TaxProf Blog

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

Thursday, January 24, 2019

2018 Tax Prof Teachers Of The Year

AALS Teacher of the Year 2
Tax Profs recognized at the AALS annual meeting in New Orleans as Teachers of the Year:

January 24, 2019 in Legal Education, Teaching | Permalink | Comments (0)

Judge: Federal Courts Need A 'Rooney Rule' For Law Clerk Hiring

Following up on my previous posts:

National Law Journal op-ed: Why We Should Adopt a Rooney Rule for Law Clerks, by U.S. District Judge Vince Chhabria:

There’s debate about how successful the Rooney Rule has been. ... But the numbers seem to suggest that the rule was a good idea: Shortly after its adoption the number of minority head coaches began to rise, and it has held relatively steady since. This past season, there were eight minority head coaches, still not good, but an improvement.

When I took the bench around five years ago, I was struck by how many law clerks are white and from privileged backgrounds. This is to the detriment of the legal profession (in which people from all walks of life should have a chance to rise to the top) and the judiciary (which benefits from having people with different perspectives involved in the decision-making process). I thus adopted my own version of the Rooney Rule: I will not fill a law clerk slot until I’ve interviewed at least one minority candidate and at least one candidate from a non-“T-14” law school (since those schools tend to have more students from less-privileged backgrounds). ...

Continue reading

January 24, 2019 in Legal Education | Permalink | Comments (0)

ABA To Again Consider 75% Within 2 Years Bar Passage Accreditation Standard Opposed By Diversity Advocates, Some California Law Schools

ABA Logo (2016)Law.com, ABA to Reconsider Proposal to Tighten Bar Exam Pass Standards:

The second time could be the charm for pushing through a stronger bar pass standard for law schools.

The American Bar Association’s House of Delegates on Monday will consider a proposal to bolster the existing rule, requiring at least 75 percent of a school’s graduates to pass the bar within two years of leaving campus or risk losing accreditation. The House rejected the same proposal in February 2017 amid concern from diversity advocates who said it could imperil schools with a large percentage of minority students, especially at a time when pass rates across the country have plummeted.

Continue reading

January 24, 2019 in Legal Education | Permalink | Comments (0)

Borden: Tax Tips For Leasing Lawyers

Bradley T. Borden (Brooklyn), Basic and Non-Basic Tax Tips for Leasing Lawyers, Practical Real Estate Lawyer, Vol.35, p.48, Jan. 2019:

Leases raise numerous tax issues. Attorneys advising landlords and tenants should be aware of the general tax aspects of leases and know of more complicated tax issues that may affect leases and be prepared to introduce those issues to experts in taxation of leases. This article covers basic tax aspects of leases, including the character and timing of rental income and rent deductions; the deductibility of tenant improvements; and the consequences to the landlords and tenants of lease terminations, including leases with tenant improvements.

Continue reading

January 24, 2019 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 23, 2019

Kleiman Presents Tax Limits And Public Control Today At Pepperdine

KleimanAriel Jurow Kleiman (San Diego) presents Tax Limits and Public Control at Pepperdine today as part of our Tax Policy Workshop Series hosted by Dorothy Brown and Paul Caron:

Local governments are severely restricted in their ability to raise tax revenue, in part by state-level statutes that place caps on local tax rates and revenue. Many attribute the proliferation of these local tax limitations to entrenched antitax sentiment among U.S. taxpayers. This antitax narrative is attractive for its simplicity and explanatory power. It provides a clear mandate for those enacting tax limiting laws as well as a simple fiscal rubric for those evaluating the success of such limits—namely, lower taxes equals success. However, the explanatory power of the antitax narrative is limited. Perhaps most notably, it fails to explain why voters regularly approve tax increases, even in places with strict tax limitations. Using the lens of the 1970s Tax Revolt, this Article complicates the traditional antitax narrative surrounding tax limitations, offering evidence that voters also supported tax limits in order to increase public control and oversight of local government fiscal decisions.

Continue reading

January 23, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (1)

Kysar Presents Unravelling The Tax Treaty Today At Toronto

Kysar (2018)Rebecca Kysar (Fordham) presents Unravelling the Tax Treaty at Toronto today as part of its James Hausman Tax Law and Policy Workshop Series:

Coordination among nations over the taxation of international transactions rests on a network of some 2,000 bilateral double tax treaties. The double tax treaty is, in many ways, the roots of the international system of taxation. That system, however, is in upheaval in the face of globalization, technological advances, taxpayer abuse, and shifting political tides. In the academic literature, however, scrutiny of tax treaties is largely confined to the albeit important question of whether tax treaties are beneficial for developing countries. Surprisingly little consideration has been paid to whether developed countries, like the United States, should continue to sign tax treaties with one another, and no formal revenue or economic analyses of the treaties has been undertaken by the United States government. In fact, little evidence or theory exists to support entrance into tax treaties by the United States, and examination of investment flows indicates the treaties likely lose significant U.S. revenues. Additionally, they enable taxpayer abuse, stagnate domestic policy, and thwart reforms of the antiquated international tax system. These consequences are particularly problematic for the United States. Other nations, after all, have been able to supplement their revenues and pursue destination-based taxation through treaty-friendly VATs.

