Paul L. Caron
Dean


Saturday, October 5, 2019

Tax Court Can’t Order IRS To Not Jerk People Around

Forbes:  Tax Court Can’t Order IRS To Not Jerk People Around, by Peter J. Reilly:

Tax Court (2017)Jeffrey Davis is my new hero. From the record in Judge Ruwe’s Tax Court opinion, it appears that he got the IRS to back down on their notice of deficiency, but he didn’t stop there. He went on to recover $154.98 in costs.

But that is not the heroic part. He also sought to have the Tax Court order the IRS to not jerk other people around in the way that he was jerked around. In that quixotic quest he failed, because as the mantra goes the Tax Court is a court of “limited jurisdiction. Here is the story. ...

Mr. Davis contacted Senator Cory Booker’s office. They got the Taxpayer Advocate Service involved. Since the ninety day clock was ticking, there was also a Tax Court petition filed.

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October 5, 2019 in New Cases, Tax, Tax News | Permalink | Comments (0)

Friday, October 4, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

U.S. Tax Gap Holds Flat At 14%

Tax Gap

Wall Street Journal, U.S. Tax Compliance Holds Flat at 86%:

Americans pay about 86% of their federal taxes, leaving a $381 billion annual gap between taxes owed and taxes collected, according to an Internal Revenue Service study released Thursday.

The government’s first report on the “tax gap” since 2016 shows tax compliance holding steady as the IRS shrinks. However, the study covers tax years 2011 through 2013, and the IRS has reduced audits and staffing considerably since then.

In those years, taxpayers paid 83.6% of the taxes they owed voluntarily and a total of 85.8% after IRS enforcement efforts. Those are about equal to the previous study, which covered tax years 2008 through 2010 and was updated with the same methodology used for the new analysis.

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October 4, 2019 in IRS News, Tax, Tax News | Permalink | Comments (2)

Thursday, October 3, 2019

Northern Illinois Seeks To Hire A Tax Prof

Northern Illinois LogoNorthern Illinois University College of Law invites applications for anticipated openings for two entry-level tenure-track faculty positions beginning August 2020. Duties include engaging in high quality research and teaching, as well as being an active participant in law school and university service. Requirements include a J.D. degree from an ABA accredited law school, an ability to engage in high quality research and teaching, and a willingness to actively participate in law school and university service.

We are particularly interested in candidates specializing in contracts, business associations, tax, torts, trusts and estates, and skills courses in the areas of pre-trial skills and/or business related skills.

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October 3, 2019 in Tax, Tax News, Tax Prof Jobs | Permalink | Comments (1)

Case Western Tax Prof Is Still Teaching At 92 Years Old

Cleveland.com, Case Western Reserve University Law Professor Still Teaching at 92 Years Old:

GabinetYou know that saying, “when you love what you do, you’ll never work a day in your life?”

Well, at 92 years old and still teaching four days a week, Professor Leon Gabinet is the true embodiment of that.

“I think at 92, I must be the oldest living professor,” Gabinet said, laughing.

News 5 checked with the American Association of University Professors, and while we're told the data around professor's ages isn't maintained, a spokesperson couldn't immediately think of professor above that age still teaching.

Gabinet teaches federal income tax law at the Case Western Reserve University School of Law — a place he has been a fixture since 1968. ...

“You would think going into a federal income tax class that it was going to be really dry and boring,” said law student Jess Ice. “But I laugh every class. I just have a great time. He has forgotten more about tax than I’ll ever learn in my life.”

It’s true — Professor Gabinet, at 92, has much of the tax code memorized by heart. And still, he spends hours before each of his classes every week reviewing materials and getting prepared. ...

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October 3, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Teaching | Permalink | Comments (0)

Wednesday, October 2, 2019

Colinvaux & Madoff: A Donor-Advised Fund Proposal That Would Work For Everyone

Chronicle of Philanthropy op-ed:  A Donor-Advised Fund Proposal That Would Work for Everyone, by Roger Colinvaux (Catholic) & Ray D. Madoff (Boston College):

More than $110 billion that Americans have earmarked for charity are now housed in donor-advised funds. DAFs are a fundraising phenomenon that make it easy to set aside dollars for good causes and get significant tax benefits right away.

