Calvin Johnson - tax.network

Andrews & Kurth Centennial Professor of Law, University of Texas at Austin - School of Law, USA

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Contributions to Capital from Nononers

Section 118 gives a corporation an exemption for a‘‘contribution to capital’’ received from a nonshareholder or a shareholder not acting as such. A typical transaction within the exemption is a transfer by a local government or business group to a corporation to induce the corpo- ration to locate its factory ...

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Amended Returns – Imposing a Duty to Correct Material Mistakes

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 ...

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No Deductions for Tax Planning And Controversy Costs

Tax planning and tax litigation are too profitable for the taxpayer. The tax accounting for tax planning and controversy work allows an exemption for the reduction in tax achieved by the costs and also generally allows a deduction for the costs of the work. The mismatch of the exemption of ...

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Two Years of the Shelf Project

A. The Impending Tax Crisis The Congressional Budget Office estimates that the federal budget deficit for 2009 will total $1.6 trillion, or 11.2 percent of GDP.[1] Over the coming decade, federal spending will average twice that (22.5 percent of GDP) without much chance of finding significant amounts of unpopular spending that ...

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End Identification of Stock Certificates

This proposal would end the ability of taxpayers under current law to identify which lot of stock they have sold. The proposal would instead minimize unrealized appreciation and bring adjusted basis for the whole block of stock the taxpayer owns after the sale as close as possible to the fair ...

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Deferred Payment Sales

Deferred Payment Sales: Change The Basis and Character Rules In installment sales and open transactions, tax is deferred until payments are received. This proposal would continue to defer tax until payments are received, but would change the recovery of basis and character rules. The proposal would allocate payments first as recognition ...

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

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, ...

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Fixing Capital Gains at the Core

Eligibility for the lower capital gains tax rate is now broader than it should be. Capital gains originally meant amounts that were credited to the capital or corpus account. Capital gains were still capital or wealth and not available to income beneficiaries for consumption. The primary policy justification for the ...

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Wash Sales with Replacement by Related Parties

In a realization system, taxpayers have an incentive to sell loss property from a diversified portfolio and hold gain property. With no limitations on selective loss sales, the effective tax rate on an appreciating portfolio is less than zero. Replacements by related parties are now sometimes treated as “fake dispositions” ...

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UBIT to the Defense! ESOPs and Government Entities

Calvin H. Johnson Ellen P. Aprill The unrelated trade or unrelated business income tax imposes tax on the unrelated business income of tax exempt organizations, including charities and pension plans. The general principle is that tax is imposed on business income no matter what its use or destination.UBIT defends the tax base ...

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Ain’t Charity: Disallowing Deductions for Kept Resources

The two proposals in this article have a common theme: Accounting for taxable income should reflect money a taxpayer has kept for his own self-serving uses. A charitable deduction is reasonable when the taxpayer has forfeited resources to others, but not when the taxpayer has consumed resources for self-use. Providing ...

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Timber!

Under current law the combination of tax preferences for timber means that timber investments are subject to less than zero tax. Tax accounting should describe the economic income from timber. This proposal would treat timber as an ordinary asset, require the capitalization of all costs incurred before harvest, and allow ...

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An Employer-Level Proxy Tax on Fringe Benefits

A. Overview When nontaxable substitutes for cash are available, an employer and employee working in concert will inevitably shift compensation away from cash to the untaxed form. Goods and services are usually less convenient and less valuable to the employee than cash. Still, as long as the value lost is less ...

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Don’t Let Capital Accounts Go Negative

The proposal would prevent negative capital accounts as a remedy to prevent tax shelters. It would suspend deductions that would otherwise result in the taxpayer’s adjusted basis being lower than the outstanding debt. When capital accounts are negative, the transaction is a tax shelter in which tax is negative, that ...

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Accurate and Honest Tax Accounting for Oil and Gas

Tax accounting for the oil and gas industry does not describe the economic income from the investment. Indeed, for a broad range of reasonable assumptions, oil and gas accounting delivers anti-tax or subsidies to profitable investments. The combination of four important tax preferences generates a subsidy that is a negative ...

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Was it Lost?: Personal Deductions Under Tax Reform

It is my pleasure to be able to contribute to an issue of the SMU Law review dedicated to Charles O. Galvin. Dean Galvin has had a long career of honorable service to the law and more specifically, to law. He is associated with many ideas, prominently, the argument for ...

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Repeal Tax Exemption for Municipal Bonds

Overview The proposal would repeal for future years the exemption for interest on state and local bonds. While the exemption is supposed to help state and local borrowers, only a fraction of the federal cost of the exemption is captured by the borrowers. What is captured, in the form of lower ...

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Impose Capital Gain Tax on Like-Kind Exchanges

Current law allows a taxpayer to avoid taxation of gain on a disposition of real estate to the extent the taxpayer is willing to acquire other real estate as a replacement. The proposal would repeal section 1031 regarding gain and require an exchange broker to file an information return showing ...

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Replace the Corporate Tax With a Market Capitalization Tax

This proposal would replace the 35 percent corporate tax on publicly traded companies with a low 20-basis point quarterly tax on the issuer on the market capitalization including both traded debt and equity. A low-yield corporate tax would remain for corporations that are not publicly traded, and for a transition ...

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Gains and Losses on Business Depreciable Property

This proposal would repeal section 1231, which accords capital gain treatment to gains but gives ordinary treatment to losses. That asymmetry increases the expected value of volatile investments over the pretax value of the investments. During a revenue crisis, the tax system should ...