer, because there is no clear normative definition of income that would suggest one answer or another. Rather, the income definition, and its implication for the proper taxation of gifts, will depend upon one’s normative views on the purpose and shape of the tax system.

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December 22, 2017 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Tax Policy In The Trump Administration

Tax (And Other) Profs:

Other:

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December 22, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (0)

The Farmer, The Pickup, And The Elephant: A Post-Modern Fable

Once upon a time in West Texas there lived a farmer. In addition to raising crops, he kept a collection of interesting animals as a hobby. Always keen to make some money, however, he used the output of the animals for compost and sold the excess to surrounding farms. More about that below the fold. But first I need to tell you about the farmer’s pickup truck, “Iris.”

The farmer’s dad had bought a fine Ford F250 in the early 2000’s. His dad was very fond of the truck and called it “Iris.” But the farmer did not like Iris and so he used it exclusively to haul the animal product to market. Of course that meant Iris stank. The stink offended people, who thought Iris was to blame for payload the farmer asked Iris to carry.

When the farmer took over farming operations from his dad in 2008 he began neglecting Iris by not putting in the money to make needed upkeep and repairs. For example, he used a really cheap motor oil because he liked its name “Liberty,” and he liked the pennies he saved. But that oil actually did the exact opposite of what oils are supposed to do: it exacerbated the wear on the engine Then the farmer started using an even cheaper lubricant: chicken grease. When the once proud 5.2L Voodoo V8 engine failed, the farmer replaced it with an 4-cylinder engine taken from a Ford Fiesta, ‘cause that was cheap. More pennies saved! As parts failed, Iris became increasingly unreliable.  Still, the farmer kept relying on Iris to carry the load for him.

And now, for the Elephant part, below the fold.

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December 22, 2017 in Bryan Camp, IRS News, Tax, Tax Policy in the Trump Administration, Tax Practice And Procedure | Permalink | Comments (3)

Mazur: Taxing Social Impact Bonds

SIBOrly Mazur (SMU), Taxing Social Impact Bonds, 20 Fla. Tax Rev. 431 (2017):

An exciting new way to fund social services has recently emerged. This new financing mechanism, called a social impact bond (SIB), has the potential to help us tackle some of our nation’s most challenging social problems. Broadly speaking, a SIB is a type of “pay for success” contract where private investors provide the upfront capital to finance a social program, but only recoup their investment and realize returns if the program is successful. Like any new financing instrument, SIBs create numerous regulatory challenges that have not yet been addressed. One unresolved issue is the tax implications of a SIB investment. This Article argues that the current law allows for multiple possible characterizations of the SIB arrangement for tax purposes.

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December 22, 2017 in Scholarship, Tax | Permalink | Comments (0)

Thursday, December 21, 2017

The Tax Bill Will Not Help The GOP In 2018

FiveThirtyEight, Will Passing The Tax Bill Help The GOP In 2018? Probably Not.:

President Trump’s first year has been marked by an almost complete lack of major policy wins. But that could come to an end this week. [The tax bill] would be the first major legislative victory for Trump and the Republicans. And it would accomplish a long-held GOP goal: cutting the corporate tax rate.

But policy wins and political wins don’t always go hand in hand. Republicans who believe that failing to pass this tax bill will be a disaster for them in the 2018 midterm elections, like Trump and Sen. Lindsey Graham, are likely to be disappointed.

This tax bill remains historically unpopular. According to an average of nine surveys taken this month, 33 percent of Americans are in favor of it, and 52 percent are opposed. That -19 percentage point split between support and opposition makes it the least popular major tax bill since at least the Ronald Reagan tax cuts in 1981.