But while the dollars are flooding into DAFs, too few dollars are coming out. That is because the legal framework governing these funds is out of sync with the way tax incentives are supposed to work. The reason for tax incentives is to get people to take an action deemed good for society, in this case, to make funds available so that charities can use them in support of their mission. But with donor-advised funds, the system is backwards: the federal government provides donors huge tax subsidies upfront, handing them out when the donor sets up a fund or augments it, but there is  no incentive to actually give the money away.

As legal scholars focused on public policy, we have long been concerned that the tax rules are not working as they should to get money to charities. When it comes to DAFs, we have advocated for the imposition of a payout term to ensure that DAF funds are distributed within a reasonable amount of time — say, a decade.

While a payout is one solution, as we have been studying the issue and hearing objections from sponsors of donor-advised funds, we have realized there is an even better approach that could maximize contributions, help donors save on taxes, and avoid abuses that lose money for the Treasury.

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October 2, 2019 in Tax, Tax News | Permalink | Comments (1)

Tuesday, October 1, 2019

NY Times: Tax Law’s Cap On State And Local Deductions Is Upheld By Court

New York Times, Tax Law’s Cap on State and Local Deductions Is Upheld by Court:

Congress didn’t unconstitutionally penalize Democratic-leaning states when it imposed a cap on federal deductions for state and local taxes, a federal judge ruled Monday.

The 2017 federal tax law, which President Trump signed after a party-line vote in Congress, limited to $10,000 the state and local tax payments that families can write off on their federal income taxes if they itemize deductions. The provision, known as the SALT cap, disproportionately affected residents of wealthy, high-tax states, where residents are more likely to have state tax bills that exceed the $10,000 limit.

Four states, including New York, sued the federal government last year, arguing that the cap is an “unconstitutional assault” on their sovereignty.

But on Monday, a Federal District Court judge in Manhattan rejected that argument. “The court recognizes that the SALT cap is in many ways a novelty,” the judge, J. Paul Oetken, wrote in his decision. “But the states have failed to persuade the court that this novelty alone establishes that the SALT cap exceeds Congress’s broad tax power.”

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October 1, 2019 in Tax, Tax News | Permalink | Comments (2)

The Financial Transaction Tax: A Progressive Tax With Beneficial Effects

Public Citizen, A Progressive Tax With Beneficial Effects:

A Small Levy on Financial Transactions Would Steer Clear of Struggling Americans, Raise Meaningful Revenue, and Possibly Retire An Abusive Wall Street Industry

A small tax on financial transactions, such as a one-tenth of 1 percent levy on the purchase of stocks and bonds, would likely end the viability of high-frequency trading while raising consequential sums for the U.S. Treasury. Opponents of this proposal have claimed it would hinder the ability of middle-class families to save for retirement. In contrast, we conclude that the costs of a modest financial transaction tax (FTT) would be little to nothing for middle-income families and would be easily manageable for average families in top income bracket.

FTT

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October 1, 2019 in Tax, Tax News, Think Tank Reports | Permalink | Comments (4)

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October 1, 2019 in About This Blog, Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (0)

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October 1, 2019 in About This Blog, Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (0)

