Paul L. Caron
Dean




Wednesday, May 12, 2021

OECD Calls For Increased Inheritance, Estate And Gift Taxes To Curb Inequality And Raise Revenue

OECD, Inheritance, Estate and Gift Taxes Could Play a Stronger Role in Addressing Inequality and Improving Public Finances:

Inheritance taxation can be an important instrument to address inequality, particularly in the current context of persistently high wealth inequality and new pressures on public finances linked to the COVID-19 pandemic, according to a new OECD report.

Inheritance Taxation in OECD Countries provides a comparative assessment of inheritance, estate and gift taxes across the 37-member OECD, and explores the potential role these taxes could play in raising revenues, addressing inequalities and improving the efficiency of tax systems in the future.

The report highlights the high degree of wealth concentration in OECD countries as well as the unequal distribution of wealth transfers, which further reinforces inequality. On average, the inheritances and gifts reported by the wealthiest households (top 20%) are close to 50 times higher than those reported by the poorest households (bottom 20%).

The report points out that inheritance taxes — particularly those that target relatively high levels of wealth transfers — can reduce wealth concentration and enhance equality of opportunity. It also notes that inheritance taxes have generally been found to generate lower efficiency costs than other taxes on the wealthy, and to be easier to assess and collect than other forms of wealth taxation.

A majority of OECD countries currently levy inheritance or estate taxes — 24 in total. However, these taxes typically raise very little revenue. Today, only 0.5% of total tax revenues are sourced from inheritance, estate and gift taxes on average across the countries that levy them.

OECD

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May 12, 2021 in Tax, Tax News | Permalink

The Foreign Reverse Hybrid And The Estate Tax

Seth J. Entin (Holland & Knight, Miami), The Foreign Reverse Hybrid and the Estate Tax, 101 Tax Notes Int'l 1255 (Mar. 8, 2021):

Tax Notes Int'lIn this article, the author demonstrates that the estate of a foreign individual who dies owning an interest in a foreign reverse hybrid entity is not subject to U.S. federal estate tax in connection with an interest in the entity, even if the entity owns U.S.-situs assets.

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May 12, 2021 in Tax, Tax Analysts, Tax Scholarship | Permalink

Tuesday, May 11, 2021

Goldberg: Partnership Book-Ups And Section 704(c)

Daniel S. Goldberg (Maryland), 'Partnership Revaluations: Book-Ups Are Your Friends (Usually)'—Planning with Revaluations and Their Interplay with Section 704(c), 74 Tax Law. ___ (2021):

ABA Tax Lawyer (2019)The procedure provided in the section 704(b) regulations known as “re-valuation and book-up” (sometimes called simply “book-up”) of a partnership’s assets and capital accounts is available and often used when a new partner enters an existing partnership and acquires a partnership interest in exchange for cash or property. The procedure is also available for use when the new partner obtains a partnership interest for services and when an existing partner’s interest is reduced by a nonproportionate distribution or increased by a nonproportionate contribution.

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May 11, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Newman: Restore The Personal Casualty And Theft Loss Deduction

Joel S. Newman (Wake Forest), Restore the Personal Casualty and Theft Loss Deduction Now!, 11 Wake Forest J. L. & Pol'y ___ (2021):

IRS Statistics of Income data suggest that some 88,000 taxpayers suffered personal casualties in 2018, which would have been deductible under prior law, but were nondeductible pursuant to the Tax Cuts and Jobs Act of 2017 (TCJA).

Newman

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May 11, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Jake Brooks To Leave Georgetown For Fordham

John R. Brooks (Georgetown) has accepted a lateral offer from Fordham to begin in Fall 2022. Jake's recent publications include:

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May 11, 2021 in Legal Education, Tax, Tax Prof Moves | Permalink

Call For Papers: Indiana/Leeds Summer Zoom Tax Workshop Series

From Leandra Lederman:

2021-indiana-leeds-graphic-2This summer, the Indiana University Maurer School of Law and the University of  Leeds School of Law will run the Indiana/Leeds Summer Tax Workshop Series again. Like last summer, Dr. Leopoldo Parada and I will host it. It will meet online via Zoom on Fridays from 11:30am-1pm Eastern time (4:30-6pm British Summer Time), starting May 28, 2021. We expect to invite a couple of speakers and select the remainder from a call for papers.

The Call for Papers opens today and will close on May 14, 2021 at midnight British Summer Time (7pm Eastern Daylight Time). If you are interested in presenting in the Workshop, please send the following before then to both llederma@indiana.edu and L.Parada@leeds.ac.uk, with “Indiana/Leeds Workshop submission” in the subject line of your email:

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May 11, 2021 in Colloquia, Tax, Tax Scholarship, Tax Workshops | Permalink

Tax Practitioners Scoff At Janet Yellen's Comment That 'The IRS Has Put On A Masterclass In How The Machinery Of Government Should Work'

Forbes, Treasury Secretary’s IRS Praise Sparks Backlash From Those Who Must Deal With The Tax Agency:

IRS Logo 2Is the IRS broken? It depends on whom you ask. Yesterday Treasury Secretary Janet Yellen tweeted “It’s a stunning achievement. In the midst of a crisis, the IRS has put on a masterclass in implementation and how the machinery of government should work.” The pushback from tax industry professionals was immediate and vehement.

Brian Streig, CPA and Tax Director at Calhoun, Thomson & Matza, LLP in Austin, Texas, responded “Yes, the IRS did a great job at implementing CARES Act and other Covid tax law changes. But, the IRS has completely failed American taxpayers in their primary function of processing tax returns, issuing refunds, and handling notices.” ...

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May 11, 2021 in IRS News, Tax, Tax News | Permalink

Monday, May 10, 2021

Brooks Reviews Brauner's International Tax Handbook

Kim Brooks (Dalhousie University, Schulich School of Law; Google Scholar), A Hand Up in International Tax (JOTWELL) (reviewing Research Handbook on International Taxation (Yariv Brauner (Florida; Google Scholar) ed. Elgar 2020):

JOTWELL (2020)Handbooks are the best. A good one tells you something about how the discipline is organized, identifies major debates, showcases thoughtful researchers, and captures the momentum of the field. Brauner’s editorial work on the Research Handbook on International Taxation achieves all those advantages.