Continue reading

January 23, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Requirement That Women Constitute 40% Of Faculty Search Committees Resulted In 38% Reduction In Female Hires

Inside Higher Ed, Male Backlash Blamed for Failure of French Effort on Hiring Female Academics:

The introduction of quotas to get more women onto university recruitment committees in France has backfired and has actually led to far fewer female academics being hired, new research has revealed.

A male backlash against the equity measures is the most likely reason for the decline in female recruitment, according to analysis by Pierre Deschamps, an economist at Sciences Po, in Paris [Gender Quotas in Hiring Committees: A Boon or a Bane for Women?].

He investigated recruitment data from 455 hiring committees across three French universities in the years before and after the introduction of the requirement for recruitment committees to draw at least 40 percent of their membership from each gender.

’ modeling indicates that, had the quotas not been introduced, 38 percent more women would have been hired. “That’s enormous,” he said.

France

Continue reading

January 23, 2019 in Legal Education | Permalink | Comments (1)

2018-20 ABA Tax Section Public Service Fellows

ABA Tax Section (2017)The 2018-2020 Christine A. Brunswick Public Service Fellowship Class:

  • Anastassia Kolosova, a graduate of the University of Michigan Law School, will be working with the Accounting Aid Society, in Detroit, Michigan, to conduct outreach and education activities for specific vulnerable populations in Detroit and expand the organization’s ability to provide legal representation to low-income taxpayers.
  • Omeed Firouzi, a graduate of Villanova University Charles Widger School of Law, will be working with Philadelphia Legal Assistance to provide education and legal assistance to workers misclassified as independent contractors and conduct advocacy and awareness efforts to decrease the practice among employers in Philadelphia.

Continue reading

January 23, 2019 in ABA Tax Section, Tax | Permalink | Comments (0)

Columbia Journal Of Tax Law Publishes New Tax Matters: The Tax Treatment Of A Marijuana Business

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published a new issue of its Tax Matters feature, with short pieces responding to a specific cutting-edge tax law issue:

Section 59A of The Tax Cuts and Jobs Act of 2017 created the new Base Erosion and Anti-Avoidance Tax, which denies deductions for payment made to foreign related persons. The BEAT has created a number of issues with regards to its relationship with international treaties and obligations.

Continue reading

January 23, 2019 in Scholarship, Tax | Permalink | Comments (0)

2018 Law School Teachers Of The Year

It was great to see four of my colleagues (Trey Childress, Steve SchultzVictoria Schwartz, and Peter Wendel) recognized at the AALS Annual Meeting in New Orleans as 2018 Teachers of the Year:

AALS Teacher of the Year

January 23, 2019 in Legal Education, Teaching | Permalink | Comments (0)

Saez & Zucman: Alexandria Ocasio-Cortez's 70% Top Tax Rate Would Curtail Inequality And Save Democracy

Following up on Sunday's post, Alexandria Ocasio-Cortez's Proposed 70% Top Tax Rate:  New York Times op-ed:  Alexandria Ocasio-Cortez’s Tax Hike Idea Is Not About Soaking the Rich—It’s About Curtailing Inequality and Saving Democracy, by Emmanuel Saez (UC-Berkeley) & Gabriel Zucman (UC-Berkeley):

Alexandria Ocasio-Cortez has kick-started a much-needed debate about taxes. But the debate, so far, has been misplaced. It’s obvious that the affluent — who’ve seen their earnings boom since 1980 while their taxes fell — can contribute more to the public coffers. And given the revenue needs of the country, it is necessary.

But that’s not the fundamental reason higher top marginal income tax rates are desirable. Their root justification is not about collecting revenue. It is about regulating inequality and the market economy. It is also about safeguarding democracy against oligarchy. ...

Continue reading

January 23, 2019 in Tax | Permalink | Comments (3)

How Should Law Schools Respond To Student Failure?

Elizabeth Ruiz Frost (Oregon), Failure Begets Failure: An Examination of Failure and How Law Schools Ought to Respond, 48 Stetson L. Rev. 33 (2018):

Students, of course, fail for many reasons. Some students fail because of an external disruption, such as a family emergency, that keeps the student from completing his coursework. For those students, perhaps the most reasonable course of action is, in fact, to simply redo the course once the external disruption has been resolved. The focus of this Article, however, is on those students who fail due to lack of academic knowledge or skill.

Continue reading

January 23, 2019 in Legal Education | Permalink | Comments (0)

Tuesday, January 22, 2019

Stantcheva Presents Taxation And Innovation In The 20th Century Today At NYU

StanchevaStefanie Stantcheva (Harvard) presents Taxation and Innovation in the 20th Century (with Ufuk Akcigit (Chicago), John Grigsby (Chicago) & Tom Nicholas (Harvard)) at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:

This paper studies the effect of corporate and personal taxes on innovation in the United States over the twentieth century. We use three new datasets: a panel of the universe of inventors who patent since 1920; a dataset of the employment, location and patents of firms active in R&D since 1921; and a historical state-level corporate tax database since 1900, which we link to an existing database on state-level personal income taxes. Our analysis focuses on the impact of taxes on individual inventors and firms (the micro level) and on states over time (the macro level).

