The Impact of the 1986 Tax Reform Act on Income Shifting From Corporate to Shareholder Tax Bases: Evidence From the Motor Carrier Industry

Charles Enis
Using a sample of privately held C corporations and S corporations from the motor carrier industry during 1984-92, we assess the effect of the 1986 Tax Reform Act on the amount of corporate income shareholders of privately held C corporations shifted to their personal tax bases. We estimate that the C corporations shifted a mean of $130,587 taxable income each year to shareholders (representing 29percent of their mean...

Amended Returns – Imposing a Duty to Correct Material Mistakes

Calvin Johnson
T. Keith Fogg The amended return proposal would require a taxpayer to file an amended return to correct an innocent factual error large enough to be worth correcting once the error is discovered. Failure to correct a prior representation on discovery of its falseness is a form of deceit under American nontax law. A taxpayer should not deceive his government.[1] I. Current Law A. Internal Revenue Code The Internal...

Tax Fraud Investigations – A Procedural Road Map – Part I

Burton J. Haynes
Joseph M. Jones I. Introduction An IRS fraud investigation is a harrowing experience, not only for the corporate officers, directors and employees who are the subject of the investigation, but for the corporation's legal advisors as well. The process many begin innocuously with a routine civil tax examination, or with the jolting arrival of a grand jury subpoena. The investigators may not know exactly what (or who)...

Good Hybrids/Bad Hybrids

Edward Mccaffery
In the second article I published as an academic, in 1992, "Tax Policy Under Hybrid Income - Consumption Tax," I wrote that: the tax policy literature has spent decades, and by some measures centuries, discussing the relative merits of an income versus a consumption tax. It may be time to stop. We should accept the fact of a hybrid income-consumption tax and begin to figure out how best to structure it.[1] My ears...

The Section 734(b) Basis Adjustment Needs Repair

Howard Abrams
The partnership tax provisions – Subchapter K of the Internal Revenue Code – work pretty well. And they have a difficult job to do because they must provide a reasonable mechanism for taxing arrangements between parties that can be far from off-the-rack. It should not be difficult to figure out how to tax two individuals who contribute equal amounts of cash to start a joint business in which each will own a one-half...

Elephant in the Parlor: Repeal of Stepup in Basis at Death

Calvin Johnson
This proposal would end the step-up in basis for property acquired by reason of the death of another individual and increase the tax on inherited property when it is sold. The exemption for built-in gain at death is unfair because it allows consumption, even sumptuous consumption of investments by heirs, without either the heir or original owner paying tax on the consumption.[1] Under normal patterns, tax on heirs...

A Voluntary Tax? Revisited

Edward Mccaffery
Abstract This Article explains, updates and generalizes Cooper (1979), which had labeled the estate tax a voluntary tax. The tax has remained voluntary in the sense of being easily avoidable, even by those engaging in activities within the tax's ostensible normative target (i.e., significant intergenerational wealth transfers). Further, all taxes on the yield to capital are voluntary in this sense. The federal tax...

More Cooperation, Less Uniformity: Tax Deharmonization and The Future of the International Tax Regime

Steve Dean
Efforts to foster improved international tax cooperation have become preoccupied with tax harmonization. Deharmonization offers the possibility of harmony without uniformity. By exploring two examples of tax deharmonization in practice and considering the origins and limitations of tax harmonization, this Article brings the traditional emphasis on harmonization into question. It then makes the case that deharmonization—cooperation...

The Federal Definition of Tax Partnership

Bradley T. Borden
I. INTRODUCTION “When an entity must be classified for purposes of a Federal income tax statute, policy considerations of Federal income tax law should govern that classification . . . .”[1] Thus spoke the Tax Court, honoring federal income tax policy with its pen, but remaining far from it in application.[2] In fact, although the federal definition of tax[3] partnership has been at issue in over 150 statutes,...

Moonshine to Motorfuel: Tax Incentives For Fuel Ethanol

Mona Hymel
Written by Roberta F. Mann and Mona L. Hymel ABSTRACT Biofuels have been embraced by supporters from President George W. Bush to the Natural Resources Defense Council. Before 1930, the U.S. Treasury focused on shutting down small alcohol producers. After 1978, U.S. energy policy sought to encourage ethanol production to reduce dependence on foreign oil. Federal and state incentives have been credited with increasing...
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