The volume has twenty chapters, organized in five parts. Part I, Fundamentals, digs into some of the issues that situate the discipline as a whole. Is there such a thing as international tax law? How did we get here? Who is responsible? And is there an international doctrine of tax fairness that can serve as a platform for constructive engagement? ...

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May 10, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

ABA Tax Section May Meeting Kicks Off Today With The Emergence Of Analytics For Tax Positions

The ABA Tax Section virtual 2021 May Meeting kicks off today (program). Today's highlight:

ABA TaxBenjamin Alarie (Osler Chair in Business Law, University of Toronto Faculty of Law; Co-Founder & CEO, Blue J Legal), The Emergence of Analytics for Tax Positions at 2:30 PM ET:

When defending a client’s position to the IRS or a judge, it can be hard to ensure you are making the strongest possible argument for the client’s position, mitigating the risk of the position being successfully challenged and providing time- and cost-effective service for your client. Join us as we discuss how leading tax professionals are using advanced analytics tools to strengthen client positions and gain an advantage in settlement discussions by:

  • Using artificial intelligence to identify the strength of a position with greater than 90% accuracy;
  • Testing the effect of various changes to the facts on the strength of the position;
  • Gaining a comprehensive view of the law by identifying authorities and guidance that may pose a risk to the position or can be used to support it;
  • Providing independent, 3rd party reports to foster favorable resolutions

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May 10, 2021 in ABA Tax Section, Conferences, Legal Education, Tax | Permalink

Lesson From The Tax Court: The Measure Of Intent For Gift Exclusions Under §102(a)

Camp (2017)When my church stopped in-person worship services in 2020, we kept paying our part-time child-care workers.  We first paid them with PPP loan money (which we treated as wages).  When that ran out, we decided to continue payments.  Why did we do that?  First, they were part of our church family and we knew that losing those amounts would be a hardship for them.  Second, we wanted to retain goodwill so they would come back when we resumed in-person worship.  So we had dual intent, mixed motives.  Which dominated would determine whether those continued payments were taxable compensation or non-taxable gifts.  How is a Court supposed to figure that out?

Juan Pesante, Jr., and Maria A. Moreno-Pesante v. Commissioner, (Bench Opinion, May 6, 2021) (Judge Copeland) teaches how the Tax Court measures the intent of a payor to determine whether a taxpayer may exclude a payment as a gift under §102(a).  There, the payor had sent mixed messages on whether a $25,000 payment to Mr. Pesante was a gift.  The Tax Court agreed with the IRS that the payment was not a gift.  Judge Copeland’s reasoning gives a great road map for how taxpayers and their tax advisors should approach this messy life-in-all-its-fullness issue.  Details below the fold. 

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May 10, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, May 9, 2021

The Top Five New Tax Papers

There is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new #1 paper, a paper returning to the list at #4, and a new paper debuting on the list at #5:

  1. SSRN Logo (2018)[434 Downloads]  Ten Truths About Tax Havens — Inclusion And The ‘Liberia’ Problem, by Steven Dean (Brooklyn) & Attiya Waris (Nairobi)
  2. [367 Downloads]  Tax Treaty Entitlement and Fiscally Transparent Entities: Improvements or Unnecessary Complications?, by Leopoldo Parada (University of Leeds; Google Scholar)
  3. [366 Downloads]  Insider Giving, by Sureyya Burcu Avci (Sabanci University; Google Scholar), Cindy A. Schipani (Michigan; Google Scholar), H. Nejat Seyhun (Michigan; Google Scholar) & Andrew Verstein (UCLA; Google Scholar),
  4. [195 Downloads]  The Case for a Sustainable Excess Profits Tax, by Allison Christians (McGill; Google Scholar) & Tarcisio Diniz Magalhaes (Antwerp))
  5. [191 Downloads]  Religious Legitimacy, by Phil Lord (McGill; Google Scholar)

May 9, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, May 8, 2021

This Week's Ten Most Popular TaxProf Blog Posts

Bridget Crawford Named University Distinguished Professor At Pace

Pace University Appoints Bridget J. Crawford as University Distinguished Professor:

Crawford (2021)Bridget J. Crawford, a member of the Elisabeth Haub School of Law faculty, has been named as a Distinguished Professor. The title of Distinguished Professor is the highest honor the University can bestow upon a faculty member.

This honor comes in recognition of a sustained record of extensive, extraordinary research and scholarship, outstanding teaching, and exemplary service to the University, community, and the faculty member’s professional field. Professor Crawford’s pathbreaking interdisciplinary scholarship explores how seemingly neutral legal rules and systems can reflect, exacerbate and sustain inequality. Her work draws on jurisprudence, statutory analysis, behavioral economics, critical tax theory and feminist legal theory to demonstrate how an equitable legal system can better serve human needs by taking gender, race and other identity factors into account.

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May 8, 2021 in Legal Education, Tax | Permalink

Tax Prof Baby: Theo Choi

Jonathan Choi (Minnesota) and Lilai Guo (PwC) welcomed Theo Choi (6 pounds, 10 ounces) into their family on March 18:

TaxProBaby - Theo Choi

May 8, 2021 in Legal Education, Tax | Permalink

Friday, May 7, 2021

Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Monroe's Improvisation And Forgotten Taxpayers In Partnership Tax

This week, Hayes Holderness (Richmond) reviews Andrea Monroe (Temple), Making Tax Law Work: Improvisation and Forgotten Taxpayers in Partnership Tax, 55 Mich. J. L. Reform ___ (2021):

Holderness (2017)When I teach Partnership Taxation, I like to introduce the subject by telling my students that there are really only two principles behind Subchapter K: 1) do what you want, and 2) don’t screw the government. I explain that the course will be an exercise in reconciling those two principles, and it will probably be the most difficult exercise in tax law that they encounter in law school. Until reading Andy Monroe’s forthcoming article, I was certain that the difficulty of Partnership Taxation was merely the unfortunate side effect of a tax regime designed to respect taxpayer choices. Now I’m not so sure, and worse, I’ve certainly been complicit in promoting this narrative.