Continue reading

January 22, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Life After Tenure

ASUArizona State is hosting a conference on Tenure! Now What? on March 30:

In the legal academy, as in other disciplines, tenure is the most important goal of aspiring and junior professors. Yet we as a profession never talk about what happens after tenure. This conference seeks to fill that void. We want to initiate a conversation about life after tenure.

We have assembled an impressive group of panelists who will discuss service, scholarship, and teaching. The conference will conclude with a workshop for participants to create a personalized plan for their career. The conference is free and all are welcome.

The conference has sparked a fascinating Twitter thread #LifeAfterTenure. Participants include:

January 22, 2019 in Legal Education | Permalink | Comments (1)

Denying Tax-Exempt Status To Discriminatory Private Adoption Agencies

Allison M. Whelan (Covington & Burling, Washington D.C), Denying Tax-Exempt Status to Discriminatory Private Adoption Agencies, 8 UC Irvine L. Rev. 711 (2018):

This Article ... and argues that the established public policy at issue here is the best interests of the child, which includes the importance of ensuring that children have safe, permanent homes. In light of this established public policy, which all three branches of the federal government have recognized and support, this Article ultimately argues that, consistent with the holding in Bob Jones, private adoption agencies that refuse to facilitate adoptions by same-sex parents, thereby narrowing the pool of qualified prospective parents and reducing the number of children who are adopted, act contrary to the established public policy of acting in the best interests of the child.

Continue reading

January 22, 2019 in Scholarship, Tax | Permalink | Comments (1)

Anderson: Law School GPA Is A Much Better Predictor Of Bar Passage Than LSAT Or UGPA

Following up on my previous post, Deans, Law Profs Weigh In On The California Bar Exam:  Robert Anderson (Pepperdine), Analysis of the California Bar Examination Report, Part 2:

Today's installment presents one of the most interesting charts in the [California State Bar] report, one that everyone connected with legal education should understand. Figure 2.3, pictured below, shows the relationship between LSAT, undergraduate GPA (UGPA), first year law school GPA (FYGPA), cumulative law school GPA (LSGPA), and bar exam scores. The data is derived from a large number of California law graduates for 2013, 2016, and 2017. ...

Anderson

The first point to note is one that is fairly well known among those who study bar performance, which is that law school GPA (whether first year or cumulative) is much more predictive of bar performance than incoming predictors like UGPA or LSAT. For example, in 2013 the correlation of FYGPA to bar score was .582 and the correlation of LSGPA to bar score was .640, compared to LSAT's .424 and UGPA's .212.

Continue reading

January 22, 2019 in Legal Education | Permalink | Comments (2)

Lesson From The Shutdown: Court Budgets

CapitolClosedGraphicThe partial government shutdown has affected different courts differently.  Readers likely know that the Tax Court closed December 28th but still held trial calendars the week of January 14.  For a while the Court said that later calendars would also go forward but as the shutdown wore on the Court wore down: it has now cancelled the trial calendars for January 21, 28, and February 4th and 11th.  The Court issued its last pre-shutdown opinion on December 27th.  It has since continued issuing orders as needed for pending cases but has issued no opinions or designated orders.  

In contrast to the Tax Court, all other federal courts remained open.  The Administrative Office of the U.S. Courts (AO) administers the federal judicial branch, both the Article III judges and their Article I adjuncts, such as magistrates and bankruptcy judges.   It has made several announcements on its website about those courts' operation during the shutdown.  The current announcement says those courts will remain open through January 25th.  In addition, the other Article I courts have remained open: (1) the Court of Appeals for the Armed Forces; (2) the Court of Appeals for Veterans Claims; and (3) the Court of Federal Claims; and (4) the Court of International Trade

I was curious, particularly about why the Tax Court was closed when the other Article I courts remained open.  It turns out the reason has to do with funding.  It is not intuitive.  I share my results below the fold.  As usual, I invite those with deeper knowledge to help out by using the comment function to correct any error or to give further explanation. 

Continue reading

January 22, 2019 in Bryan Camp, Miscellaneous, News | Permalink | Comments (0)

Morrow: Noncompetes As Tax Evasion

Rebecca Morrow (Wake Forest), Noncompetes as Tax Evasion, 96 Wash. U. L. Rev. 265 (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.

Continue reading

January 22, 2019 in Scholarship | Permalink | Comments (0)

26% Of Law Students Pay Full Tuition, Down From 53% In 2011

Matt Leichter, 2017: Full-Time Law Students Paying Full Tuition *Rises* by 0.4 Percentage Points:

At the average law school not in Puerto Rico in 2017, the proportion of full-time students paying full tuition rose by 0.4 percentage points from 25.4 percent to 25.8 percent. At the median law school less than one quarter of students pay full tuition.

Leichter 1A

Continue reading

January 22, 2019 in Legal Education | Permalink | Comments (1)

TaxProf Blog Holiday Weekend Roundup

Monday, January 21, 2019

Columbia Journal Of Tax Law Publishes New Issue

Columbia Journal of Tax Law LogoThe Columbia Journal of Tax Law has published Vol. 10, No. 1:

Continue reading

January 21, 2019 in Scholarship, Tax | Permalink | Comments (0)

Spring 2019 Law Review Article Submission Guide

SubmissionsNancy Levit (UMKC) & Allen Rostron (UMKC) have updated their incredibly useful document, which contains two charts for the Spring 2019 submission season covering 202 law reviews.