Monday, September 30, 2019

TaxProf Blog Weekend Roundup

Saturday, September 28, 2019

This Week's Ten Most Popular TaxProf Blog Posts

  1. Bryan Camp (Texas Tech), Lesson From The Tax Court: The Functional Definition Of 'Return'
  2. Enjuris, Law School Enrollment by Race & Ethnicity
  3. Matthew Smith (U.S. Treasury Department), Danny Yagan (UC-Berkeley), Owen Zidar (Chicago) & Eric Zwick (Chicago), Capitalists in the Twenty-First Century, 135 Q. J. Econ ___ (2019)
  4. Tallahassee Democrat, Five Years After Dan Markel's Murder, Trial Of Two Suspects Begins Today
  5. Fatih Guvenen (Minnesota), Gueorgui Kambourov (Toronto), Burhanettin Kuruscu (Toronto), Sergio Ocampo-Diaz (Minnesota) & Daphne Chen (Econ One), Efficiency Gains from Wealth Taxation
  6. Bryce Clayton Newell (Kentucky), 2019 Meta-Ranking of Flagship US Law Reviews
  7. Washington Post, How Excel's Automatic Data Formatting Can Cause Errors In Published Research
  8. Derek Muller (Pepperdine), A Few Thoughts On Free Casebooks For Law Students
  9. Symposium, Mindfulness and Well-Being in Law Schools and the Legal Profession, 48 Sw. L. Rev. 199-412 (2019)
  10. Sahar Aziz (Rutgers), Identity Politics Is Failing Women in Legal Academia, 69 J. Legal Educ. ___ (2019)

September 28, 2019 in Legal Ed News, Legal Education, Tax, Tax News, Weekly Legal Ed Roundup, Weekly Tax Roundup, Weekly Top 10 TaxProf Blog Posts | Permalink | Comments (0)

Friday, September 27, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Saturday, September 21, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Friday, September 20, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Thursday, September 19, 2019

Carl Icahn Is Moving From NY To Florida For Lower Tax Rates

Bloomberg, Carl Icahn Is Heading to Florida for Lower Tax Rates:

Billionaire Carl Icahn is planning to move his home and business to Florida to avoid New York’s higher taxes, according to people familiar with the matter.

Icahn, 83, who was born in the Far Rockaway neighborhood in Queens, New York, has been an icon on Wall Street for decades. In the 1990s, he bought a mansion in the exclusive Indian Creek island enclave on Biscayne Bay in Miami.

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September 19, 2019 in Tax, Tax News | Permalink | Comments (3)

WSJ: One Argument For Radical Income Transparency

Wall Street Journal:  One Argument for Radical Income Transparency, by Oliver Hauser (University of Exeter Business School) & Michael Norton (Harvard Business School):

How much do people actually know about the income and wealth of people who live around them? And how does what they think they know skew the way they think about government taxes and spending?

Recent research we conducted suggests that the answer to those two questions are: Not much and a lot.

An emerging body of research suggests that citizens’ preferences for spending on public goods—from social programs to health care to infrastructure—are based in part about who they believe contributes and benefits. However, we discovered that many people are unaware of the true extent of inequality where they live. And in some cases, their beliefs are dramatically different than reality.

In our research, we assessed people’s behavior toward the rich and poor under two conditions in a controlled experiment: when inequality remains invisible (or hidden), and when we reveal it. We then explored whether people might view the behavior of lower-income people differently when they were made aware of just how little income being “low income” entailed.

In other words, I might be angry that poor people contribute very little in income tax to the overall federal budget. But I might feel differently when I realize that they have so little that any contribution represents a large percentage of their small income. ...

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September 19, 2019 in Tax, Tax News | Permalink | Comments (3)

Financial Times: Are Big Corporations Paying Enough Tax?

Wednesday, September 18, 2019

Apple Takes On EU In World's Biggest Tax Case: $14 Billion

Bloomberg News, Apple Takes on EU’s Vestager in Record $14 Billion Tax Fight:

Apple EUApple fights the world’s biggest tax case in a quiet courtroom this week, trying to rein in the European Union’s powerful antitrust chief ahead of a potential new crackdown on internet giants.

The iPhone maker can tell the EU General Court in Luxembourg that it’s the world’s biggest taxpayer. But that’s not enough for EU Competition Commissioner Margrethe Vestager who said in a 2016 ruling that Apple’s tax deals with Ireland allowed the company to pay far less than other businesses. The court must now weigh whether regulators were right to levy a record 13 billion-euro ($14.4 billion) tax bill.

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September 18, 2019 in New Cases, Tax, Tax News | Permalink | Comments (2)

Tuesday, September 17, 2019

WSJ: Inequality Is Holding Back The U.S. Economy

Wall Street Journal, Inequality Is Holding Back the U.S. Economy:

When it comes to money, America has always had winners and losers, but the widening gulf between the rich and the bulk of U.S. households may be making almost everybody worse off. That includes investors.

