TaxProf Blog

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

Friday, January 25, 2008

Senate Asks Why Colleges Earn 17.6% on Endowments But Spend Only 4.6% on Students

20080125_endow__2The Senate Finance Committee yesterday sent a letter to the 136 U.S. colleges and universities with endowments of $500 million or more, requesting the schools to respond within thirty days to more than fifty questions dealing with finances and tuition.  From the press release:

Federal law requires most private foundations to pay out 5% of their assets each year toward their charitable purpose. No such requirement exists for university endowments. Donations to universities are tax-exempt, and endowment funds are tax-exempt. A Finance Committee hearing last September explored endowment growth. Since then, three colleges – Harvard, Yale, and Dartmouth – have announced increased student aid.

A new study from the National Association of College and University Business Officers (NACUBO) released today shows double-digit endowment growth at hundreds of colleges over the past year. According to the study, 136 colleges in the United States now have endowments of $500 million or more.

My school -- the University of Cincinnati -- ranked 63rd out of 785 colleges and universities with a $1.2 billion endowment.

Press and blogosphere coverage:

January 25, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

Tax in the First Year

From a survey on the TaxProf Discussion List:  here are the law schools that offer income tax in the first year, as either a required or elective course:

  • Arizona State (elective)
  • Connecticut (elective)
  • Iowa (elective)
  • NYU (elective)
  • Northwestern (elective)
  • Rutgers-Newark (elective)
  • Temple (elective)
  • UC-Hastings (elective)
  • Virginia (elective)

If I have missed any schools that offer tax in the first year, please respond in the comments and I will publish an updated, corrected list.

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January 25, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

Details of Tax Cuts in Economic Stimulus Plan

President Bush and House leaders agreed yesterday on $146.3 billion in tax cuts intended to stimulate the economy. More than $100 billion is in the form of tax rebate checks of up to $600 for individuals or $1,200 for couples, and the remainder of the tax cuts are aimed at encouraging businesses to increase their investments in new equipment by the end of 2008.  Here are some details from the White House Fact Sheet:

  • The agreement reached today would allow Americans to keep more of their money to stimulate consumer spending. The growth plan provides approximately $100 billion in temporary relief that will allow Americans to keep or spend more of their incomes. Under the agreement:
    • In 2008, taxes would be cut from 10 percent to zero percent on the first $6,000 dollars of taxable income for individual taxpayers and the first $12,000 of taxable income for couples. Taxpayers could receive rebates of up to $600 for individuals and $1,200 for couples. A minimum of $300 per person and $600 per couple would be available to those with at least $3,000 of earned income. This relief would be available to everyone with adjusted gross income less than $75,000 for singles and $150,000 for married couples filing jointly. It will be phased out for taxpayers above those income thresholds.
    • Everyone eligible for this relief would also receive an additional $300 per child. For example, this would mean up to $1,800 of tax relief for an eligible couple with two children.
  • The agreement would also offer incentives to spur business investment. The agreement would save businesses approximately $50 billion in near-term taxes through a temporary change to the tax code that will allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. This will encourage businesses to expand and create new jobs now because buying equipment, software, and tangible property this year will dramatically lower their taxes. The agreement also increases expensing for small businesses.

Press and blogosphere coverage:

January 25, 2008 in News | Permalink | Comments (7) | TrackBack (0)

Henderson on Benchmarking Law School Performance: Why Law Professors and Deans Should Care

Bill Henderson (Indiana) has a detailed, thoughful post on Benchmarking Law School Performance: Why Law Professors and Deans Should Care:

For those law faculty who would dismiss such detailed market intel in favor of their own vision of a great law school, typically without any empirical data to assess your progress, that path is fraught with problems. As the price of legal education rises faster than the earning power of most law school graduates, law school applicants are declining. Further, we can expect those students who do apply to be more discriminating consumers. ...

Legal education is not about turning a profit or maximizing prestige--to my mind, it is about educating highly competent, ethical lawyers who carry forward the highest ideals of the profession. So, as a moral imperative, this information needs to be shared.

Update:  Louisville Dean Jim Chen praises Bill's post here.

January 25, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

Thursday, January 24, 2008

"Cuddly" Law Firms

Interesting article in the New York Times:  Who’s Cuddly Now? Law Firms, by Lisa Belkin:

Inthe last two decades, as working schedules became flexible, and even accounting firms, of all places, embraced the mantra of work-life balance (at least on paper), there was one unbending, tradition-bound profession: the law.

That is why it is so remarkable to watch the legal world racing — metaphorical black robes flapping — to catch up.

Over the last few years and, most strikingly, the last few months, law firms have been forced to rethink longstanding ways of doing business, if they are to remain fully competitive.

As chronicled by my colleague Alex Williams in the Sunday Styles section earlier this month [blogged here], lawyers are overworked, depressed and leaving.

Less obvious, but potentially more dramatic, are the signs that their firms are finally becoming serious about slowing the stampede for the door. So far the change — which includes taking fresh looks at the billable hour, schedules and partnership tracks — is mostly at the smaller firms. But even some of the larger, more hidebound employers are taking notice.

For more, see the Wall Street Journal's Law Blog: The Legal Profession: Is There Something Happening Here?

January 24, 2008 in News | Permalink | Comments (1) | TrackBack (0)

Halperin Presents Deferred Compensation Revisited Today at NYU

Daniel I. Halperin (Harvard) presents Deferred Compensation Revisited at NYU today as part of its Colloquium Series on Tax Policy and Public Finance.  Here is the abstract:

The tax rules governing deferred compensation, codified at section 409A, are harsh and complex. The rules are focused on the least important policy considerations and overlook the most important. Professors Halperin and Yale suggest a different approach, one that would make the law simpler, fairer, and more effective.

The co-convenors are Daniel Shaviro (NYU) & Kevin Hassett (American Enterprise Institute).

