Paul L. Caron

Tuesday, April 26, 2022

2021 IFA International Tax Student Writing Award; Call For Entrants In 2022 Competition

The winners of the International Fiscal Association's 2021 International Tax Student Writing Competition are: 

IfaMohanad Salaimi (Michigan), Corporate Inversions: Getting on the Tax Reform Train Before It Leaves the Station, 41 Va. Tax Rev. ___ (2022) (Winner, 2021 Tannenwald Tax Writing Competition)
Faculty Sponsor:  Reuven Avi-Yonah

The Article brings a tax issue of utmost importance to the foreground. The Article addresses the corporate inversion phenomenon and why it occurred in the U.S. in the past decades.

The Article traces the history of inversions in the U.S. to highlight some of the critical lessons they provide. It also deals with the U.S. tax system’s response to this tax planning technique as reflected by the development of the anti-inversion rules which attempted to curb such phenomenon.

The Article puts forward that policy discussions on inversions should inform themselves with the history of this phenomenon and reasons that accounted for the U.S. MNEs’ decisions to expatriate over the last decades

Nory Dianne R. Miano (Georgetown), Debt vs. Equity Financing and Business Taxation in a Post-BEPS/Anti-Tax Avoidance Directive/Corona World, 51 BNA Tax Mgmt. Int’l J. 1 (2022)
Faculty Sponsor:  Stafford Smiley

Everyone wants to be rich. But, do you want to be rich in debt or rich in equity? If you are a taxpayer in the United States (“US”), let me help you decide. This paper aims to describe how tax rules regarding debt and equity financing are implemented in the US. The different treatment of debt and equity for income tax purposes is one of the primary concerns of a country’s business taxation system under domestic laws, international law and applicable treaty law, which, under current US laws and tax rules, may give preference to one type of financing over the other. In order to avoid any “debt-equity bias,” accompanying tax rules and regulations (“Reg.”) should be implemented which are geared towards improving neutrality between both forms of financing.

A corporation has two primary sources of capital: (1) investor capital and (2) borrowed capital. Differentiating for federal income tax purposes between these two types of capital has caused considerable difficulty for many years. The usual federal income tax planning approach is to treat capital as coming from borrowed sources because (1) the cost of such borrowing is a deductible expense to the borrower, and (2) that borrowed principal amount can be repaid to the lender without federal income tax consequences to the lender.

Part I of this paper gives an overview of the debt-equity bias in the US tax system. It is followed by a background of business taxation under US domestic laws in Part II. The author dives deeper in Part III and Part IV to a more detailed discussion of debt financing and equity financing, with an interplay of the relationship of US domestic tax laws with the international tax rules on Base Erosion and Profit Shifting (“BEPS”) and the Anti-Tax Avoidance Directive (“ATAD”). Part V then takes us to the post-Corona world to see how the pandemic has impacted the rules on debt and equity financing. After analyzing neutrality and business taxation in the US, the author wraps it up with Part VI for her analysis and own recommendations to achieve tax neutrality.

2022 IFA International Tax Student Writing Competition
Subject: Any topic relating to U.S. taxation of income from international activities, including taxation under U.S. tax treaties.
Open to: All students during the 2021-22 academic year pursuing a graduate degree. Any appropriate papers written in fall 2021 or spring and summer 2022.
Submission Deadline:  September 30, 2022.
Prize: $5,000 cash, plus expenses-paid invitation to the IFA USA Branch Annual Meeting in April 2023. The faculty advisor of the winning submission will also receive an expenses-paid invitation to the annual meeting.

Here are the recent winners:

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