Income data released by the Census Bureau on Tuesday showed that the median U.S. household—the one in the statistical middle—had income of $63,200 last year. That was a bit more than the $62,600, adjusted for inflation, that the median household made in 2017. And it is well above the $56,750 that new data, adjusted for methodology changes, show the median household made in 2014, when many Americans were still smarting from the aftermath of the financial crisis.

But the 2018 figure was basically even with what the adjusted data show for 1999.

WSJ

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September 17, 2019 in Tax, Tax News | Permalink | Comments (4)

NY Times: GAO Study Shows Income Gap Between Rich And Poor Keeps Growing, With Deadly Effects

New York Times, Study Shows Income Gap Between Rich and Poor Keeps Growing, With Deadly Effects:

The expanding gap between rich and poor is not only widening the gulf in incomes and wealth in America. It is helping the rich lead longer lives, while cutting short the lives of those who are struggling, according to a study released this week by the Government Accountability Office [Income and Wealth Disparities Continue through Old Age].

Almost three-quarters of rich Americans who were in their 50s and 60s in 1992 were still alive in 2014. Just over half of poor Americans in their 50s and 60s in 1992 made it to 2014.

GAO

“It’s not only that rich people are living longer but some people’s life expectancy is actually shrinking compared to their parents, for some groups of people,” said Kathleen Romig, a senior policy analyst at the liberal Center on Budget and Policy Priorities.

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September 17, 2019 in Tax, Tax News | Permalink | Comments (0)

Monday, September 16, 2019

Lesson From The Tax Court: Administrative File Notes Are Not Ex-Parte Contact

Tax Court (2017)Tax collectors have an tough and lonely job.  I know.  I collected taxes for Arlington County, Virginia shortly after law school.  And when I was in IRS Office of Chief Counsel, my clients were Revenue Officers (ROs), the IRS employees whose dolorous job is to collect unpaid taxes. 

When a taxpayer receives a CDP hearing, ROs are prohibited from making ex part contacts with anyone in Appeals about the substance of the collections under review.  If the RO wants to communicate with anyone in Appeals about matters that are not ministerial, administrative, or procedural, they must give taxpayers an opportunity to participate in the discussion. Rev. Proc. 2000-43, §3, Q&A-6.   If they violate the ex-parte prohibition, then the CDP hearing becomes tainted and the ex part nature of the contact must either be cured or else the case be reassigned.  Rev. Proc. 2012-18, §2.10(1).

Not every communication from an RO to Appeals is a prohibited ex parte contact.  Last week’s case of Jason Stewart and Kristy Stewart v. Commissioner, T.C. Memo 2019-116 (September 10, 2019) (Judge Kerrigan) teaches a lesson in what does not constitute a prohibited communication from an RO to the Settlement Officer in a CDP hearing.  Details below the fold.

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September 16, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax News, Tax Practice And Procedure | Permalink | Comments (1)

Saturday, September 14, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Friday, September 13, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Thursday, September 12, 2019

Andrew Weiner Appointed To Lead Temple Tax LL.M. Program

Andrew Weiner Appointed to Lead LL.M. in Tax at Temple Law School:

Weiner 2Nationally recognized tax litigator Andrew Weiner has joined the faculty at Temple Law School, where he will serve as Director of the Graduate Tax Program and Practice Professor of Law.

In joining Temple’s nationally ranked tax program, Professor Weiner brings a wealth of tax litigation experience to an exceptional roster of scholar-teachers on the full-time faculty and highly accomplished adjuncts. He also brings experience in the classroom, having taught corporate tax and partnership tax at American University Washington College of Law for several years. In addition, Professor Weiner is developing a tax research and writing class, and has plans to explore interdisciplinary opportunities with Temple’s vaunted trial advocacy program. ...