January 24, 2008 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Schenk Presents The Political Economy of Tax Reform: The Case for Retaining the AMT Today at BC

Deborah H. Schenk (NYU) presents The Political Economy of Tax Reform:  The Case for Retaining the AMT at Boston College today as part of its Tax Policy Workshop Series. Here is the part of the Introduction:

Three significant issues in tax and fiscal policy have been running on parallel tracks for the last decade, engendering their own debate, largely in isolation. Talk of fundamental tax reform rarely leaves the national rhetorical agenda, particularly during election years. Concerns about the burgeoning costs of entitlement programs, especially Medicare, Medicaid and Social Security, are voiced frequently, often accompanying the release of gloomy long-term fiscal projections. The alternative minimum tax is everyone’s favorite punching bag, widely reviled as a major tax policy mistake. Yet, seldom are connections drawn between the three issues. This paper fills that gap.

January 24, 2008 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Avi-Yonah Presents A Proposal to Adopt Formulary Apportionment for Corporate Income Taxation Today at Northwestern

Reuven Avi-Yonah (Michigan) presents A Proposal to Adopt Formulary Apportionment for Corporate Income Taxation (with Kimberly A. Clausing, Wellesley College, Department of Economics) at Northwestern today as part of its Advanced Topics in Taxation Series organized by Charlotte Crane.  Here is the abstract:

The current system of taxing the income of multinational firms in the United States is flawed across multiple dimensions. The system provides an artificial tax incentive to earn income in low-tax countries, rewards aggressive tax planning, and is not compatible with any common metrics of efficiency. The U.S. system is also notoriously complex; observers are nearly unanimous in lamenting the heavy compliance burdens and the impracticality of coherent enforcement. Further, despite a corporate tax rate one standard deviation above that of other OECD countries, the U.S. corporate tax system raises relatively little revenue, due in part to the shifting of income outside the U.S. tax base.

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January 24, 2008 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Fleming Presents Some Perspectives from America on the Worldwide Taxation vs. Territorial Taxation Debate Today in Australia

J. Clifton Fleming, Jr. (BYU) presents Some Perspectives from America on the Worldwide Taxation vs. Territorial Taxation Debate (with Robert J. Peroni (Texas) and Stephen E. Shay (Ropes & Gray, Boston)) at the 20th Annual Australasian Tax Teachers Association Conference on Tax:  The Devil's in the Details today in Hobart, Australia.  Here is the abstract:

Because of political gridlock and lack of enthusiasm by the business community, the prospects of the United States moving from its hybrid worldwide system for taxing income to an explicit territorial (exemption) system are not good. Nevertheless, in the United States, the subject of worldwide taxation v. territorial taxation has recently generated two high-level government proposals and a lively academic and political debate. In this paper, my co-authors and I attempt to share the outlines of this controversy with our Australasian colleagues while arguing the merits. We concede that a well-designed exemption system is superior to the badly-flawed worldwide system currently operated by the U.S. We argue, however, that the proper way to frame the debate is to ask whether an exemption system is superior to a worldwide system where both are well-designed. We conclude that when the debate is so framed, efficiency and fairness concerns indicate that the prize should be awarded to worldwide taxation. We critique the competitiveness rationale that serves as the principal justification for exemption systems and find it wanting. We also critique the ownership neutrality defense of territorial taxation that has been recently developed in the United States by Professors Desai and Hines. We conclude that this defense is simply a slightly tweaked version of the competitiveness rationale and shares its flaws.

For a list of speakers and their topics, including abstracts of their papers, see here

January 24, 2008 in Conferences | Permalink | Comments (0) | TrackBack (0)

Odds Posted on Outcome of Wesley Snipes Tax Fraud Trial; Counsel Spar Over Whether His Tax Views Are "Crazy or Criminal"

Wesleysnipes_2Odds have been posted on the outcome of the Wesley Snipes tax fraud trial:

Will Wesley Snipes be convicted of tax fraud?

YES – 1/10
NO – 3/1

Wesley Snipes' tax fraud sentence will be:

Convicted 1 to 5 years – 1/3
Convicted 5 to 10 years – 7/4
Convicted 10 to 16 years – 10/1
Not convicted – 5/1

In this news video of the trial, counsel spar over whether Snipes' tax views are "crazy or criminal."  ShowBizSpy notes the Star-Studded List of Witnesses Revealed in Wesley Snipes’ Tax Evasion Trial:

The Blade star’s lawyers caused a stir in the Florida courtroom yesterday when they reeled off a list of 82 names including Muhammad Ali, Goldie Hawn, Spike Lee, Paul Simon, Sylvester Stallone, Tom Brokaw and Barbara Walters.

Other blogosphere and press coverage:

(Hat Tip: How Appealing.)

January 24, 2008 in New Cases | Permalink | Comments (0) | TrackBack (1)

NY Governor Proposes $200-a-Gram Tax on Cocaine

New York Times:  A $200-a-Gram Tax on Cocaine, by Sewell Chan:

Among the hundreds of proposals contained in Gov. Eliot Spitzer’s second executive budget, which he unveiled on Tuesday in Albany, is a provision that would impose a $3.50-a-gram tax on marijuana and a $200-a-gram tax on other illegal drugs, like cocaine. ...

The new Spitzer proposal would require “tax stamps” on “all marihuana and controlled substances acquired or possessed by a dealer in this state,” defined as any person who makes, buys, owns, distributes or transports drugs into or within the state.

The Spitzer administration projects that the proposal would raise $13 million in the 2008-9 fiscal year and $17 million each year thereafter. According to the Spitzer administration, 29 other states have already passed laws imposing tax liability for controlled substances: Alabama, Arizona, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Minnesota, Montana, Nebraska, Nevada, North Carolina, North Dakota, Oklahoma, Rhode Island, South Carolina, Tennessee, Texas, Utah, Wisconsin and Wyoming.