The first chart (pp. 1-52) contains information gathered from the journals’ websites on:

  • Methods for submitting an article (such as by e-mail, ExpressO, regular mail, Scholastica, or Twitter)
  • Any special formatting requirements
  • How to request an expedited review
  • How to withdraw an article after it has been accepted for publication elsewhere

The second chart (pp. 53-59) contains the ranking of the law reviews and their schools under six measures:

  • U.S. News: Overall Rank
  • U.S. News: Peer Reputation Rating
  • U.S. News: Judge/Lawyer Reputation Rating
  • Washington & Lee Citation Ranking
  • Washington & Lee Impact Factor
  • Washington & Lee Combined Rating

Continue reading

January 21, 2019 in Legal Education, Scholarship | Permalink | Comments (0)

Congress Fumbles New Tax on Nick Saban's Paycheck

SabanPolitico, Congress Fumbles New Tax on Nick Saban's Paycheck:

A mistake in Republicans’ tax overhaul is allowing many state universities to escape a crackdown on highly paid executives.

Lawmakers inadvertently exempted public universities — though not private ones — from a new 21 percent tax they created on nonprofits that pay their employees more than $1 million.

Continue reading

January 21, 2019 | Permalink | Comments (2)

The Loan Repayment Assistance Programs Arms Race Among Elite Law Schools

Karen Sloan, LRAP Arms Race:

A number of elite law schools have in recent months bolstered their Loan Repayment Assistance Programs for graduates who go into public interest and government law jobs. Harvard Law School, Columbia Law School and New York University School of Law have since the summer announced improvements to their existing programs that expand coverage and options for graduates. (It’s possible that even more schools have also upped their programs without my noticing.) ...

Harvard got the LRAP party started in August when it unveiled a number of enhancements to its Low Income Protection Plan (LIPP), which also covers some low-paying private sector jobs. They include expanding coverage during temporary leaves such a parental leave and medical leave, as well as covering more transitional periods between jobs.

Continue reading

January 21, 2019 | Permalink | Comments (3)

Sunday, January 20, 2019

Muller: How U.S. News Distorts Law School Admissions

Derek Muller (Pepperdine), Solving Law School Admissions; or, How U.S. News Distorts Student Quality:

Brian Leiter has noted elsewhere that LSAT and GPA are "highly manipulable" by law schools. But I'd like to focus on a slightly different area: the distortion of student quality by the reporting of medians.

A student, after all, has both an LSAT score and a GPA. But the USNWR ranking isolates LSAT and GPA. An incoming class under USNWR, then, is no longer the composite of students; it is the composite of LSAT scores and GPAs, each independently evaluated.

At the same time, schools are still trying to accept the "best" students, and they need a metric for identifying the "best."  Each school often has an "index" formula, which combines LSAT and GPA into a single number, weighting each differently.

So there's a metric schools use to identify the "best" students, calculated by their indices; and there's a metric that USNWR uses to identify the selectivity of each institution, calculated by isolating LSAT and GPA medians. What happens when the two don't align? ...

Muller 2012

There are two "wings" blocked out in blue. The smaller wing at the top of each chart includes those with above-median GPAs and below-median LSAT scores, who appear to be accepted at a relatively high rate. The larger wing at the bottom includes those with below-median GPAs and above-median LSAT scores, who also appear to be accepted at a relatively high rate. ...

Continue reading

January 20, 2019 | Permalink | Comments (1)

Alexandria Ocasio-Cortez's Proposed 70% Top Tax Rate

FiveThirtyEight, Alexandria Ocasio-Cortez Wants To Raise Taxes On The Rich — And Americans Agree:

new poll from The Hill and Harris X found that 59 percent of registered voters supported imposing a 70 percent tax rate on every dollar over the 10 millionth a person earns in a year. (Tax rates that apply only to income over a certain threshold are called marginal tax rates.) The idea even received bipartisan support: 71 percent of Democrats, 60 percent of independents and 45 percent of Republicans said they were in favor. 

Wall Street Journal, How Wealthy Americans Like Jack Benny Avoided Paying a 70% Tax Rate:

Many top earners during the high-rate era, such as politicians Dwight Eisenhower and Ronald Reagan, entertainer Jack Benny and librettist Alan Jay Lerner, didn’t pay the top rates. In 1952, for example, when the top rate was 92%, the highest-earning 1% of taxpayers had an average rate of 32%, according to Elliot Brownlee, a tax historian and emeritus professor at the University of California, Santa Barbara. “When top tax rates were high, there was always a large gap between the stated rates and what the highest earners actually paid as a percentage of their income,” says Joel Slemrod, an economics professor at the University of Michigan.

WSJ

The Atlantic, Alexandria Ocasio-Cortez Has the Better Tax Argument:

Continue reading

January 20, 2019 in Tax | Permalink | Comments (6)

Cincinnati Hosts Nation’s First 1L Diversity Case Competition To Boost Law Firm Hiring Of Students Of Color

Cincinnati Logo (2019)Cincinnati Hosts Nation’s First, Only Law Student Diversity Case Competition:

When law firm hiring systems are overly dependent on grades and class rank, employers have a limited view of the diverse talent readily available.