Prior to joining Temple Law, Professor Weiner served for more than a decade in the Tax Division of the Department of Justice. Most of his tenure at the Tax Division was spent as an Attorney in the Appellate Section, where he briefed and argued approximately 50 cases, including Florida Bankers Association v. Department of the Treasury before the DC Circuit and Bedrosian v. United States before the Third Circuit—important victories for the government. During that time, Professor Weiner also served as Counsel to both Diana Erbsen (Deputy Assistant Attorney General for Appellate and Review) and Tamara Ashford (then Acting Assistant Attorney General & Deputy Assistant Attorney General for Appellate and Review and now a judge on the United States Tax Court). Most recently, he worked as a Trial Attorney at the Court of Federal Claims Section.

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September 12, 2019 in Tax, Tax News | Permalink | Comments (0)

Tuesday, September 10, 2019

29 Tax Profs Say Deference To Tax Court Is Not Needed In Altera

Bloomberg Tax, Deference to Tax Court Isn’t Needed in Altera Case, Academics Say:

AlteraIntel-owned Altera misrepresented how the Ninth Circuit should treat conflicting decisions between its own three-judge panel and the U.S. Tax Court, a group of legal academics said.

“No special deference is due to Tax Court decisions,” the 29 academics argued in an amicus brief filed with the U.S. Court of Appeals for the Ninth Circuit. They were responding to Altera's request for a rehearing in a tax dispute with the IRS.

The 29 Tax Profs signatories are:

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September 10, 2019 in New Cases, Tax, Tax News | Permalink | Comments (0)

Trump Took A Big Loan From Trump And Never Paid Trump Back ... Because It's A Tax Scam

Daily Kos, Trump Took a Big Loan From Trump and Never Paid Trump Back ... Because It's a Tax Scam:

A loan listed on Donald Trump’s personal financial disclosure forms appears to be hiding a scheme in which he got tens of millions from Deutsche Bank and never reported the income to the IRS. It all adds up to a huge violation of federal tax law that Trump is hiding behind one of the many LLCs that make up the Trump Organization.

Donald Trump has debts. How many debts, and who is collecting on those debts, is not very clear. It’s especially not clear because Trump is fighting tooth and nail to prevent the release of his tax returns and to prevent banks from providing Congress with any information. But among Trump’s loans there is one that may be more mysterious than all the rest, and that’s the over $50 million that Donald Trump owes to … Donald Trump.

Trump’s business is not actually a single business at all, but an interwoven network of over 500 LLCs and holding companies. They may have different names, different assets, and even different addresses, but what almost all these companies have in common is that they are 100% owned by Trump.

With that in mind, Mother Jones took a look a Trump’s personal financial disclosure forms and found that he reports owing “over $50 million” to Chicago Unit Acquisition LLC. Trump owns that company 100%. So he owes that debt to himself. Which isn’t necessarily dishonest, but Trump sets the value of Chicago Unit Acquisition at zero. He’s borrowed at least tens of millions, but he doesn’t seem to be making any payments on this “loan” at all. That’s just the start of the weirdness. On the books of the company, the company that Trump owns, the loan to Donald Trump is classified as a high-risk loan. 

That last thing is certainly true. But everything else about this situation stinks to high heaven. As the Mother Jones analysis points out, it not only violates every rule of accounting, but it also looks like massive tax fraud.

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September 10, 2019 in Tax, Tax News | Permalink | Comments (4)

Monday, September 9, 2019

IRS Releases New Online Tax Calculator For Gig Economy Workers

IR-2019-149, Freelancers, Others With Side Jobs in the Gig Economy May Benefit From New Online Tool:

IRS Logo 2The Internal Revenue Service said today that the new Tax Withholding Estimator tool includes a feature designed to make it easier for employees who also receive self-employment income to accurately estimate the right amount of tax to have taken out of their pay.

The estimator is an expanded, mobile-friendly online tool that replaced the Withholding Calculator, which since 2001 had offered workers an online method for checking their withholding. The old calculator lacked features geared to self-employed individuals; the new estimator made changes to address this important group.