(Hat Tip: Philip Robin Cleary and Sarah Lawsky.)


January 24, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Blogs v. Peer-Review

Interesting article in the Chronicle of Higher Education:  Blog Comments and Peer Review Go Head to Head to See Which Makes a Book Better, by Jeffrey R. Young:

What if scholarly books were peer reviewed by anonymous blog comments rather than by traditional, selected peer reviewers? That's the question being posed by an unusual experiment that begins today.

It involves a scholar studying video games, a popular academic blog with the playful name Grand Text Auto, a nonprofit group designing blog tools for scholars, and MIT Press. The idea took shape when Noah Wardrip-Fruin, an assistant professor of communication at the University of California at San Diego, was talking with his editor at the press about peer reviewers for the book he was finishing [Expressive Processing: Digital Fictions, Computer Games, and Software Studies].

For more, see:

January 24, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 23, 2008

Ranking of Online Colleges

Online Education Database has released a ranking of 41 online colleges, which equally weights eight variables:

  1. Acceptance Rate
  2. Financial Aid
  3. Graduation Rate
  4. Peer Web Citations
  5. Retention Rate
  6. Scholarly Citations
  7. Student-Faculty Ratio
  8. Years Accredited

Here are the Top 25 online colleges using this methodology, along with each school's score (the sum of all of its ranks divided by the number of metrics for which data was found for that particular school):

  1. Upper Iowa University (10.813)
  2. LeTourneau University (11.960)
  3. Liberty University (12.540)
  4. Nova Southeastern University (13.323)
  5. California University of Pennsylvania (14.232)
  6. Grand Canyon University (14.709)
  7. Regent University (14.742)
  8. Champlain College (14.960)
  9. Westwood College (15.428)
  10. Tiffin University (16.700)
  11. Dickinson State University (17.111)
  12. Walden University (17.500)
  13. National University (17.758)
  14. Fisher College (19.887)
  15. Colorado Technical University (20.165)
  16. ITT Technical Institute (20.186)
  17. Kaplan University (20.418)
  18. Post University (20.467)
  19. Franklin University (20.547)
  20. Peirce College Online (20.765)
  21. Western International University (20.891)
  22. Florida Metropolitan University (21.223)
  23. Bellevue University (21.335)
  24. Capella University (21.712)
  25. University of Phoenix (22.722)

(Hat Tip: InstaPundit.)

Update:  See today's Inside Higher Ed:  We Get No Respect — Well, Maybe a Little, by Doug Lederman

A group of true believers gathered in a Congressional office building Wednesday under the auspices of the Presidents’ Forum of Excelsior College, which is made up of leaders of numerous institutions that operate mostly or exclusively online. In sessions on the great variation in how state regulators assess distance ed programs, how the news media cover online learning, and the group’s new effort to prove online institutions’ value by making public reams of data about their performance — including student outcomes at the program-specific level.

January 23, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

Senate Holds Hearing Today on Tax Rebates

The Senate Finance Committee holds the second of a two-part hearing today on Strengthening America’s Economy: Stimulus That Makes Sense.  The witnesses scheduled to testify are:

  • Martin Feldstein, Baker Professor of Economics, Harvard University; President and CEO, National Bureau of Economic Research (NBER)
  • Jason Furman, Director, The Hamilton Project

The hearing takes place at 10:00 a.m. in Room 215 of the Dirksen Senate Office Building.  In connection with the hearing, the Joint Committee on Taxation has released Overview of Past Tax Legislation Providing Fiscal Stimulus and Issues in Designing and Delivering a Cash Rebate to Individuals (JCX-4-08). For prior TaxProf Blog coverage, see:

January 23, 2008 in Congressional News | Permalink | Comments (0) | TrackBack (0)

Winners of 7th Annual ABA Law Student Tax Challenge

Congratulations to the winners of the 7th Annual ABA Law Student Tax Challenge, determined through oral and written arguments in semi-final and final competition rounds at the ABA Tax Section Midyear Meeting last week in Lake Las Vegas, NV:

J.D. Division:

  • 1st Place:  Western New England:  John LeVangie & Ryan Wyzik, coached by Frederick Royal
  • 2nd Place:  Southwestern:  John Greenwall & Charles Fairchild, coached by Mark S. Hoose
  • 3rd Place:  Tulane:  Lauren Zimmerman & Drew Harpool, coached by Stuart Lazar
  • Best Written Submission:  Temple:  Ryan Smith & Andreas Ringstad, coached by Kathy Mandelbaum
  • Semi-Finalists:
    • Florida:  Matthew Mauney & Jamie Delman, coached by Martin McMahon
    • Temple:  Ryan Smith & Andreas Ringstad, coached by Kathy Mandelbaum
    • Wisconsin:  Julie Skelton & Timothy Hamer, coached by Allison Christians

LL.M. Division:

  • 1st Place:  Northwestern:  Anne-Marie Rabago & Gary Scanlon, coached by Robert Wootton
  • 2nd Place:  Denver:  Kelly Young & Hailley Joyner, coached by Michael Walker
  • Best Written Submission:  Denver:  Cynthia Schlegel & Melissa Webber, coached by Michael Walker
  • Finalists:
    • Denver:  Julie Karavas & Michelle Jez, coached by Michael Walker
    • Denver:  Cynthia Schlegel & Melissa Webber, coached by Michael Walker

For a list of the 12 judges in the semi-final and final rounds, and the 36 law schools that participated in the competition, see here.