Finding new ways to address the lack of diversity in the legal profession is one of the reasons Cincinnati Law and local law firm Keating Muething & Klekamp partnered to create the nation’s first and only Law Student Diversity Case Competition, to be held Jan. 18-19 at KMK’s Cincinnati headquarters.  

The competition, which brings the case model to the law school arena, is the brainchild of Mina Jones Jefferson, associate dean, chief of staff, and director of the Center for Professional Development at Cincinnati Law, and will bring together 14 teams from seven law schools.

Continue reading

January 20, 2019 in Legal Education | Permalink | Comments (3)

The Top Five New Tax Papers

SSRN Logo (2018)There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper and new papers debuting on the lit at #4 and #5:

  1. [370 Downloads]  Profit Shifting Before and After the Tax Cuts and Jobs Act, by Kimberly Clausing (Reed)
  2. [353 Downloads]  How Data Should (Not) Be Taxed, by Johannes Becker (University of Muenster), Joachim Englisch (University of Muenster) & Deborah Schanz (Ludwig Maximilian University of Munich)
  3. [230 Downloads]  The Proposed Section 163(j) Regulations, by David S, Miller, Sejin Park, Mani Kakkar & Sean Webb (Proskauer)
  4. [221 Downloads]  The Impact of Soda Taxes: Pass-through, Tax Avoidance, and Nutritional Effects, by Stephen Seiler (Stanford), Anna Tuchman (Northwestern) & Song Yao (Minnesota)
  5. [115 Downloads]  Cloudy with a Chance of Taxation, by Rifat Azam (Radzyner) & Orly Mazur (SMU) (review by Hayes Holderness (Richmond))

January 20, 2019 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Saturday, January 19, 2019

This Week's Ten Most Popular TaxProf Blog Posts

IRS Releases Final Regs On New 20% Business Tax Deduction

IR-2019-04 (Jan. 18, 2019), Treasury, IRS Issue Final Regulations, Other Guidance on New Qualified Business Income Deduction; Safe Harbor Enables Many Rental Real Estate Owners to Claim Deduction:

Today the Treasury Department and the Internal Revenue Service issued final regulations and three related pieces of guidance, implementing the new qualified business income (QBI) deduction (section 199A deduction).

The new QBI deduction, created by the 2017 Tax Cuts and Jobs Act (TCJA) allows many owners of sole proprietorships, partnerships, S corporations, trusts, or estates to deduct up to 20 percent of their qualified business income.  Eligible taxpayers can also deduct up to 20 percent of their qualified real estate investment trust (REIT) dividends and publicly traded partnership income.

Continue reading

January 19, 2019 in IRS News, Tax | Permalink | Comments (0)

Ex-Charlotte Law Students Get $2.7 Million Settlement, Despite Objectors

Charlotte Logo (2016)Following up on my previous posts (links below):  Law.com, Ex-Charlotte Law Students Get $2.7 Million Settlement, Despite Objectors:

A federal judge approved a $2.65 million class action settlement between the now-closed Charlotte School of Law and former students, over the objections of some plaintiffs who said that amount is far too low.

Judge Graham Mullen of the U.S. District Court for the Western District of North Carolina signed off on the settlement Jan. 16 following a two-day hearing, potentially ending two years of litigation over Charlotte School of Law’s slow demise.

Continue reading

January 19, 2019 in Legal Education | Permalink | Comments (1)

Ten Reasons To Prefer Tax Partnerships Over S-Corporations

Bradley T. Borden (Brooklyn), Ten Reasons to Prefer Tax Partnerships Over S-Corporations, N.Y. Bus. L.J. Vol. 22, No. 2, p 47, Winter 2018:

A fundamental choice for every business owner is the type of legal and tax entity the owner will use for the business. Because C-corporations are subject to an entity-level tax, owners of small businesses often face the choice of operating as an S-corporation or a tax partnership. To the uninitiated, the choice may appear to be trivial because both tax partnerships and S-corporations provide passthrough tax treatment (i.e., no entity-level tax). In fact, however, despite the passthrough nature of both tax partnerships and S-corporations, tax law treats them differently in many respects. This article identifies ten ways in which tax law treats the two types of tax entities differently, showing that in many situations, business owners will be better served by forming as tax partnerships. The article also identifies situations under which S-corporations provide the better tax alternative.

Continue reading

January 19, 2019 in Scholarship, Tax | Permalink | Comments (0)

Friday, January 18, 2019

Weekly SSRN Tax Article Review And Roundup: Eyal-Cohen Reviews Hemel's The State-Charity Disparity Under The 2017 Tax Law

This week, Mirit Eyal-Cohen (Alabama) reviews Daniel Hemel (Chicago), The State-Charity Disparity Under the 2017 Tax Law, 58 Wash. U. J.L. & Pol'y ___ (2019).