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May 7, 2021 in Hayes Holderness, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Tax Policy In The Biden Administration

Lipman: We The People Must Pull America Back From The Abyss Of Economic Injustice

Francine J. Lipman (UNLV; Google Scholar), We the People Must Pull America Back from the Abyss of Economic Injustice:

Americans have long suffered decades of increasing income and wealth disparity resulting from failed economic policies and systemic racial discrimination. The COVID-19 pandemic has further exposed and exacerbated the depth and breadth of these gaps. The juxtaposition of 67 million Americans losing their jobs, 27 million adults and their kids suffering food insecurity, and 14 million households behind on their rent with 651 billionaires adding $1 trillion in net worth to their already bloated balance sheets is immoral. The percentage of food-insecure families with children is approaching 20 percent of the U.S. population, and these numbers are almost double for families of color. Because of institutional racism, Black Americans have been hospitalized and died from COVID-19 at five times the rate of white Americans. Indigenous and Latinx individuals also suffer disproportionately from COVID-19 hospitalizations and deaths. 

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May 7, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Thursday, May 6, 2021

Thomas Reviews Are Individuals More Willing To Lie To A Computer Or A Human About Their Taxes?

Kathleen DeLaney Thomas (North Carolina; Google Scholar), Your Tax Software Doesn't Know You're Lying (JOTWELL) (reviewing Ethan LaMothe (Central Florida; Google Scholar) & Donna Bobek (South Carolina; Google Scholar), Are Individuals More Willing to Lie to a Computer or a Human? Evidence from a Tax Compliance Setting, 167 J. Bus. Ethics 157 (2020)):

JOTWELL (2020)Imagine your accountant asks you if you earned any income that wasn’t reported on a 1099 or W-2 this year, and you know that you have an extra $5000 of such income. Do you tell her? Probably. For starters, you might be worried that she is going to be suspicious if you lie to her. Something in your voice might give it away, or perhaps your income this year is lower than last year and she wants to know why. Further, you might have developed a rapport with your accountant, and lying to her might cause psychological discomfort.

Now imagine that you are debating whether to report the same income without an accountant’s help, using tax return preparation software. The software isn’t suspicious of your omission and doesn’t harbor any ill feelings about whether you are telling it the truth. In that case, you might be more likely to lie and not report the income. A fascinating new study by Ethan LaMothe and Donna Bobek confirms this intuition. In a survey of 211 participants, LaMothe and Bobek find that individuals may be more willing to lie to tax preparation software than they are to a human tax return preparer. ...

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May 6, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Sabu: Reframing Bitcoin And Tax Compliance

Arvind Sabu (Chicago-Kent), Reframing Bitcoin and Tax Compliance, 64 St. Louis U. L.J. 181 (2020):

This Article argues that, contrary to the common belief that Bitcoin enables tax evasion, the Internal Revenue Service (“IRS”) can increasingly police transactions in Bitcoin. First, commercial and technical intermediaries have emerged as part of Bitcoin’s ecosystem. This diverse set of intermediaries can facilitate tax enforcement, as the litigation over the IRS’s summons on Coinbase—the largest domestic digital asset exchange—and subsequent IRS efforts show. These intermediaries could report transactions to the IRS or even, one day, withhold and remit tax payments. Second, the publicly visible, trustworthy nature of Bitcoin’s blockchain—its unique role as a shared truth—allows tax authorities to observe transaction flows. This renders Bitcoin unusually regulable for tax purposes, as recent efforts by the IRS to rely on Bitcoin’s blockchain to police tax evasion demonstrate.

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May 6, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Death Of Jack McNulty (UC-Berkeley)

SFGATE obituary, John McNulty:

Mcnulty_john_210x270-210x270John Kent McNulty, professor emeritus at Berkeley Law and a man of letters, music, and the arts, died Saturday, Sept. 26, at his home in Berkeley of an apparent heart attack. He was 85.

Jack, as he was known by many since childhood, was an accomplished legal scholar who specialized in federal income taxation and international tax. He joined the faculty at Berkeley Law (then Boalt Hall School of Law) in 1964 and taught full-time until his retirement in 2002. The law was his true north, and his community of scholars sustained him; he continued to visit his campus office every weekday until the COVID-19 pandemic precluded it.

An invitation to join the Berkeley Law faculty prompted Jack, his wife Linda, and their three young children, Martha, Jennifer, and John Jr., to pack up and head west, arriving just in time for the Free Speech Movement and all the social, political, and personal change that would ensue. Jack and Linda, both born and raised in Buffalo, N.Y., welcomed the waves of change, eager for their children to grow up in a more just and democratic society.

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May 6, 2021 in Legal Ed News, Legal Education, Obituaries, Tax, Tax News | Permalink

Five Former IRS Commissioners (3 GOP, 2 Dem) Back Biden's Tax Plan

Washington Post, Five Former IRS Commissioners: Biden’s Proposal Would Create a Fairer Tax System:

The writers are former commissioners of the Internal Revenue Service: Lawrence B. Gibbs, 1986 to 1989; Fred T. Goldberg, 1989 to 1992; Margaret M. Richardson, 1993 to 1997; Charles O. Rossotti, 1997 to 2002; John Koskinen, 2013 to 2017.

President Biden’s proposal would restore our tax administration system to make it far fairer and more effective. This would benefit everyone who pays their taxes. It would produce a great deal of revenue by reducing the enormous gap between taxes legally owed and taxes actually paid — much of it through increased voluntary compliance. And it would improve taxpayers’ interactions with the IRS.