January 23, 2008 in ABA Tax Section, Law School, Teaching | Permalink | Comments (0) | TrackBack (0)

Hines Presents The Last Best Hope for Progressivity in Tax Today at Michigan

James R. Hines, Jr. (Michigan) presents The Last Best Hope for Progressivity in Tax (with Edward McCaffery (USC)) at Michigan today as part of its Tax Policy Workshop Series.  Here is part of the Introduction:

While tax bases and tax rates are analytically distinct, or separable, subject matters, they are linked politically, rhetorically, and economically. The choice of base affects the arguments for the degree of progression in the tax rate structure, and vice versa. As a practical matter, there are only two realistic options for tax reform, a wage or an expenditure tax. The only possible base-rate pair that features significantly enhanced progressivity over the status quo baseline is a progressive expenditure tax. Hence it appears that the only path towards greater progressivity in tax lies in the direction of a specific form of consumption tax, namely a “postpaid consumption” or (equivalently) expenditure tax. This is intended as a positive, descriptive claim about the state of tax reform today and the possibilities for its foreseeable future. The balance of the Article explains the point.

January 23, 2008 in Colloquia | Permalink | Comments (0) | TrackBack (0)

Camp on A Theory of Taxing Virtual Worlds

Bryan Camp (Texas Tech) has published The Play's the Thing: A Theory of Taxing Virtual Worlds, 59 Hastings L.J. 1 (2008).  Here is the abstract:

Taxation is shadow life. As our culture monetizes more and more life activities, the shadow grows. This article looks at the potential tax issues arising from a new life activity: online role-playing games in virtual worlds. Currently, some 12 million people regularly play such games and the number is growing. Exploring the reach of the Tax Code into virtual world transactions not only responds to the potentially practical needs of millions of U.S. taxpayers, it also permits a reevaluation of core principles of income tax as they interplay with life activities in the context of 21st century American culture.

This article's central thesis is that while player activity in virtual worlds produces measurable economic value to the player, player activity that occurs solely within the online virtual world is not gross income under the law. The article argues for a "cash out" rule. Players whose added wealth consists solely in what are defined as "units of play" should not be taxed unless and until they convert those units into cash or property that is something other than a unit of play. Conversely, when the play ceases, taxation begins. The resulting line-drawing difficulties have nothing to do with player intent nor with "fun" and "games." Instead, the issue presented is as old as the Tax Code itself: at what point does economic gain become legal gain? The new context of virtual words allows for a renewed exploration of how and why the legal concept of "income" differs, and indeed must differ, from the economic concept.

Continue reading

January 23, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

1L Grades Are In -- Should You Quit Law School?

From the New York Lawyer:

Q:  I am a first-year law student at a fourth-tier regional law school and I got my grades about a week ago. They were below average for my class, and I have been very depressed lately. ... How do I evaluate whether I should drop out of law school and do something entirely different? I really want to be a lawyer, but I don't want to do it if I'm not going to be any good at it. Any ideas?

A:  Some people are better suited to being lawyers than law students. You may be one of them.  [Ouch.]

The first year of law school presents a difficult challenge for many students. You are learning new concepts and a new way of thinking. Some students "get it" sooner than others. Sometimes it takes a semester or two, or possibly more, to figure out how to approach legal issues. In a few cases, law is not the right career choice

Consider whether you like the law, without letting your grades taint your assessment. ... Similarly, separate your grades from your comprehension of the course material. ...

Ask yourself whether you possess the skills and characteristics that lead to success in the practice of law. ...

Do not make a hasty decision to drop out of law school. Take time for self-assessment. Explore your options. Benefit from the help that is available to you.

Update:  The Wall Street Journal's law Blog has more here.

January 23, 2008 in Law School | Permalink | Comments (9) | TrackBack (0)

NY Times: Make the Tax Cuts Work

Interesting op-ed in today's New York Times:  Make the Tax Cuts Work, by Len Burman (Director, Urban-Brookings Tax Policy Center):

Since 2001, Washington’s answer to every policy question has been the same. What should we do with a big surplus? Tax cuts. How do we beat back global terrorism? Tax cuts. Increase energy independence? Rebuild New Orleans? Expand health insurance coverage? Tax cuts, tax cuts, tax cuts.

Now comes another question that becomes more pressing each day that the markets lose ground — one to which taxes have long been at least part of the answer. How do we stimulate the economy to prevent or shorten a recession? One way would be to repeal the Bush tax cuts two years early, in 2009.

January 23, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Zelenak Is Finalist for Washington Deanship

Zelenak_2Tax Prof Lawrence A. Zelenak (Duke) is one of four finalists for the University of Washington deanship.  See the official announcement and CVs of the four finalists here.

After law school, Larry worked as an associate at a Seattle law firm for four years before joining the faculty at Lewis & Clark in 1983.  He served as the Professor-in-Residence at the IRS's Office of Chief Counsel in 1990-91, and joined the North Carolina faculty in 1991 and the Columbia faculty in 2003.  He considered an offer to join the University of Washington faculty and direct its graduate tax program before joining the Duke faculty in 2003.

(Hat Tip:  Brian Leiter.)

January 23, 2008 in Law School, Tax Prof Moves | Permalink | Comments (0) | TrackBack (0)

NYU Pays $4.2m for Condo to Lure Columbia Prof

From the New York Times:  Recruiting With Real Estate, by Josh Barbanel:

Columbia University, in a never-ending search for a larger campus, has long had an outpost for faculty housing at 455 Central Park West — 53 apartments in an 26-story tower attached to the French Renaissance chateau at West 106th Street. So it was something of a surprise when a foundation associated with NYU bought a large condominium in the complex. The unit ...cost $5.2 million ...

Catherine M. Sharkey, a Columbia law professor, lived in a 2,000-square-foot two-bedroom on the second floor of the tower building.

But last June, NYU announced that it had recruited Ms. Sharkey, an expert in product liability law and empirical legal studies, from Columbia. A month later the NYU Foundation signed a contract to buy the nearly 4,000-square-foot apartment in the same complex for use by Ms. Sharkey. The property records show that the foundation spent $4.2 million two weeks ago to buy an 80 percent interest in the turreted apartment.