Mirit-Cohen (2018)This Article is especially timely in light of continuous efforts by states (recently by Connecticut, New Jersey, New York, and Oregon) to create state tax credits for charitable contributions to public education or public health. These tax credits reduce the state tax liability for Federal purposes and might be helpful in alleviating the effect of the new cap on individual state and local tax (“SALT”) deductions imposed by the Tax Cuts and Jobs Act of 2017 (and was also part of the 2016 Clinton tax proposal). While the IRS has allowed in the past such charitable contributions as deductible for Federal purposes, Treasury recently proposed regulation to reverse this trend requiring taxpayers to decrease their charitable contribution deduction by the value of SALT benefits received for their contribution, with a “de minimis” rule ignoring state tax benefits worth less than 15% of the donation.

Hemel makes a case against the disparity in the limitations on charitable contributions (up to 60% of AGI) compared to those placed on SALT payments ($10,000 cap a year).  He provides several justifications for removing such differential tax treatment. First, he points out to the fact that both public charities and state and local governments are primarily in the business of providing education, health, and social services. But more so, in Hemel’s eyes, the fundamental reasons for supporting charities such as promoting pluralism, creating positive externalities, and delivering specified knowledge, are equally if not more present in the case of state and local government organizations. SALT can be seen as simply the price of goods and services that state and local governments provide. Accordingly, from a measurement-of-income perspective, Hemel suggests that SALT should represent costs of services only up to a point, after which they constitute a reduction in consumption plus savings. Indeed, today this is encompassed somewhat in the Standard Deduction and will continue to do so with its exponential recent increase in 2018. Taking Hemel’s implicit analogy a step forward could be providing a differentiated Standard Deduction at the Federal level, adjusted for each state for its value worth of services. Ignoring issues of valuation and political brawl, this could be an efficient way to coordinate more equitably the services (measured via local taxes) of each state to their Federal deductibility. 

Continue reading

January 18, 2019 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Tax Policy In The Trump Administration

Chodorow Presents The Parsonage Exemption Today At Florida

ChodorowAdam Chodorow (Arizona State) presents The Parsonage Exemption, 51 U.C. Davis L. Rev. 849 (2018), at Florida today as part of its Tax Colloquium Series:

The parsonage exemption allows “ministers of the gospel” to exclude the value of housing benefits from income, whether received in-kind or as a cash allowance. Critics argue that the provision violates the First Amendment’s Establishment Clause, while supporters contend that it does not single religion out for a cognizable benefit. Alternately, supporters claim that it is a permissible accommodation for religion under the First Amendment’s Free Exercise Clause. This Article fills an important gap in the debate by offering a nuanced explanation of how the parsonage exemption and other housing provisions function within the tax code.

Continue reading

January 18, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Law Students Learn Best From Professors They Love (And Who Love Them)

New York Times:  Students Learn From People They Love, by David Brooks:

A few years ago, when I was teaching at Yale, I made an announcement to my class. I said that I was going to have to cancel office hours that day because I was dealing with some personal issues and a friend was coming up to help me sort through them.

I was no more specific than that, but that evening 10 or 15 students emailed me to say they were thinking of me or praying for me. For the rest of the term the tenor of that seminar was different. We were closer. That one tiny whiff of vulnerability meant that I wasn’t aloof Professor Brooks, I was just another schmo trying to get through life.

That unplanned moment illustrated for me the connection between emotional relationships and learning. We used to have this top-down notion that reason was on a teeter-totter with emotion. If you wanted to be rational and think well, you had to suppress those primitive gremlins, the emotions. Teaching consisted of dispassionately downloading knowledge into students’ brains.

Then work by cognitive scientists like Antonio Damasio showed us that emotion is not the opposite of reason; it’s essential to reason. Emotions assign value to things. If you don’t know what you want, you can’t make good decisions.

Continue reading

January 18, 2019 in Legal Education | Permalink | Comments (1)

Conservative Groups Targeted In Lois Lerner’s IRS Scandal Receive Settlement Checks

IRS Logo 2The Daily Signal, Conservative Groups Targeted in Lois Lerner’s IRS Scandal Receive Settlement Checks:

Dozens of conservative organizations are receiving late Christmas presents years after the IRS handed them a lump of coal.

The federal government in recent days has been issuing settlement checks to 100 right-of-center groups wrongfully targeted for their political beliefs under the Obama administration’s Internal Revenue Service, according to an attorney for the firm that represented plaintiffs in NorCal v. United States.

Continue reading

January 18, 2019 in IRS News, IRS Scandal, Tax | Permalink | Comments (6)

Wanted ASAP: Pioneering Women Law Profs For Oral History Project

AALS (2019)Law.com, Wanted ASAP: Pioneering Women Law Profs for Oral History Project:

With interviews completed of more than 40 women law professors who entered the legal academy in the 1960s and after, the Women in Legal Education Oral History Project is seeking additional subjects in order to capture the voices of the first true generation of women professors.

Continue reading

January 18, 2019 in Legal Education | Permalink | Comments (2)

Issues Taxing Cryptocurrency And The Policy Behind A Safe Harbor For Exchanges And Users

Stan Sater (Tulane), Issues Taxing Cryptocurrency and the Policy Behind a Safe Harbor for Exchanges and Users

The U.S. federal tax framework for virtual currency remains ambiguous. In the face of emerging technology, the IRS has taken a cautious approach using a “best guess” tax treatment until the technology is sufficiently mature. In particular, for this rapidly evolving ecosystem, a careful regulatory approach is prudent. Regulations that are hastily written have the chance of stifling innovation or force companies to seek jurisdiction elsewhere. However, legal ambiguity and uncertainty in this wait and see approach may have a negative impact on startup investment and impact individuals honestly using the technology.