Achieving these goals will take time, persistence and sound management, but the investment is likely to pay for itself many times over, for decades to come.

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May 6, 2021 in Tax, Tax News | Permalink

Michael Jackson's Estate Beats The IRS: Tax Court Sets FMV Of His Name And Likeness At $4 Million, Not $161 Million

Wall Street Journal, Michael Jackson Estate to Face Smaller Tax Bill After Court Ruling:

JacksonMichael Jackson’s estate prevailed over the Internal Revenue Service on several key issues in a closely watched court case, an outcome that will push the estate’s tax burden below the government’s initial assessment.

In a ruling issued Monday, U.S. Tax Court Judge Mark Holmes found that the singer’s name and likeness were worth $4 million when he died in 2009 at the age of 50, not the $161 million the government had claimed. The IRS won on some other points about the value of other Jackson assets, but will get far less than the hundreds of millions of dollars in taxes and penalties it had sought from the estate.

The government and the estate settled some issues, and the case came down to the question of how to value three main assets: Mr. Jackson’s name and likeness and two entities tied to the music business.

The estate initially started with some lower values, but by Monday’s decision, it had said those three assets were worth $5.3 million combined. The government had started with higher values and an estate tax bill topping $500 million, but eventually concluded those three assets were worth $481.9 million combined. Judge Holmes, in his ruling, said they were worth $111.5 million. The estate’s actual tax bill will be determined later. ...

A central question in the case was this: Was it foreseeable that the estate would—as it since has done—build a successful business around Mr. Jackson’s image? Or was that such a long shot that the estate could plausibly claim, as it initially did, that Mr. Jackson’s name and likeness was worth $2,105? As Judge Holmes put it, the estate was “valuing the image and likeness of one of the best known celebrities in the world—the King of Pop—at the price of a heavily used 20-year-old Honda Civic.” ...

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May 6, 2021 in Celebrity Tax Lore, New Cases, Tax | Permalink

Wednesday, May 5, 2021

Bank Reviews Rebellion, Rascals, And Revenue: Tax Follies And Wisdom Through The Ages

Steven A. Bank (UCLA), Taxation’s Summer Blockbuster (reviewing Michael Keen (IMF) & Joel Slemrod (Michigan; Google Scholar), Rebellion, Rascals, and Revenue: Tax Follies and Wisdom through the Ages (Princeton University Press 2021)):

RascalsIn Rebellion, Rascals, and Revenue, Michael Keen and Joel Slemrod have written a fantastic book that collects and loosely organizes a treasure trove of anecdotes about tax systems, trivia, and events around the world and throughout history. In many respects the book, which endeavors to include stories about any type of tax, in any type of tax system, in any period in history, is overly ambitious. Nevertheless, Keen and Mick identify several common themes that persist over time. More contextualization might have revealed an omitted theme – the effect of societal changes on the development and adaptation of tax systems – but the book’s main contribution is in taking readers on a raucous ride through tax history that will leave them convinced that taxation is not only important, but exciting as well. In Rebellion, Rascals, and Revenue, Michael Keen and Joel Slemrod, two public finance economists from the International Monetary Fund and the University of Michigan, respectively, have written a fantastic book that collects and loosely organizes a treasure trove of anecdotes about tax systems, trivia, and events around the world and throughout history.

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May 5, 2021 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Regional Variation In Tax Compliance And The Role Of Culture

Alice Guerra (Bologna, Google Scholar) & Brooke Harrington (Dartmouth, Google Scholar), Regional Variation in Tax Compliance and the Role of Culture:

To address a debate in the literature concerning the impact of culture on tax compliance, we examine a case where extreme disparities in the two variables coincide, and test for a causal relationship. Our research design isolates the role of culture by focusing on regional differences within a single country: Italy. Southern Italy has long been a focus of research interest, not only for its extremely high rates of tax evasion, but for a host of other social and political ills, all usually attributed to regional culture.

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May 5, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Low-Income Taxpayers And The Affordable Care Act

Christine Speidel (Villanova), Low-Income Taxpayers and the Affordable Care Act (in Effectively Representing Your Client Before the IRS:

ABA What is the connection between taxes and health insurance? Why do advocates for low-income taxpayers need to know about the Affordable Care Act? The Patient Protection and Affordable Care Act (ACA) contains dozens of tax provisions. The ACA introduced a major new tax credit and a major new tax penalty for 2014. It also imported tax concepts into Medicaid. All told, the ACA will have a major impact on low-income taxpayers. Health care advocates are already in the thick of helping people get and maintain health insurance coverage. Tax advocates at Low-Income Taxpayer Clinics (LITCs) may not see ACA-related examinations and collection controversies until 2015, but now is the time many of our clients are making decisions that will seriously impact their lives and shape future tax controversies. Education, issue-spotting, and early guidance could make a positive difference. All advocates working with low-income taxpayers should educate their clients, particularly those in English as-a-second-language (ESL) communities, about their new rights and responsibilities. This article serves as an introduction and reference on the ACA for legal advocates and policymakers, with a focus on tax provisions affecting lower-income individuals. The article summarizes the major health care reform developments affecting low-income taxpayers from October 2013 through mid-2015, and introduces key ACA concepts. It then focuses in detail on the two ACA tax provisions that most concern low-income individuals: the Premium Tax Credit and the individual shared responsibility payment.

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May 5, 2021 in Book Club, Scholarship, Tax, Tax Scholarship | Permalink

Former IRS Chief Counsel Michael Desmond Joins Gibson Dunn

Former IRS Chief Counsel Michael Desmond Joins Gibson Dunn’s Los Angeles and D.C. Offices:

Desmond 3Gibson, Dunn & Crutcher LLP is pleased to announce that Michael J. Desmond has joined the firm as a partner in the Los Angeles and Washington, D.C. offices.  Desmond, who recently served as the Chief Counsel of the U.S. Internal Revenue Service and Assistant General Counsel in the U.S. Department of the Treasury, will focus on tax controversy matters.