Ms. Sharkey and her partner, Ina Bort, who practices commercial and maternity law in New York, bought the remaining 20 percent interest in the apartment for $1.05 million, but the foundation provided them with a mortgage to cover $650,000 of their share of the purchase price for up to 30 years (unless Ms. Sharkey leaves the university before then).

(Hat Tip: Above the Law and Brian Leiter.)

January 23, 2008 in Law School | Permalink | Comments (17) | TrackBack (0)

ABA Offers Webcast Interview Today with Lee Sheppard on Current Tax Topics

The ABA is offering a live video webcast interview with Lee Sheppard (Contributing Editor, Tax Analysts) today from 3:00 - 4:40 p.m. EST on Current Tax Topics:

Meet Lee Sheppard, a Tax Analysts contributing editor for 20+ years, in this live webcast interview. Hear her distinctive voice on top tax developments, and see her express her views on both the short and long horizons. Lee Sheppard’s influential articles “have become a must-read for tax practitioners,” the New York Times wrote in its recent profile of her. Known for writing about complicated tax subjects with style, she is often among the first to discuss tax issues that get the attention of Washington lawmakers.

Whether tax planning, compliance, litigation, or the legislative process is your forte, Lee Sheppard's insight on a variety of tax topics will strike you as provocative and practical. She will speak lawyer-to-lawyer with host, Jerald David August, a nationally recognized tax lawyer and long-standing ALI member. Mr. August, past Vice-Chair (Publications), ABA Tax Section, recently served as Editor-in-Chief of The Tax Lawyer, Vols. 58 & 59, and is also a member of the Editorial Board of The Practical Tax Lawyer.

January 23, 2008 in ABA Tax Section, Conferences | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 22, 2008

Federal Circuit Affirms Classification of Product of "Caron Process" Under Tariff Schedule

Howard Bashman was kind enough to send me the Federal Circuit's decision yesterday in Metchem, Inc. v. United States, No. 2007-1138 (Fed. Cir. 1/22/08):

The subject merchandise is known commercially as basic nickel carbonate. It is obtained from the Yabulu Nickel Refinery in Queensland, Australia. MetChem, Inc. (“MetChem”) imports it into the United States and is the only known customer of the basic nickel carbonate produced at Yabulu.

The material is a product of what is known as the Caron process, a hydro-metallurgical process of refining laterite ore into nickel metal sinters. The first steps of the Caron process involve the drying and roasting of the laterite ore, followed by a leaching of the ore with an ammonia solution that dissolves around fifty percent of the cobalt in the ore. At that point, the ore has been liquefied into a solution of dissolved nickel and cobalt and is treated with hydrogen sulfide to further separate the cobalt from the nickel. The remaining nickel-containing solution is distilled to drive off ammonia and carbon dioxide. The nickel content of the material is between fifty-two and fifty-five percent.

Separated from the subject material, the majority of the chemically processed ore at the Yabulu factory continues along the Caron process. The material that remains in the Caron process is calcined, reduced, compacted, and sintered, which leads to nickel oxide sinters. Those additional processes increase the percentage of nickel in the product from around fifty-five percent at the stage in which the basic nickel carbonate is removed from the Caron process, to over ninety percent when in sinter form. The nickel oxide sinters are sold for use in the production of stainless steel and other alloys.

January 22, 2008 in New Cases | Permalink | Comments (0) | TrackBack (0)

B.U. Seeks Director of Graduate Tax Program

My friends at Boston University have asked me to post the following:

Boston University School of Law, a top tier law school (#20 in US News overall rankings; #8 in Taxation) seeks a distinguished tax lawyer to lead its esteemed Graduate Tax Program. This position is responsible for the leadership and management of all aspects of the Graduate Tax Program including strategic planning; curriculum design; faculty recruitment, leadership and evaluation; student recruitment, admission and enrollment; budget oversight; student counseling, placement and commencement; and extracurricular academic and social functions. The opening, created by the impending retirement of Ernest M. Haddad as Director of the Program, is a non-tenure track, administrative position in which teaching is a secondary but significant component.

Individuals interested in applying for the position should send a resume and cover letter by regular mail to: Graduate Tax Program Director Search Committee, Boston University School of Law – Suite 1670, 765 Commonwealth Avenue, Boston, MA 02215 Or by email.

January 22, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

Rankings of Federal District Judges

The Administrative Office of the U.S. Courts has released its annual report on Federal Judicial Caseload Statistics through March 31, 2007.  Today's Legal Times discusses the reaction to the report in New Report Identifies the Slowest Federal Judges in the Land; Semiannual Report on Pending Cases and Motions Identifies the Judges with Steep Backlogs in Cases, by Joe Palazzolo:

Last month, the Administrative Office released its semiannual report on pending cases and motions, which -- however imperfect -- is the closest thing there is to a judicial report card. The difference between a docket that moves on rails and one that drags along on gravel can come down to one mammoth case or 1,000 smaller ones, and there are no apparent penalties or rewards one way or the other. ...

The office's data, current as of March 2007, show that most dockets are somewhere in between, but 13 judges had at least 100 civil cases pending for longer than three years, and 22 judges had 50-plus motions pending for six months or more. A handful had more than 100 motions and more than 200 cases pending -- the kind of backlog that doesn't go unquestioned. ...

The backlog, according to the data, cuts across age and experience, but those with the deepest dockets, almost uniformly, say the rankings fail to account for the nuance of law. ...

Continue reading

January 22, 2008 in Gov't Reports | Permalink | Comments (0) | TrackBack (0)

Tax News Roundup

When Do Tax Profs Peak?