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September 9, 2019 in IRS News, Tax, Tax News | Permalink | Comments (0)

TaxProf Blog Weekend Roundup

Saturday, September 7, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Friday, September 6, 2019

Tax Policy In The Trump Administration

Trump's Taxes And Tax Returns

Welcome To The Tax Blogosphere: Write-Off: The Tax Blog

Jeff Hoopes (North Carolina), Welcome to Our New Blog, Write-Off: The Tax Blog:

Write-off-tax-blogWelcome to our new blog, Write-Off: The Tax Blog, hosted by the UNC Tax Center. The purpose of this blog is to provide original, useful, compelling and timely tax information to the general public, especially those with an interest in tax policy.

There are other excellent tax policy blogs — so how is this one different? The content of this blog will be produced by tax scholars, many of whom understand taxation through the lens of an accountant. Academic accountants often have a different way of viewing tax policy, and we hope to provide that view on this blog. Accounting scholars have the economics-based research training needed to understand complex relationships using data, while simultaneously understanding the tax law. Many have worked at large accounting firms, therefore they understand the institutional background in which the tax system operates. We hope to bring that training and knowledge to bear in our posted tax-related thoughts, notes, news and notions.

Recent Posts:

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September 6, 2019 in Tax, Tax News | Permalink | Comments (0)

Thursday, September 5, 2019

Avi-Yonah: The Shaky Case Against Wealth Taxation

Reuven Avi-Yonah (Michigan), The Shaky Case Against Wealth Taxation:

American Prospect LogoEver since Senator Elizabeth Warren (D-MA) introduced her proposed wealth tax, there has been a storm of criticism against it not just from predictable sources like the Tax Foundation or Fortune magazine, but also from Democrats like former Secretary of the Treasury Larry Summers. This criticism is misguided and should not prevent other Democrats from supporting Senator Warren’s proposal.

Under Warren’s wealth tax plan, the richest 75,000 American households would pay an annual 2 percent tax on all assets—net worth—above $50 million, and a 3 percent tax on every dollar of net worth above $1 billion. University of California, Berkeley, economists Gabriel Zucman and Emmanuel Saez, who study wealth inequality, say Warren’s tax would raise around $2.75 trillion over ten years. The revenue would be used to fund, among other things, universal child care for every child age zero to five, free tuition and fees for all public colleges, and forgiveness of 95 percent of student debt.

There are four major lines of criticism of the Warren proposal, and they are all wrong. ...

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September 5, 2019 in Tax, Tax News | Permalink | Comments (5)

Wednesday, September 4, 2019

ABA Tax Section Releases 19th Annual Law Student Tax Challenge Problem

The ABA Tax Section has released the J.D. Problem (rules; entry form) and LL.M. Problem (rules; entry form) for the 19th Annual Law Student Tax Challenge:

LSTCAn alternative to traditional moot court competitions, the Law Student Tax Challenge asks two-person teams of students to solve a cutting-edge and complex business problem that might arise in everyday tax practice. Teams are initially evaluated on two criteria: a memorandum to a senior partner and a letter to a client explaining the result. Based on the written work product, six teams from the J.D. Division and four teams from the LL.M. Division receive a free trip (including airfare and accommodations for two nights) to the Section of Taxation 2020 Midyear Meeting, January 30-February 1, in Boca Raton, FL, where each team will defend its submission before a panel of judges representing the country’s top tax practitioners and government officials, including Tax Court judges.

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September 4, 2019 in ABA Tax Section, Legal Education, Tax, Tax News, Teaching | Permalink | Comments (0)

Tuesday, September 3, 2019

Lesson From The Tax Court: Charity Used To Gin Up Business Loses Tax Exemption

Tax Court (2017)I don’t carry a cell phone for a variety of idiosyncratic reasons.  My accommodating wife lets me keep our home phone, a land-line we got 20 years ago.  She no longer answers it, however, because we get a lot of spam calls.  Sure, it’s on the FTC’s Do Not Call Registry, but that does not protect us from certain types of spam, particularly charity spam and polling spam.

This charity loophole in the Do Not Call system is the basis for today’s lesson in substance over form.  In Giving Hearts, Inc. v. Commissioner, T.C. Memo 2019-94 (July 29, 2019), Judge Guy teaches how the operational test in tax exempt entity taxation looks through formal agreements to focus on function.   Thus, a charity created to provide cover for a replacement windows telemarketing business was not really a charity.