“We are delighted that Michael has joined the firm,” said Barbara Becker, Chair and Managing Partner of Gibson Dunn.  “As a nationally prominent, deeply experienced tax litigator, he adds significant capability to our elite tax and litigation practices.  Our clients will benefit from the invaluable insight that he gained during his tenure at the IRS, where he was involved in the agency’s most important guidance and enforcement actions.”

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May 5, 2021 in Legal Education, Tax | Permalink

Tuesday, May 4, 2021

Shobe: Subsidizing Economic Segregation Through The State And Local Tax Deduction

Gladriel Shobe (BYU; Google Scholar), Subsidizing Economic Segregation Through the State and Local Tax Deduction, 11 UC Irvine L. Rev. 539 (2020) (reviewed by Ariel Jurow Kleiman (San Diego; moving to Loyola-L.A.; Google Scholar) here): 

Economic segregation has increased over the past half-century. The trend of rich localities getting richer while poor localities get poorer is particularly concerning because it limits upward mobility and perpetuates intergenerational income inequality. This Article makes the novel argument that the state and local tax deduction subsidizes economic segregation. It arrives at that conclusion by showing that the “local tax deduction” provides a greater subsidy, per capita, for wealthy, economically segregated localities because only those localities have a critical mass of wealthy taxpayers who claim the deduction. This allows wealthy localities, but not poor localities, to provide services at a cost less than face value to their residents. This Article argues that the deduction’s subsidy for wealthy localities rewards and likely contributes to economic segregation because it provides an incentive for the wealthy to segregate into wealthy, subsidized localities over less segregated and less subsidized localities.

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May 4, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Soled: The Need To Reduce The Federal Estate Tax Exemption

Jay A. Soled (Rutgers; Google Scholar), The Federal Estate Tax Exemption and the Need for Its Reduction, 47 Fla. L. Rev. 649 (2020):

One of the central components of the nation’s transfer tax system is the federal estate tax exemption. This is the amount that taxpayers can pass free of transfer tax imposition. While over the last 100 years the size of this exemption has fluctuated, Congress most recently increased it exponentially, jeopardizing the vitality of the entire transfer tax regime and potentially sapping it of its strength. To enhance the nation’s fiscal solvency and to reduce wealth inequality, this analysis contends that Congress must reduce the estate tax exemption (and, along with it, the gift and generation-skipping transfer tax exemptions). Furthermore, it proposes ways for Congress to efficiently and equitably accomplish this goal.

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May 4, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

University Of Illinois Symposium: President Biden’s First 100 Days

Symposium, President Biden’s First 100 Days, 2021 U. Ill. L. Rev. Online 1-219:

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May 4, 2021 in Conferences, Legal Education, Tax, Tax Scholarship | Permalink

IRS Seeks Grant Applications For Funding Low Income Taxpayer Clinics

LITC

The IRS has announced (IR-2021-100) that it is accepting grant applications through June 18 for Low Income Taxpayer Clinics for the 2022 grant cycle (Jan. 1 - Dec. 31, 2022):

The LITC Program is a federal grant program administered by the Office of the Taxpayer Advocate at the IRS, which is led by National Taxpayer Advocate (NTA) Erin M. Collins. LITCs can make a tremendous impact on the lives of taxpayers, as detailed in this recent blog from the NTA:  Not all Superheroes Wear Capes: Join the Low Income Taxpayer Clinic Community and Be a Hero to Taxpayers Most in Need.

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May 4, 2021 in IRS News, Tax | Permalink

Monday, May 3, 2021

Layser: A Spatial Analysis Of Place-Based Tax Incentives

Michelle D. Layser (Illinois; Google Scholar), Subsidizing Gentrification: A Spatial Analysis of Place-Based Tax Incentives, 11 UC Irvine L. Rev. ___ (2021):

Place-based tax incentives, such as the New Markets Tax Credit (NMTC) and Opportunity Zones incentives, are often used to promote investment in low-income neighborhoods. However, not all low-income neighborhoods have an equal need for investment subsidies. Subsidies for investment in already gentrifying neighborhoods, for example, may reflect inefficient inframarginal investment, and they may lead to inequitable outcomes. Critics fear that when gentrifying neighborhoods are eligible for tax incentives, they will draw investment away from the neighborhoods that need it most. However, few studies have provided empirical analysis to assess whether these concerns have merit. Through a novel geospatial analysis of the location patterns of tax-subsidized projects, this Article provides new evidence that critics’ concerns are justified.

This Article analyzes 15 years of NMTC data to explore the location patterns of tax-subsidized projects in 20 U.S. cities.

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May 3, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

The Wealth Hoarders: How Billionaires Pay Millions To Hide Trillions

Chuck Collins (Institute for Policy Studies), The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions (2021):

Wealth Horders 3For decades, a secret army of tax attorneys, accountants and wealth managers has been developing into the shadowy Wealth Defense Industry. These “agents of inequality” are paid millions to hide trillions for the richest 0.01%.

In this book, inequality expert Chuck Collins interviews the leading players and gives a unique insider account of how this industry is doing everything it can to create and entrench hereditary dynasties of wealth and power. He exposes the inner workings of these “agents of inequality,” showing how they deploy anonymous shell companies, family offices, offshore accounts, opaque trusts, and sham transactions to ensure the world’s richest pay next to no tax. He ends by outlining a robust set of policies that democratic nations can implement to shut down the Wealth Defense Industry for good.

This shocking exposé of the insidious machinery of inequality is essential reading for anyone wanting the inside story of our age of plutocratic plunder and stashed cash.