Non-tax, but interesting new article:  Ray C. Fair (Yale University, Department of Economics), Estimated Age Effects in Baseball, 4 J. Quantitative Analysis in Sports, art. 1 (2008).  Here is the abstract:

Age effects in baseball are estimated in this paper using a nonlinear fixed-effects regression. The sample consists of all players who have played 10 or more "full-time" years in the major leagues between 1921 and 2004. Quadratic improvement is assumed up to a peak-performance age, which is estimated, and then quadratic decline after that, where the two quadratics need not be the same. Each player has his own constant term. The results show that aging effects are larger for pitchers than for batters and larger for baseball than for track and field, running, and swimming events and for chess. There is some evidence that decline rates in baseball have decreased slightly in the more recent period, but they are still generally larger than those for the other events. There are 18 batters out of the sample of 441 whose performances in the second half of their careers noticeably exceed what the model predicts they should have been. All but 3 of these players played from 1990 on. The estimates from the fixed-effects regressions can also be used to rank players. This ranking differs from the ranking using lifetime averages because it adjusts for the different ages at which players played. It is in effect an age-adjusted ranking.

The article notes that peak performance age is 28 for batters and 26 for pitchers. The percentage rates of decline after the peak-performance age are greater for pitchers than for batters and greater for OPS than for OBP.

January 22, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Senate Holds Hearing Today on Tax Rebates

The Senate Finance Committee holds the first of a two-part hearing today on Strengthening America’s Economy: Stimulus That Makes Sense.  Peter Orszag, Director of the Congressional Budget Office, is scheduled to testify. The hearing takes place at 10:00 a.m. in Room 215 of the Dirksen Senate Office Building.

In connection with the hearing, the Joint Committee on Taxation has released Overview of Past Tax Legislation Providing Fiscal Stimulus and Issues in Designing and Delivering a Cash Rebate to Individuals (JCX-4-08).

For prior TaxProf Blog coverage, see Do Tax Rebates Work? (1/20/08).

Update:  Peter Orszag's testimony is available here.

January 22, 2008 in Congressional News | Permalink | Comments (1) | TrackBack (0)

Abrams on Taxation of Carried Interests

Howard Abrams (Emory) has posted two papers on the taxation of carried interests on SSRN:

January 22, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

B-School Guy v. Law School Guy

Check out this video, B-School Guy v. Law School Guy, spoofing the Mac v. PC TV ads:

January 22, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

Foundation Press Publishes Civil Rights Stories

Civil_rights_stories_2Foundation Press has published Civil Rights Stories, edited by Myriam Gilles (Cardozo) & Risa Goluboff (Virginia):

Like all the other volumes in the Law Stories collection, this book provides students with a three dimensional picture of the most important cases that are addressed in civil rights courses. These stories give the students and faculty members a deeper understanding of the historical and cultural background of the cases and an insight into their long term impact on the development of civil rights law.

Other titles in the Law Stories Series (for which I serve as Series Editor) are:

January 22, 2008 in Book Club | Permalink | Comments (0) | TrackBack (0)

Monday, January 21, 2008

Chronicle: Nonprofits Pay Zero Tax on Billions of Unrelated Business Income

The Chronicle of Philanthropy reviewed the Form 990s for 91 nonprofit organizations -- including Columbia, Emory, Harvard, Indiana, Johns Hopkins, MIT, Minnesota, Penn, Stanford, UC-Berkeley, USC, and Yale -- and found that the organizations reported $412.9 million of income from unrelated business activities, but 46 (51%) reported zero tax liabilities:

The finding does not mean that the nonprofit organizations have run afoul of tax laws. In fact, legal experts say charities are merely following federal tax laws on the books for years that allow them to shield much of their income from tax through exemptions that Congress has built into the tax code and to take myriad expenses as deductions for operating expenses. ... But the finding may verify longstanding concerns of the IRS that current rules on unrelated-business income tax, known as UBIT, may allow “excess flexibility” for charities in some cases when they calculate their “unrelated-business taxable income”. ...

[T]he Chronicle’s finding has some lawmakers worried that existing rules are not working to put charities and companies on a level playing field. There are also questions over whether some charities are being too aggressive in how they account for these activities to avoid taxes. Sen. Charles E. Grassley, of Iowa, the senior Republican on the Senate Finance Committee, said the information “raises a significant number of questions that need to be looked at more closely by charity boards, Congress, and the Treasury Department.”

A Taxing Matter, by Peter Panepento & Grant Williams.  Of the 45 organizations that reported a UBIT liability, five (including Emory and Stanford) accounted for 75% of the taxes paid.

January 21, 2008 in News | Permalink | Comments (2) | TrackBack (0)

Last Week's Developments in the Wesley Snipes Tax Fraud Trial

For a discussion of last week's developments in the Wesley Snipes tax fraud trial, see:

January 21, 2008 in New Cases | Permalink | Comments (0) | TrackBack (0)

Presidential Candidates Release Economic Stimulus Proposals

Rodriguez on The Market for Deans

Daniel B. Rodriguez (Texas) has posted The Market for Deans, 16 J. Contemp. Legal Issues ___ (2007), on SSRN.  Here is the abstract:

Deans are extremely important figures in the performance of American law schools in modern times. And giving the growing complexity of legal education, we can expect that the importance of law school deans and deaning will only expand in the coming years. It is especially vexing, then, that the market for deans is - and will likely continue to be - more bear than bull. Why is this and why should we care? Social science geeks beware: The methodology in this discussion paper is a loose admixture of anecdote, polemic, and preliminary data. A more complete analysis would, of course, require the careful study to which this essay only suggests.

January 21, 2008 in Law School, Scholarship | Permalink | Comments (0) | TrackBack (0)

Martin Luther King, Jr. and Tax

Mlk_2In honor of Martin Luther King, Jr. Day: reports on how some southern officials tried to use state tax laws to stop King and the nascent civil rights movement:

  • "In Alabama, ... Governor John Patterson in early 1960 directed state revenue authorities to charge Martin Luther King, Jr., with tax evasion and perjury in completing his Alabama state income tax returns. The charges against King, who had already moved his ministry from the Dexter Street Church in Montgomery to his father's church in Atlanta, specified that he had diverted money raised for the Southern Christian Leadership Conference (SCLC) into his own pockets without ever reporting it as income." Kermit L. Hall, "Lies, Lies, Lies": The Origins of New York Times Co. v. Sullivan, 9 Comm. L. & Pol'y 391, 404 (2004).
  • "The only person ever prosecuted under the Georgia income tax perjury statute was Martin Luther King." Corey R. Chivers, Desuetude, Due Process, and the Scarlet Letter Revisited, 1992 Utah L. Rev. 449, 454 n.27.