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September 3, 2019 in Bryan Camp, New Cases, Scholarship, Tax, Tax News, Tax Scholarship | Permalink | Comments (1)

NY Times: How Trump Opportunity Zone Tax Break To Help Poor Communities Became A Windfall For The Rich

New York Times, How a Trump Tax Break to Help Poor Communities Became a Windfall for the Rich:

President Trump has portrayed America’s cities as wastelands, ravaged by crime and homelessness, infested by rats.

But the Trump administration’s signature plan to lift them — a multibillion-dollar tax break that is supposed to help low-income areas — has fueled a wave of developments financed by and built for the wealthiest Americans.

NYT OZ

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September 3, 2019 in Tax, Tax News | Permalink | Comments (1)

TaxProf Blog Holiday Weekend Roundup

Monday, September 2, 2019

WSJ: Companies Say They Can Ignore Cost Of U.S. Tax Rules For Financial Reporting Purposes

Wall Street Journal, Companies Say They Can Ignore Cost of U.S. Tax Rules:

Consumer-products conglomerate Newell Brands Inc., facing $180 million to $220 million in taxes because of Treasury Department antiabuse regulations, isn’t recognizing those costs in its financial statement, contending the new rules aren’t valid.

The move presages a legal fight between companies and the government. Beyond tax revenue, the outcome may shape the government’s ability to implement some of the most sweeping provisions of the 2017 tax law while Congress remains deadlocked over technical fixes.

Newell, which makes Sharpie markers, Mr. Coffee machines and Rubbermaid containers, told investors this month it was so confident the government’s rules will fall that it didn’t have to take an earnings hit. The tax cost would have swung the company from profit to loss in the second quarter. Maxim Integrated Products, an analog chip maker, made a very similar disclosure to its investors. ...

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September 2, 2019 in Tax, Tax News | Permalink | Comments (1)

Marginal Tax Rates For Pass-through Businesses Vary By State: 32.7% In TX, FL; 46.1% In CA

Tax Foundation, Marginal Tax Rates for Pass-through Businesses Vary by State

Pass-through businesses—businesses like sole proprietorships, S corporations, and partnerships that “pass” their income “through” to their owner’s income tax returns and pay the ordinary individual income tax—make up a majority of U.S. businesses. Marginal tax rates vary for pass-throughs depending upon the state in which they operate because of differences in how states tax individual income.

Pass-through businesses’ marginal tax rates vary by state, from a low of 32.7 percent (in seven states) to a high of 46.1 percent (in California). These rates include both state and federal taxes.

Tax Foundation

See also Libin Zhang (Roberts & Holland, New York), Marginal Income Tax Rates of the Passthrough Business Deduction, 159 Tax Notes 1139 (May 21, 2018).

September 2, 2019 in Tax, Tax News, Think Tank Reports | Permalink | Comments (3)

Sunday, September 1, 2019

WSJ: The Collapse Of The Income And Wealth Inequality Argument

Wall Street Journal, Collapse of the Inequality Argument?:

Leftist politicians have been saying for years that a dramatic rise in wealth and income inequality is the central economic problem of our time. It remains the go-to explanation among Democratic presidential candidates for their myriad schemes to increase federal taxation. But the claim of an inequality surge is getting much harder to make. And even for those who cling to the belief that recent decades have led to record levels of inequality, they will have to explain why wages in the Trump era have lately been moving a little closer to equality.

On the latter point, the inconvenient truth for the inequality-obsessed appears in the most recent employment report from the federal Bureau of Labor Statistics. For the past year, average hourly earnings for employees on private nonfarm payrolls have increased 3.2%. But looking beyond that overall average, we see that wages for production and non-supervisory employees are rising slightly faster. In other words, workers’ wages have lately been rising faster than their bosses’ wages. Don’t expect Bernie Sanders to credit Trumponomics. ...

