Marital Deduction Formulae—A Planner’s Guide

The marital deduction formula bequest exists principally as a means of minimizing federal estate taxes. Considerations apart from the estate tax, however, have had a substantial effect upon the form of such clauses, and a 1964 pronouncement by the Internal Revenue Service has circumscribed their continued utility. The author examines the basic formula clauses, setting out the characteristics of each, the respects in which they differ, the objectives each is designed to secure, and the factors to be weighed by the draftsman who wishes to utilize a formula bequest to achieve a maximum federal estate tax marital deduction

The Misconstruction of the Deductions for Business and Personal Casualty Losses

Losses suffered on an individual\u27s personally used property generally are not deductible. Even after the changes made by the 2017 Tax Cuts and Jobs Act, in two circumstances an exception to this rule applies when such losses arise from.fire, storm, shipwreck, or other casualty, or from theft. The principal issue that arises is determining the meaning of the term other casualty. Taking what they deemed to be the common elements in the three explicitly identified casualties, the courts and the Internal Revenue Service determined that an event will qualify as an other casualty only if it is sudden, unusual, and unexpected. This current definition of other casualty does not support the appropriate purpose of that provision. Applying this incorrect standard leads to unfair results in that the courts and the Service disallow deductions for some losses that should be deductible. Instead, courts and the Service should look to the purpose of allowing a casualty and theft loss deduction. The key issues are whether a loss of property as a result of an outside force constitutes a personal consumption and whether the event causing the loss is one that is part of the ordinary vicissitudes of life. If not, allowing a deduction complies with the congressional purposes for allowing one in the two circumstances in which the deduction is currently allowed. While most scholarship concerning the casualty and theft loss deduction is on personal losses, the definition of other casualty can be important to business and investment losses as well. The determination that a business or investment loss did or did not occur as a result of a casualty can affect the timing and characterization of the deduction of that loss. Whatever definition is adopted for personal losses purpose should not be used to determine the timing and realization of a business or investment loss because the role of the casualty characterization in applying the realization requirement is very different. There has been little, if any, commentary on those issues and a major contribution of this piece is to shed light on them

The Misconstruction of the Deductions for Business and Personal Casualty Losses

Losses suffered on an individual’s personally used property generally are not deductible. Even after the changes made by the 2017 Tax Cuts and Jobs Act, in two circumstances an exception to this rule applies when “such losses arise from fire, storm, shipwreck, or other casualty, or from theft.” The principal issue that arises is determining the meaning of the term “other casualty.” Taking what they deemed to be the common elements in the three explicitly identified casualties, the courts and the Internal Revenue Service determined that an event will qualify as an “other casualty” only if it is “sudden,” “unusual,” and “unexpected.” This current definition of “other casualty” does not support the appropriate purpose of that provision. Applying this incorrect standard leads to unfair results in that the courts and the Service disallow deductions for some losses that should be deductible. Instead, courts and the Service should look to the purpose of allowing a casualty and theft loss deduction. The key issues are whether a loss of property as a result of an outside force constitutes a personal consumption and whether the event causing the loss is one that is part of the ordinary vicissitudes of life. If not, allowing a deduction complies with the congressional purposes for allowing one in the two circumstances in which the deduction is currently allowed. While most scholarship concerning the casualty and theft loss deduction is on personal losses, the definition of “other casualty” can be important to business and investment losses as well. The determination that a business or investment loss did or did not occur as a result of a casualty can affect the timing and characterization of the deduction of that loss. Whatever definition is adopted for personal losses purpose should not be used to determine the timing and realization of a business or investment loss because the role of the casualty characterization in applying the realization requirement is very different. There has been little, if any, commentary on those issues and a major contribution of this piece is to shed light on them

A theory of contracts for web services

<p>Contracts are behavioural descriptions of Web services. We devise a theory of contracts that formalises the compatibility of a client to a service, and the safe replacement of a service with another service. The use of contracts statically ensures the successful completion of every possible interaction between compatible clients and services.</p> <p>The technical device that underlies the theory is the definition of filters, which are explicit coercions that prevent some possible behaviours of services and, in doing so, they make services compatible with different usage scenarios. We show that filters can be seen as proofs of a sound and complete subcontracting deduction system which simultaneously refines and extends Hennessy's classical axiomatisation of the must testing preorder. The relation is decidable and the decision algorithm is obtained via a cut-elimination process that proves the coherence of subcontracting as a logical system.</p> <p>Despite the richness of the technical development, the resulting approach is based on simple ideas and basic intuitions. Remarkably, its application is mostly independent of the language used to program the services or the clients. We also outline the possible practical impact of such a work and the perspectives of future research it opens.</p&gt

Tax Significance of Payments in Satisfaction of Liabilities Arising Under Section 16(b) of the Securities Exchange Act of 1934