Update:  The Tax Girl adds to the story:

Continue reading

January 21, 2008 in Celebrity Tax Lore | Permalink | Comments (2) | TrackBack (0)

Burke on Illusory DROs: At-Risk Lessons from Hubert

Karen C. Burke (San Diego) has posted Illusory DROs: At-Risk Lessons from Hubert, 118 Tax Notes ___ (Jan. 21, 2008), on SSRN.  Here is the abstract:

The Sixth Circuit [Nos. 05-2616, 05-2617, 05-2619 (6th Cir. Apr. 27, 2007)] recently vacated the Tax Court's decision in Hubert Enterprises, Inc. v. Commissioner [125 T.C. 72 (2005)], that LLC members' deficit restoration obligations (DROs) did not give rise to amounts at risk under section 465. In Hubert, the LLC members did not guarantee or directly assume any portion of the entity's recourse liabilities. Thus, the case raises an issue of first impression concerning whether LLC members should be treated as at risk for a liability that is recourse to the entity under section 1001 but, absent a DRO or similar arrangement, nonrecourse to the members under section 752. Professor Burke argues that the economic-risk-of-loss (EROL) analysis under the section 752 regulations provides the appropriate framework for determining whether the LLC members were "payors of last resort" for purposes of section 465, the standard articulated by the Sixth Circuit. The article also addresses the broader problem of integrating the EROL and at-risk rules in the event the Tax Court determines, on remand, that the DROs imposed an unconditional obligation to repay the LLC's recourse liabilities. As Hubert illustrates, guidance concerning the relationship between the EROL and at-risk rules is long overdue.

See also Richard M. Lipton, At Risk Rules and DROs: Did the Tax Court Err in Hubert Enterpises, 103 J. Tax'n 325 (Dec. 2005).

January 21, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Sunday, January 20, 2008

Video: DePaul University College of Law

More on Should Non-Elite Law Schools Eschew Interdisciplinary Legal Scholarship?

Update on Friday's post:  Should Non-Elite Law Schools Eschew Interdisciplinary Legal Scholarship? Brian Tamanaha's original post, Why the Interdisciplinary Movement in Legal Academia Might be a Bad Idea (For Most Law Schools), sparked a flurry of responses in the law prof blogosphere:

Brian Tamanaha responds in Is There an Impending Crisis in Non-Elite Law Schools?, which in turn generated more debate:

January 20, 2008 in Law School | Permalink | Comments (0) | TrackBack (0)

TaxProf Blog Weekend Roundup

Top 5 Tax Paper Downloads

Harv. L. Rev.: Taxing Private Equity Carried Interest as an ISO

The current issue of the Harvard Law Review includes this note:  Taxing Private Equity Carried Interest Using an Incentive Stock Option Analogy, 121 Harv. L. Rev. 846 (2008).  Here is part of the Introduction:

Rarely does an idea that germinates in a law review article catch the attention of Congress. Even more rarely does such an idea inspire policy statements by presidential candidates. Recently, however, an idea that originated in Professor Victor Fleischer’s forthcoming article, Two and Twenty: Taxing Partnership Profits in Private Equity Funds, has done both. The issue to which it relates is the taxation of the so-called “carried interest” that private equity professionals earn from their funds’ investments. ...

Led by Professor Fleischer, tax scholars, former policymakers,8 legislators,9 and even some business executives have argued that carried interest is, in substance, compensation for labor and should be taxed as such. They have accordingly called for tax law reforms that would, at least in some instances, raise the rate of tax that private equity partners pay on their carried interest. Opponents — principally private equity partners and those who represent them — argue that these reforms would create inequity, encourage investors to expatriate their capital, or otherwise harm the economy. The issue has even become a talking point for 2008 presidential hopefuls. No politically viable resolution of the issue has yet emerged, however. This Note seeks to offer one — one that is both moderate and rooted in existing tax code paradigms.

Continue reading

January 20, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

Do Tax Rebates Work?

January 20, 2008 in News | Permalink | Comments (0) | TrackBack (0)

CTJ Publishes Tax Justice Digest

Citizens for Tax Justice has published its weekly Tax Justice Digest with a number of interesting pieces on:

  • Who's Rich? New CTJ Paper Analyzes Presidential Candidates' Definitions of "Rich"
  • Congress and the White House Eyeing Stimulus Package
  • Stimulus Must Go Towards Those Who Need It -- Or Else Congress Shouldn't Even Bother
  • Giuliani and McCain Release Tax Plans
  • State of the States Roundup

January 20, 2008 in Think Tank Reports | Permalink | Comments (0) | TrackBack (0)

Do Tax Cuts Pay for Themselves?


Q: Have tax cuts always resulted in higher tax revenues and more economic growth as many tax cut proponents claim?

A: No. In fact, economists say tax cuts do not spark enough growth to pay for themselves.

See the full explanation here.