Continue reading

January 18, 2019 in Scholarship, Tax | Permalink | Comments (0)

Thursday, January 17, 2019

Lawsky Presents Form As Formalization Today At Duke

Lawsky (2017)Sarah Lawsky (Northwestern) presents Form as Formalization at Duke today as part of its Tax Policy Workshop Series hosted by Lawrence Zelenak:

There are, roughly speaking, two approaches to applying computing to law, which can be thought of as a bottom up approach and a top down approach. The bottom up approach uses large amounts of data in some way—to make predictions, for example. Machine learning is one such approach; neural nets are another. This is generally seen to be the approach with the most potential, the one that leads to the “data driven future” of legal practice. The “top down” approach would derive conclusions from the law itself, after making the law legible to the computer in some way, perhaps through hand-encoding, perhaps through natural language processing or some similar approach to read the actual text of a statute or regulation.

The top-down approach, also sometimes called computational law, is generally considered to have much less potential. But even those whose dismiss computational law point to one example of success in encoding the law: TurboTax and similar tax compliance programs. Thus one finds enthusiastic references to creating “TurboTax for police complaints,”“TurboTax for copyright,” “TurboTax for immigration,” and so forth.

Continue reading

January 17, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Hayashi Presents Countercyclical Tax Bases Today At Indiana

Hayashi (2019)Andrew Hayashi (Virginia) presents Countercyclical Tax Bases at Indiana today as part of its Tax Policy Colloquium Series hosted by David Gamage:

Tax scholarship has tended to focus on the efficiency properties of different tax bases under assumptions about the macroeconomy that only sometimes hold, and has paid relatively little attention to how those bases operate in recessions. I show how different tax bases interact with household credit constraints and adjustment costs to either stabilize or aggravate economic shocks.

Continue reading

January 17, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Why The University Of Illinois Is Insuring Itself Against A Drop In Chinese Students

Illinois 2Following up on my previous post, Wall Street Journal: U.S. Grip On Higher Education Market Is Slipping; University Of Illinois Pays $424,000 For $61 Million Lloyd’s Of London Policy To Hedge Against Decline In Chinese Students:

Crain's Chicago Business, Why U of I Is Insuring Itself—Literally—Against a Drop in Chinese Students:


Way before President Donald Trump began a trade war with China last year, University of Illinois at Urbana-Champaign administrators began worrying about the school's increasing financial dependence on Chinese students.

When newly appointed College of Business Dean Jeff Brown addressed faculty for the first time in September 2015, on a range of issues, he noted the risk of having so many of the college's students come from a single country outside the U.S.—namely China. What if they stopped enrolling? Afterward, a finance professor colleague, Tim Johnson, suggested they try to hedge that exposure.

"I said, 'I'd love to, but I don't think such a market exists,' " Brown recounts. With the help of another UIUC professor and former Chicago trader, Morton Lane, they found that market, and in 2017 UIUC's Gies College of Business and its College of Engineering jointly signed a $60 million insurance policy that protects the colleges against a sudden disappearance of Chinese tuition dollars.

Continue reading

January 17, 2019 in Legal Education | Permalink | Comments (1)

Creating Interest Expense Out of Nothing at All—Policy Options to Cap Deductions to 'Real' Interest Expense

Anthony Ting (Sydney), Creating Interest Expense Out of Nothing at All—Policy Options to Cap Deductions to 'Real' Interest Expense, 5 British Tax. Rev. 589 (2018)

It is well recognised that interest deductions are often used by multinational enterprises (“MNEs”) to minimise their tax liabilities. Despite the significant effort devoted by the OECD and the participating countries in the Base Erosion Profit Shifting project, research has shown that the recommendations of Action 4 – which aimed at strengthening interest limitation regimes – are not as effective as could have been hoped for. One of the key issues with the best practice approach recommended in Action 4 is its failure to prevent interest deductions from exceeding a MNE’s net third party interest expense, or the “real” interest expense. This outcome is ironic as the OECD has repeatedly emphasised that an important objective of Action 4 was to recommend policy options to prevent interest deduction from exceeding the “real” interest expense (“the guiding policy objective”). This begs the tax policy question: what are the policy options that can achieve the guiding policy objective?

Continue reading

January 17, 2019 | Permalink | Comments (0)

Holderness: Whither Substantial Nexus?

Hayes Holderness (Richmond), Whither Substantial Nexus?:

Hailed as a massive victory for coherence in defining the state tax jurisdiction standard of “substantial nexus,” the 2018 South Dakota v. Wayfair case fundamentally altered the state and local tax jurisprudence. However, the vagueness of the decision left the substantial nexus doctrine at a crossroads: it may wither away into meaningless platitudes or solidify into a coherent standard that meaningfully protects interstate commerce from undue state tax burdens. This Article guides the substantial nexus doctrine down the latter path by developing a robust theory of substantial nexus that focuses on the potential burden of tax compliance costs and explaining the substantial nexus standard that follows from that theory.