It is no great surprise anymore that we are facing the greatest crisis in income and wealth inequality that we have seen since the 1920s. What is shocking is the sprawling system of corruption that the ultra-rich have designed in order to hoard their unimaginable wealth at the expense of everyone else. Chuck's book reveals not only the inner workings of this elaborate scheme to hide more than $20 trillion in wealth, it offers us a blueprint for reversing this obscene inequality so we can take back our democracy and ensure that our government works for everybody—not just the billionaire class and wealthy campaign contributors.
Senator Bernie Sanders

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May 3, 2021 in Book Club, Tax, Tax Scholarship | Permalink

Lesson From The Tax Court: The Multiple Paths For Loss Deductions

Camp (2017)Section 165 permits certain groups of taxpayers to deduct certain losses of capital under certain circumstances.  I emphasize to my students that §165 is, at bottom, a capital recovery provision.  There is no deduction for lost opportunities, lost profits, or lost pets.  It's only for losses of capital “sustained during the taxable year and not compensated for by insurance or otherwise.” §165(a).

Ronnie S. Baum and Teresa K. Baum v. Commissioner, T.C. Memo. 2021-46 (Apr. 27, 2021) (Judge Kerrigan) teaches a nice basic lesson on the multiple ways taxpayers can deduct the loss of money under §165.  There the taxpayers claimed to have lost money in a stock purchase deal gone bad.  They tried to claim a theft loss deduction of $300,000 for tax year 2015.  The Tax Court said no.  The lesson I see is not so much about the rules for theft losses.  Rather, the reasons why these taxpayers lost gives a nice lesson in the various options taxpayers have in deducting losses.  It's a woulda-coulda-shoulda lesson.  In fact, I think the Baums may still be able to get the deduction, for a different reason in a different year.  I may be wrong!  I invite your thoughts below the fold.

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May 3, 2021 in Bryan Camp, New Cases, Scholarship, Tax, Tax Practice And Procedure, Tax Scholarship | Permalink | Comments (1)

TaxProf Blog Weekend Roundup

Sunday, May 2, 2021

The Top Five New Tax Papers

There is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #1:

  1. SSRN Logo (2018)[461 Downloads]  Taxing the American Emigrant, by Laura Snyder (Taxpayer Advocacy Panel)
  2. [400 Downloads]  Ten Truths About Tax Havens — Inclusion And The ‘Liberia’ Problem, by Steven Dean (Brooklyn) & Attiya Waris (Nairobi)
  3. [354 Downloads]  Tax Treaty Entitlement and Fiscally Transparent Entities: Improvements or Unnecessary Complications?, by Leopoldo Parada (University of Leeds; Google Scholar)
  4. [337 Downloads]  Insider Giving, by Sureyya Burcu Avci (Sabanci University; Google Scholar), Cindy A. Schipani (Michigan; Google Scholar), H. Nejat Seyhun (Michigan; Google Scholar) & Andrew Verstein (UCLA; Google Scholar),
  5. [250 Downloads]  Redistribution For Realists, by Zachary Liscow (Yale; Google Scholar)

May 2, 2021 in Scholarship, Tax, Tax Scholarship, Top 5 Downloads | Permalink

Saturday, May 1, 2021

This Week's Ten Most Popular TaxProf Blog Posts

Morse: Important Developments In Federal Income Taxation (2020)

Edward A. Morse (Creighton), Important Developments in Federal Income Taxation (2020) (142 pages):

This outline covers significant developments in federal income taxation arising during the past year. It offers a selective treatment focusing on items likely to interest practitioners and advisors within a broad range of professional practices.Tax Court decisions (regular and memorandum) and appellate cases receive greater attention on account of their legal significance; Tax Court summary opinions and unreported appellate cases are omitted. Other trial decisions in the district court and claims court receive only limited attention due to their comparatively limited impact on tax law development. A few noteworthy administrative developments are also included, but such discussion is not comprehensive.

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May 1, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Friday, April 30, 2021

Weekly SSRN Tax Article Review And Roundup: Layser Reviews Work Hours And Income Tax Cuts By Simkovic And Allen

This week, Michelle Layser (Illinois; Google Scholar) reviews Michael Simkovic (USC; Google Scholar) and Eric J. Allen (UC-Riverside; Google Scholar), Work Hours & Income Tax Cuts: Evidence from Federal-State Tax Interactions, 25 Fla Tax Rev. __ (2021).

Layser (2018)

When the Biden Administration announced its plans to increase both capital gains tax rates and ordinary income tax rates on high-income earners, opponents predictably responded that doing so would reduce economic growth. This objection is supported, in part, by the familiar theory that taxpayers respond to increased taxes on labor by simply working less. Conversely, tax cuts are expected to increase labor effort since the after-tax returns are greater. But the reality is more complicated. As Professors Michael Simkovic and Eric J. Allen explain, “[t]he effect of an income tax cut on work hours can be difficult to predict because tax cuts often produce two opposite effects: a substitution effect, which encourages work, and an income or wealth effect which discourages work.”

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April 30, 2021 in Michelle Layser, Scholarship, Tax, Tax Scholarship, Weekly SSRN Roundup, Weekly Tax Roundup | Permalink

Tax Policy In The Biden Administration

ITPF Hosts Conference Today On A New International Tax Architecture Based On The OECD Blueprints

The International Tax Policy Forum hosts a conference today on "Whither International Taxation: A New International Tax Architecture Based on the OECD Blueprints?" (program):

ITPFThe architecture for international tax relations among developed economies was established almost 100 years ago by the League of Nations. Over the last few years, however, historic concepts regarding jurisdiction to tax, attribution of profits to permanent establishments, and arm’s-length pricing have come under pressure. Notable developments include: the UK diverted profits tax, digital services taxes and levies enacted or proposed in over 40 countries, and the US Base Erosion and Anti-abuse Tax (BEAT).

In October of last year, the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting released two Blueprints proposing new guidelines for the taxation of multinational enterprises (MNEs). The Pillar One Blueprint reallocates the right to tax certain high-margin income of MNEs on the basis of sales or users. Pillar Two sets forth a model minimum tax on the income of foreign subsidiaries along with rules for denying deductions (or imposing withholding tax) on payments not subject to a minimum rate of tax in the payee jurisdiction. The Biden Administration has endorsed the OECD/G20 project and agreement on open issues is targeted for the middle of this year.