538

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December 21, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (4)

Kahn & Kahn: The Fallacious Objections To The Tax Treatment Of Carried Interest

Florida Tax Review  (2015)Douglas A. Kahn (Michigan) & Jeffrey H. Kahn (Florida State), The Fallacious Objections to the Tax Treatment of Carried Interest, 20 Fla. Tax Rev. 319 (2017):

Carried interest is the term used to describe a profits interest in a partnership that invests in entities. A managing partner typically will receive a 20% profits interest in exchange for managing the investments of the partnership. The complaint against the treatment of carried interest is aimed at the characterization of the managing partner's share of the partnership's subsequent capital gains. The contention is that since the managing partner receives her share of the partnership's income for services performed, she should be taxed at ordinary income tax rates rather than the preferentially lower capital gains rate.

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December 21, 2017 in Scholarship, Tax | Permalink | Comments (0)

AT&T's Tax Cut Bonus Isn't Just A Gimmick

AT&T LogoBloomberg View:  AT&T's Tax Cut Bonus Isn't Just a Gimmick, by Justin Fox:

Yes, AT&T chief executive Randall Stephenson's announcement that his company will be paying out $1,000 bonuses to 200,000 workers in the wake of the passage of a big corporate tax cut is probably to some extent a lobbying ploy. AT&T, as many, many people have noted this afternoon, has a giant acquisition (of Time Warner) currently being held up by antitrust regulators. It has every reason, then, to want to curry favor with the man for whom the tax bill represents a first major legislative victory, President Donald Trump.

But Stephenson's move is also a simple representation of what a lot of economists think is the natural result of a cut in corporate taxes. Corporations themselves don't ultimately pay taxes.

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December 21, 2017 in Tax, Tax Policy in the Trump Administration | Permalink | Comments (3)

Treating College Athletes As Employees And The Tax Implications Of Their Scholarships

Marc Edelman (CUNY), From Student-Athletes to Employee-Athletes: Why a 'Pay for Play' Model of College Sports Would Not Necessarily Make Educational Scholarships Taxable, 58 B.C. L. Rev. 1137 (2017):

In recent years, numerous commentators have called for the National Collegiate Athletic Association (“NCAA”) to relax its rules prohibiting athlete pay. This movement to allow athletes to share in the revenues of college sports arises from the belief that college athletes sacrifice too much time, personal autonomy, and physical health to justify their lack of pay. It further criticizes the NCAA’s “no pay” rules for keeping the revenues derived from college sports “in the hands of a select few administrators, athletic directors, and coaches.” Nevertheless, opponents of “pay for play” contend that several problems will emerge from lifting the NCAA’s “no pay” rules. One problem, opponents argue, is that granting college athletes the legal status of “employees” would convert the athletes’ tax-exempt scholarships into taxable income—a result that may offset any economic benefits of “pay for play.” Their argument, however, is not necessarily accurate. This article discusses the economic and legal landscape of big-time college sports, and introduces the fallacious legal argument that “pay for play” would saddle college athletes with substantial tax liability related to their educational scholarships.

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December 21, 2017 in Scholarship, Tax | Permalink | Comments (1)

Wednesday, December 20, 2017

Lawsky: A Logic For Statutes

Florida Tax Review  (2015)Sarah B. Lawsky (Northwestern), A Logic for Statutes, 20 Fla. Tax Rev. ___ (2018):

Case-based reasoning is, without question, a puzzle. When students are taught to “think like lawyers” in their first year of law school, they are taught case-based common-law reasoning. Books on legal reasoning are devoted almost entirely to the topic. How do courts reason from one case to the next? Is case-based reasoning reasoning from analogy? How should case-based reasoning be modeled? How can it be justified?

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December 20, 2017 in Scholarship, Tax | Permalink | Comments (3)

Afield: Compromising Student Loans

W. Edward Afield (Georgia State), Compromising Student Loans, 69 S.C. L. Rev. 81 (2017):

Access to higher education is on the road to becoming a public crisis as it increasingly becomes unaffordable. Given the decline in public funding for universities, other forms of public investment designed to make higher education more affordable, such as income based repayment programs, are becoming increasingly important. The income based repayment programs currently in place do not properly allocate benefits, however, and they also produce unnecessary economic distortions because these programs do not consider all of the relevant variables that establish a borrower’s true ability to repay the loan.

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December 20, 2017 in Scholarship, Tax | Permalink | Comments (4)