Continue reading

January 17, 2019 in Scholarship, Tax | Permalink | Comments (0)

ABA Tax Section Midyear Meeting

ABA 3The ABA Tax Section Midyear Meeting kicks off today in New Orleans. Two highlights are:

Teaching Taxation: Tax Advice in the Age of the 24-Hour News Cycle
Recent instances of exposure by the press of aggressive tax planning and tax avoidance by prominent businesses, individuals or families raise unique substantive, ethical, and other legal issues for the tax community. Practitioners advising famous clients may need to assess not only the likelihood of future examinations, but also public disclosure due to whistleblowers, cooperators, and data leaks. Reporters investigating past tax compliance may recruit tax professionals for technical assistance and expertise to uncover suspect transactions, unreported income, or improper deductions or credits. The release of such information, and related commentary from various media outlets, may pressure Federal and state tax authorities, law enforcement officials, or regulators to open audits or investigations that could result in substantial tax adjustments and/or various civil and criminal penalties. This panel will explore these issues from a variety of perspectives.

  • Caroline Ciraolo (Kostelanetz & Fink, Washington, D.C.)
  • David Cay Johnston (DCReport.org)
  • Michael Lang (Chapman) 
  • Michael Plowgian (KPMG, Washington, D.C.)
  • Kerry Ryan (St. Louis) (Chair)
  • Lee-Ford Tritt (Florida) (moderator)

Teaching Taxation: Current Developments in Individual, Corporate, Partnership, and Estate & Gift Taxation
This session will review the most significant statutory enactments, judicial decisions, IRS rulings,
and Treasury regulations promulgated during the last twelve months that affect general income
taxation, corporate taxation, partnership taxation, wealth transfer taxation, and tax procedure.

  • Elaine Gagliardi (Montana)
  • Philip Hackney (Pittsburgh)
  • Bruce McGovern (South Texas) (moderator)

Other Tax Prof speakers include:

Continue reading

January 17, 2019 in ABA Tax Section, Conferences, Tax | Permalink | Comments (0)

More Minority Women Ascend To Law Dean Jobs

NLJNational Law Journal, More Minority Women Ascend to Law Dean Jobs:

Rutgers Law School on Jan. 2 named Kimberly Mutcherson [left] as its new co-dean. Eight days later, the University of the District of Columbia David A. Clark School of Law announced that University of Maryland law professor Renée McDonald Hutchins [right] will assume its deanship in April.

The appointment of two African-American women to law school deanships in the span of two weeks would have generated substantial attention 10 years ago. Today, it has become less of an anomaly.

The number of women leading law schools has been rising steadily, as have the number of minority deans. Perhaps nowhere has that trend been more noticeable than among the ranks of minority women law deans. At least 19 minority women are currently serving as dean or interim dean, or soon will assume deanships, according to Catherine Smith, associate dean of institutional diversity and inclusiveness at the University of Denver Sturm College of Law who has been keeping an informal tally over the past year.

Continue reading

January 17, 2019 in Legal Education | Permalink | Comments (1)

Is Texas v. U.S. Taxing for Obamacare?

Andrew L. Oringer (Hofstra), Is Texas v. U.S. Taxing for Obamacare?

We return to the land of the Fifth Circuit for a ruling by a Texas district court in Texas v. United States that the entirety of the Patient Protection and Affordable Care Act was rendered unconstitutional in its entirety by the Tax Cuts and Jobs Act of 2017. The ACA has survived two trips to the U.S. Supreme Court. Will it survive what looks to be a third?

Continue reading

January 17, 2019 in Scholarship, Tax | Permalink | Comments (0)

Wednesday, January 16, 2019

Mann Presents How Corporate Tax Rates Affect Corporate Environmental Social Responsibility Today In Australia

Mann (2018)Roberta Mann (Oregon) presents How Corporate Tax Rates Affect Corporate Environmental Social Responsibility at the Australasian Tax Teachers Association's 31st Annual Conference Tax on Innovation and Education: Tax in a Changing World (with Bill Butcher and Fiona Martin (University of New South Wales) (full conference program) today in Perth, Australia:

A growing literature has developed on the topic of enforcement crowding out altruism. This literature may apply to the idea of corporate social responsibility. If the government requires social responsibility, by imposing a carbon price or by otherwise increasing tax liabilities to pay for social goods, does that reduce the corporate social response? Similarly, would reducing regulations and corporate tax liability increase the social response?

Continue reading

January 16, 2019 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Impact Of Soda Taxes: Pass-through, Tax Avoidance, And Nutritional Effects

Stephen Seiler (Stanford), Anna Tuchman (Northwestern) & Song Yao (Minnesota), The Impact of Soda Taxes: Pass-through, Tax Avoidance, and Nutritional Effects

We analyze the impact of a tax on sweetened beverages, often referred to as a “soda tax,” using a unique data-set of prices, quantities sold and nutritional information across several thousand taxed and untaxed beverages for a large set of stores in Philadelphia and its surrounding area. We find that the tax is passed through at a rate of 75-115%, leading to a 30-40% price increase. Demand in the taxed area decreases dramatically by 42% in response to the tax.

Continue reading

January 16, 2019 in Scholarship, Tax | Permalink | Comments (1)