This conference brings together experts from academia, government, and private practice to share their views on challenges to the international tax architecture and the OECD Blueprints. 

Overview of the OECD Blueprints:

  • Mary Bennett (Baker McKenzie)

Are New Rules Needed for Taxing International Income?:

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April 30, 2021 in Conferences, Tax, Tax Conferences, Tax Scholarship | Permalink

Difficulty Of Care: Aligning Tax And Health Care Policy For Family Caregiving

Christine Speidel (Villanova), Difficulty of Care: Aligning Tax and Health Care Policy for Family Caregiving, 52 Loy. U. Chi. L.J. 503 (2021):

In the United States millions of people live with disabilities, many of whom require assistance with activities of daily life to remain in their homes and communities. However, financial support for this assistance is limited. Many caregivers forgo working outside the home in order to provide care to a family member. And while state and federal programs provide some compensation for caregiving, caregivers frequently face problems including poverty, lack of health insurance, lack of Social Security and Medicare credits, and lack of retirement savings. Our nation’s paltry support for caregiving threatens the practical ability of people with disabilities to choose community integration over institutional living.

This Essay examines the little-known and little-used “difficulty of care” gross income exclusion under I.R.C. § 131 as a possible vehicle to improve this picture. While § 131 originated as an exclusion for foster payments, it was reinterpreted in IRS Notice 2014-7 to apply to contemporary programs for in-home services and supports. Unfortunately, the impact of this reinterpretation was complicated and hotly contested. This Essay juxtaposes the evolution of home and community-based health care services, the Affordable Care Act, and the evolution of tax expenditures for low-income taxpayers to explain how the tax and health care systems collided in the aftermath of Notice 2014-7.

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April 30, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Thursday, April 29, 2021

Hemel Presents Regulation And Redistribution With Lives In The Balance Virtually Today At Penn State

Daniel Hemel (Chicago; Google Scholar) presents Regulation and Redistribution with Lives in the Balance, 88 U. Chi. L. Rev. __ (2021), virtually at Penn State-University Park today as part of its Faculty Works in Progress Series:

Hemel_daniel (1)A central question in law and economics is whether non-tax legal rules should be designed solely to maximize efficiency or whether they also should account for concerns about the distribution of income. This question takes on particular importance in the context of cost-benefit analysis. Federal agencies apply cost-benefit analysis when writing regulations that generate multibillion dollar impacts on the US economy and profound effects on millions of Americans’ lives. In the past, agency cost-benefit analyses typically have ignored the income-distributive consequences of those regulations. That may soon change: On his first day in office, President Biden instructed his Office of Management and Budget to propose procedures for incorporating distributive considerations into cost-benefit analysis, thus bringing renewed relevance to a long-running law-and-economics debate.

This article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis.

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April 29, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Blank Presents Automated Legal Guidance Virtually Today At Queen Mary

Joshua Blank (UC-Irvine; Google Scholar) presents Automated Legal Guidance (with Leigh Osofsky (North Carolina; Google Scholar)), 106 Cornell L. Rev. 179 (2020), virtually at the Institute of Tax Law at the Centre for Commercial Law at Queen Mary University of London School of Law today hosted by Bernard Scheider and Christiana HJI Panayi:

Blank520Through online tools, virtual assistants, and other technology, governments increasingly rely on artificial intelligence to help the public understand and apply the law. The Internal Revenue Service, for example, encourages taxpayers to seek answers regarding various tax credits and deductions through its online “Interactive Tax Assistant.” The U.S. Army directs individuals with questions about enlistment to its virtual guide, “Sgt. Star.” And the U.S. Citizenship and Immigration Services suggests that potential green card holders and citizens speak with its interactive chatbot, “Emma.” Through such automated legal guidance, the government seeks to provide advice to the public at a fraction of the cost of employing human beings to perform these same tasks.

This Article offers one of the first critiques of these new systems of artificial intelligence.

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April 29, 2021 in Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink

Oei & Ring: 'Slack' In The Data Age

Shu-Yi Oei (Boston College; Google Scholar) & Diane M. Ring (Boston College; Google Scholar), 'Slack' in the Data Age, 73 Ala. L. Rev. ___ (2021):

This Article examines how increasingly ubiquitous data and information affect the role of “slack” in the law. Slack is the informal latitude to break the law without sanction. Pockets of slack exist for various reasons, including information imperfections, enforcement resource constraints, deliberate nonenforcement of problematic laws, politics, biases, and luck. Slack is important in allowing flexibility and forbearance in the legal system, but it also risks enabling selective and uneven enforcement. Increasingly available data is now upending slack, causing it to contract and exacerbating the risks of unfair enforcement.

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April 29, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Which Is More Difficult: The CPA Exam Or The Bar Exam?

Accounting Today, Which Is More Difficult: The CPA Exam or the Bar?:

You might not believe this, but some accountants and attorneys compete for who had the tougher journey to pass their credentialing exam. I sat for the Bar Exam a few years ago and passed on my first try after finishing law school at the age of 58. However, my master’s degree is in accounting, so two years after passing the bar, I decided I might as well try to obtain my CPA license by sitting for the CPA Exam as well. Of course, everyone thought I was a bit crazy, and that is something I expected. What I did not expect was the debate surrounding which exam is harder. ...

It had not occurred to me that sitting for both exams would create a competition among my highly educated colleagues as to who had it worse in their path toward licensure. But it did. So, here is my honest assessment of the two exams. ...