Even accounting for the Obama inequality spike, it seems the distribution of wealth and income really hasn’t changed all that much. This column has chronicled significant flaws in the claim that recent decades have seen a massive surge in U.S. income inequality [U.S. Income More Equal than Advertised]. This already shaky thesis may not survive the upcoming formal publication of a working paper by Gerald Auten of the U.S. Treasury and David Splinter of the congressional Joint Committee on Taxation [Income Inequality in the United States: Using Tax Data to Measure Long-term Trends]. They find “there has been relatively little change since 1960” in the income share received by the top 1% of U.S. earners.

Top 0.1%

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September 1, 2019 in Scholarship, Tax, Tax News, Tax Scholarship | Permalink | Comments (1)

Saturday, August 31, 2019

This Week's Ten Most Popular TaxProf Blog Posts

Friday, August 30, 2019

Trump's Taxes And Tax Returns

Thursday, August 29, 2019

Tax Prof Twitter Census (2019-20 Edition)

Twitter[For an updated census with 19 additional Tax Profs, see here.]  According to Bridget Crawford's latest census, there are 1,248 Law Profs on Twitter, including 62 Tax Profs (several with tax in their Twitter handles):

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August 29, 2019 in Legal Ed News, Legal Education, Tax, Tax News | Permalink | Comments (1)

Wednesday, August 28, 2019

WSJ: Democrats’ Emerging Tax Idea: Look Beyond Income, Target Wealth

Wall Street Journal, Democrats’ Emerging Tax Idea: Look Beyond Income, Target Wealth:

The income tax is the Swiss Army Knife of the U.S. tax system, an all-purpose policy tool for raising revenue, rewarding and punishing activities and redistributing money between rich and poor.

The system could change fundamentally if Democrats win the White House and Congress. The party’s presidential candidates, legislators and advisers share a conviction that today’s income tax is inadequate for an economy where a growing share of rewards flows to a sliver of households.

WSJ

For the richest Americans, Democrats want to shift toward taxing their wealth, instead of just their salaries and the income their assets generate. The personal income tax indirectly touches wealth, but only when assets are sold and become income.

At the end of 2017, U.S. households had $3.8 trillion in unrealized gains in stocks and investment funds, plus more in real estate, private businesses and artwork, according to the Economic Innovation Group, a nonprofit focused on bringing investment to low-income areas. Most of the value of estates over $100 million consists of unrealized gains, said a 2013 Federal Reserve study. Much has never been touched by individual income taxes and may never be.

Democrats are eager to tap that mountain of wealth to finance priorities such as expanding health-insurance coverage, combating climate change and aiding low-income households. Their ideas range from new rules on inherited assets, to a plan by Sen. Ron Wyden for annual taxes on unrealized gains, to a proposal from Sen. Elizabeth Warren to tax wealth itself. These come atop more conventional proposals to raise income taxes and expand estate taxes. ...

The Democratic debate on taxing wealth is one facet of a bigger, often contentious discussion. Experts across the political spectrum agree income inequality widened in recent decades, and wealth inequality even more. There is little agreement on what, if anything, the government should do about it.

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August 28, 2019 in Tax, Tax News | Permalink | Comments (2)

Tuesday, August 27, 2019

Tax Issues In Dr. Pepper's Acquisition Of Keurig

Jeffrey Sheffield (Senior Lecturer, Northwestern; Partner, Kirkland & Ellis), Whose Earnings and Profits? What Dividend? A Discussion Based on the Dr. Pepper - Keurig Transaction, 72 Tax Law. __ (2019):

KDP2In July 2018 Dr. Pepper Snapple Group, Inc. (“Dr. Pepper”) acquired all the stock of the Maple Parent Holdings Corp. (better known as “Keurig”) in exchange for Dr. Pepper common stock. The acquisition was unusual in two respects: Dr. Pepper paid its shareholders a pre-merger “special dividend” equal to approximately 87% of the stock’s value; and Dr. Pepper then issued to Keurig’s shareholders Dr. Pepper stock equal to approximately 87% of the combined companies’ stock. It is this combination of events that gives rise to the tax issues discussed in this article.

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August 27, 2019 in ABA Tax Section, Scholarship, Tax, Tax News, Tax Scholarship | Permalink | Comments (1)