January 20, 2008 in Think Tank Reports | Permalink | Comments (4) | TrackBack (0)

Saturday, January 19, 2008

Presidential Candidates' Tax Matrix

Americans for Tax Reform has released a one-page Presidential Candidates' Tax Matrix.  From the press release:

The Presidential Tax Matrix tells voters whether the various candidates have indicated in writing that they affirmatively support each pro-growth tax policy. The categories are:

  • Taxpayer Protection Pledge
  • Bush Income and Investment Tax Cuts Permanent
  • Permanent Death Tax Repeal
  • Repeal the AMT
  • Alternative System
  • New Capital Gains Tax Cut
  • Corporate Income Tax Rate Cut
  • Tax-Free Savings Accounts
  • Full Business Expensing
  • Territoriality
  • Health Care Tax Reform

January 19, 2008 in Political News | Permalink | Comments (0) | TrackBack (0)

China Blocks Access to TaxProf Blog

Ann_muprhy_3Tax Prof Ann Murphy (Gonzaga), in China on a Fulbright Scholarship, reports that the government has decided to block all access to TaxProf Blog:

I had hoped it would not happen, but the Chinese government has decided to block your [blog]. I am so bummed!! I'm hoping it's a temporary thing. I still get your emails, but can't access the site. They block a lot of blogs, so I'm actually surprised it's taken this long to happen.

(Ann is to the left in the picture taken at the Great Wall (to the right is Ann's Gonzaga colleague, Mary Pat Treuthart). See here and for a discussion of the problem.

Update:  Jack Balkin notes that some other law prof blogs (e.g., Althouse, Balkinization, Chicago Faculty Blog, Conglomerate, and Leiter Law School reports) are also banned in China, but that others (e.g., Becker-Posner, BlackProf, Business Associations, Concurring Opinions, Election Law, Feminist Law Professors, How Appealing, InstaPundit, Lessig, Mirror of Justice, PrawfsBlawg, SCOTUSBlog, and Volokh Conspiracy) are not.

January 19, 2008 in About This Blog | Permalink | Comments (2) | TrackBack (0)

Brennan & Okamoto on Measuring the Tax Subsidy in Private Equity and Hedge Fund Compensation

Thomas J. Brennan (Drexel) & Karl S. Okamoto (Drexel) have posted Measuring the Tax Subsidy in Private Equity and Hedge Fund Compensation on SSRN.  Here is the abstract:

A debate is raging over the taxation of private equity and hedge fund managers. This paper offers a new analysis of the subject. We provide an analytical model to measure the relative subsidies being offered by current tax law to private equity and hedge fund managers. We look to relative subsidies because of our goal of answering the simple question of whether or not current tax law favors the services of a private equity fund or hedge fund manager over those of other workers. Our conclusions are that tax law does provide a meaningful incentive for workers to pursue careers as hedge fund and private equity fund managers, relative to careers as corporate managers, entrepreneurs and ordinary wage earners. After taking into account the differing risk/return profiles and the differing knock out risks of each compensation type we examine, we find that an elimination of the preferential tax rate for private equity manager's carried interest is required in order to achieve parity between private equity fund managers and other workers. Indeed, under our base case model, a tax rate of 51% would be required to achieve parity. This same analysis would require a tax rate of 61% (74% more than the rate for ordinary wage earners) in order to achieve the same parity for hedge fund managers. This analysis is important for two reasons. It provides a perspective on the current issue that has so far been ignored. It answers the question of how taxation affects behavior in the market for allocating human capital. It also provides quantitative precision to the current debate which relies significantly on loosely drawn analogies between fund managers on the one hand and entrepreneurs and corporate executives on the other. This paper provides the mathematics that these comparisons imply.

January 19, 2008 in Scholarship | Permalink | Comments (0) | TrackBack (0)

50 Tax Tips for Freelancers

Helpful piece on Bootstrapper:  50 Tools and Resources for Freelancers During Tax Season, by Jessica Hupp:

Freelancers have a lot to worry about when it comes to taxes. Just thinking about estimated payments, deductions, and extra forms is enough to make your head spin. Oh, and did we mention that freelancers are some of the most often audited taxpayers? Let this collection of advice, tools, and resources ease your stress and get you on the right track for this year’s tax season.

January 19, 2008 in News | Permalink | Comments (0) | TrackBack (0)

Friday, January 18, 2008

McMillan Presents The Canadian Taxation of Noncharitable Nonprofits Today at Stetson

Lori A. McMillan (Washburn) presents The Canadian Taxation of Noncharitable Nonprofits, and the IKEA Connection at Stetson today as part of its Faculty Speaker Series.  Here is the abstract:

There are three sectors to the economy, and as one of these three the nonprofit sector divides into charitable and noncharitable entities. In Canada, the entire nonprofit sector, noncharitable nonprofits included, is exempt from federal income taxation, as long as a nondistribution constraint is in place, and entities properly structure their affairs such that profit is a secondary purpose. Caselaw has broadly construed the purpose test so that commercial entities may qualify for exemption. For example, the Canadian Bar Association Insurance Corporation provides home, auto, and life insurance for lawyers, and the Tax Court has ruled that since the entity's purpose was to provide affordable insurance to lawyers and their families, the entity was able to qualify as having a non-profit motivated purpose, and therefore was tax exempt. Serious issues of fairness and distortion arise from this tax exemption, as little real difference exists between many for-profit entities and some commercial nonprofits. To illustrate the problems, an international example is uesd: the IKEA chain is an example of a commercial organization that is ultimately organized under the ownership of a tax exempt entitiy. An exemption for commercial nonprofits that does not require some sort of program delivery, or socially desired provision of goods and services, in return for tax subsidy is inefficient and wasteful, and is in serious need of rethinking. No government would openly subsidize lawyers' purchase of personal life insurance, and there is no good reason why it should do so indirectly. To this end, a test is proposed, which would limit qualification for noncharitable nonprofits with regard to exemption to those which provide a public benefit, akin to the public benefit currently required of charities. This would rationalize the common exemption for the entire sector, while allowing a continuing distinction between charities and noncharitable nonprofits. Charities would still need to have a charitable purpose, and in return, they are given the ability to issue tax receipts for donation. Making public benefit a common requirement does not conflate charitable and nonchartiable entities, but rather establishes the baseline nature of the entities in the sector seeking public support.

January 18, 2008 in Colloquia | Permalink | Comments (0) | TrackBack (0)