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April 29, 2021 in Legal Ed News, Legal Education, Tax, Tax News | Permalink

Stanley Surrey, The 1981 US Model, And The Single Tax Principle

Reuven S. Avi-Yonah (Michigan; Google Scholar) & Gianluca Mazzoni (S.J.D. (International Tax) 2020, Michigan), Stanley Surrey, the 1981 US Model, and the Single Tax Principle:

2021 marks the 40th anniversary of the 1981 U.S. Model Tax Treaty as well as the 5th anniversary of the 2016 US Model Tax Treaty. The first author has repeatedly argued that the 1981 Model gave life to the single tax principle (“STP”). The 2016 Model updates effectively implemented the principle that cross-border income should be taxed once – that is not more and but also not less than once. For example, the 2016 Model does not reduce withholding taxes on payments of highly mobile income that are made to related persons that enjoy low or no taxation with respect to that income under a preferential tax regime. The aim of this article is to identify with relative certainty the origins of the STP. The purpose is to give a systematic and historical interpretation of the STP by looking at the context during which it was purportedly founded.

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April 29, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

Wednesday, April 28, 2021

Corporate Taxes: Rates Down, Revenues Up

Chris Edwards (Cato Institute), Corporate Taxes: Rates Down, Revenues Up:

U.S. Treasury Secretary Janet Yellen recently complained about a “30-year race to the bottom on corporate tax rates,” and is pushing for a higher U.S. rate and a global minimum rate. Yellen wants to make sure that corporate taxes “raise sufficient revenue to invest in essential public goods and respond to crises.” Economist Gabriel Zucman approved of the proposed tax hike, saying corporations should “pay more in taxes, instead of them paying less and less."

Zucman’s claim about “less and less” is incorrect when looking across the major economies in recent decades. ... The chart below shows the average corporate tax rate and average corporate tax revenues as a percent of GDP for 22 countries. The average rate fell from 47 percent in 1980 to 25 percent in 2019. As a consequence, Yellen or Zucman might think that corporate tax revenues would have fallen. But corporate tax revenues are up substantially since the 1980s. Corporate tax revenues for the 22 countries rose from 2.2 percent in 1980 to 3.0 percent in 2019.

Edwards

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April 28, 2021 in Tax, Tax News, Think Tank Reports | Permalink

The Tax Roots Of The Resource Curse In West Virginia

Alison Peck (West Virginia), Standard Oil, Consolidation Coal, and the Roots of the Resource Curse in West Virginia, 124 W. Va. L. Rev. ___ (2021):

Despite its natural resource wealth, West Virginia today ranks last among all states in its residents’ overall sense of well-being, a puzzle that economists call “the resource curse.” Much of West Virginia’s wealth, in the form of coal, oil, and gas, left the state in the late nineteenth and early twentieth centuries before the state could tax it. This discouraging story was not inevitable. In 1905, a Morgantown lawyer named George C. Baker led an effort to tax coal, oil, and gas leases as personal property that nearly succeeded. Baker and his allies, Governor William M.O. Dawson and Tax Commissioner Charles W. Dillon, won a high-profile court battle in 1905 against industries that had managed to defeat hot-button tax reform efforts in the legislature the year before.

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April 28, 2021 in Scholarship, Tax, Tax Scholarship | Permalink

SSRN Tax Professor Rankings

SSRN Logo (2018)SSRN has updated its monthly ranking of 750 American and international law school faculties and 3,000 law professors by (among other things) the number of paper downloads from the SSRN database.  Here is the new list (through April 1, 2021) of the Top 25 U.S. Tax Professors in two of the SSRN categories: all-time downloads and recent downloads (within the past 12 months):

    All-Time   Recent
1 Reuven Avi-Yonah (Michigan)  198,927 Reuven Avi-Yonah (Michigan) 8,456
2 Dan Shaviro (NYU) 122,515 D. Dharmapala (Chicago) 5,555
3 Lily Batchelder (NYU) 120,890 Ruth Mason (Virginia) 4,902
4 Daniel Hemel (Chicago) 119,049 Lily Batchelder (NYU) 4,693
5 David Gamage (Indiana-Bloom.) 118,552 David Kamin (NYU) 4,205
6 Darien Shanske (UC-Davis) 111,727 Bridget Crawford (Pace) 3,988
7 David Kamin (NYU) 108,921 Kim Clausing (UCLA)     3,734
8 Cliff Fleming (BYU)    105,813 Daniel Hemel (Chicago) 3,686
9 Manoj Viswanathan (UC-Hastings) 102,713 Diane Ring (Boston College) 3,022
10 Rebecca Kysar (Fordham) 101,785 Margaret Ryznar (Indiana-Indy)   2,989
11 Ari Glogower (Ohio State) 100,612 Shu-Yi Oei (Boston College)  2,882
12 Michael Simkovic (USC) 45,229 Hugh Ault (Boston College) 2,872
13 D. Dharmapala (Chicago) 44,003 Richard Ainsworth (Boston Univ.) 2,651
14 Paul Caron (Pepperdine) 38,155 David Gamage (Indiana-Bloom.) 2,224
15 Louis Kaplow (Harvard) 34,821 Robert Sitkoff (Harvard) 2,202
16 Richard Ainsworth (Boston Univ.) 32,105 Dan Shaviro (NYU) 2,198
17 Ed Kleinbard (USC) 27,585 Darien Shanske (UC-Davis)  2,062
18 Bridget Crawford (Pace) 27,219 Brad Borden (Brooklyn) 1,896
19 Vic Fleischer (UC-Irvine) 26,835 Louis Kaplow (Harvard) 1,891
20 Robert Sitkoff (Harvard) 26,150 Yariv Brauner (Florida) 1,729
21 Brad Borden (Brooklyn) 26,094 Paul Caron (Pepperdine)   1,576
22 Jim Hines (Michigan) 25,773 Cliff Fleming (BYU) 1,304
23 Ted Seto (Loyola-L.A.) 24,974 Katie Pratt (Loyola-L.A.) 1,245
24 Richard Kaplan (Illinois) 24,422 Michael Simkovic (USC) 1,240
25 Gladriel Shobe (BYU) 24,308 Ari Glogower (Ohio State) 1,199

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April 28, 2021 in Scholarship, Tax, Tax Prof Rankings, Tax Scholarship | Permalink