This article examines the income tax significance to the insider of his payment in satisfaction of a liability arising under section 16(b). Such taxpayers have usually sought a deduction against ordinary income in the year of payment. When the issue was first raised, the deduction was denied. Section 16(b) liability was held to be in the nature of a penalty; allowance of the deduction, it was found, would weaken an effective method of enforcing the sharply defined policy expressed in sectin 16(b).... In 1961 the Internal Revenue Service modified its earlier position by ruling that section 16(b) is not a penal provision. The purpose of the section, the ruling stated, is merely to remove all profit from the insider\u27s transactions, thereby placing him in the position he would have occupied had he not traded. Allowance of the deduction was held consistent with this purpose. The ruling concluded: The income tax significance of the capital stock dealings giving rise to the payment determines whether it is deductible as an ordinary loss or as a capital loss. The Tax Court\u27s recent refusal to accept this limitation upon the deduction reognized by the ruling gives renewed interest to the topic

A Tax Deduction for Direct Charitable Transfers: The Case Against Davis v. United States, 861 F.2d 558 (9th Cir. 1988)

Monetary transfers to charitable service providers may be deductible either as charitable contributions or as unreimbursed expenses. Whether a charity must possess the transfer to establish the charity control necessary to effect a charitable deduction is an unresolved issue. Using direct transfers to Mormon missionaries in Davis v. United States as an example, this Note concludes that direct transfers to service providers should be deductible and proposes a test for determining when charity control is sufficient without possession

Intellectual Capital and Its Effect on Service Quality of Commercial Bank of Ethiopia: Evidence from SNNPR District

The main purpose of this research is to examine intellectual capital performance of listed district of commercial bank of Ethiopia and its impact on service quality. The researchers used multiple regression analysis to ascertain the extent that intellectual capital components indices affect service quality of the targeted bank district. This study adopts a deduction approach and a quantitative method as the research methodology. Empirical findings of the study showed that human and customer capital have a positive and significant effect on service quality.  However, structural capital has statistically weak relationship with service quality. Keywords: intellectual capital, human capital, structural capital, customer capital, service quality DOI: 10.7176/RJFA/11-3-04 Publication date: February 29th 202

A Lay Word for a Legal Term: How the Popular Definition of Charity Has Muddled the Perception of the Charitable Deduction

In the United States there is a deeply held conviction “that taxpayers who donate to charity should generally not be subject to the same income tax liability as similarly situated taxpayers.” This innate sense about the Internal Revenue Code’s § 170, otherwise known as the charitable deduction, resonates with Americans’ sense of fairness and creates strong barriers to curtailing its function. This same sense of fairness is tied to the perceived effects of the charitable deduction. Yet, how “charitable” is the charitable deduction, and how charitable do we expect it to be? This Article argues that the discrepancy between the popular meaning of the word “charitable” and the legal meaning has distorted both the perception of, and the political justifications for, the provision. The charitable deduction’s definitional discrepancy is perhaps not immediately apparent, because often the legal and layperson’s definitions of the word are the same. However, on occasion, the legal and popular definitions vary. One such example is the difference between the Tax Code’s and layperson’s definition of the word “charitable.” Although the legal definition does cover direct relief of the poor, it also has a much wider mandate, including advancing religion, science and education, constructing public buildings, lessening neighborhood tensions, and other public benefit purposes. These types of causes may provide a service to society, but they are neither charitable under the popular meaning of the word nor would most individuals consider organizations that provide such services a charity. This broad legal definition of “charitable” has created a misperception in the American psyche of where the benefits of the charitable deduction are allocated. The very use of the word “charitable” in the statutory language creates a powerful association in most non-lawyers that ties the deduction to churches and poverty relief organizations, when in reality this is only a small portion of the tax subsidy. Further, the emotive rhetoric used by politicians when attacking proposed amendments curtailing the charitable deduction is grossly out of sync with the primary beneficiaries of the provision. This Article argues that that the definitional gap between the legal and lay definition of “charitable” impedes meaningful discussion of amendments to the charitable deduction. This has led to mistaken or underestimated assumptions about the allocation of the subsidy. A clearer understanding of where the § 170 subsidy is allocated would allow politicians and the public to more critically examine this tax expenditure. In light of this confusion, the Article proposes Congress should rename § 170 the “qualified donation deduction”—a term that would not create the same poverty relief associations as the charitable deduction misnomer. This Article is structured as follows: Part II looks at how Congress and commentators justify the charitable contribution, examining the historical, theoretical and political justifications of the section. Part III examines the data associated with the charitable deduction and calculates the percentage of the charitable deduction expenditure that is allocated to direct poverty relief. Part IV proposes that Congress rename the charitable deduction to break the association between the charitable deduction and poverty relief. This section also addresses the main critiques of this proposal. Part V concludes

The Shifting Use of the So-Remote-as-to-be-Negligible Standard for Qualified Conservation Contributions

Qualified conservation contributions, also known as conservation easements, have become a subject of close scrutiny under the Internal Revenue Service within the past decade. One reason for such scrutiny is that conditions are being imposed on these contributions, testing the perpetuity requirement for conservation easement deductions. In order for a condition on the donation to survive, the condition must be “so remote as to be negligible.” The judicial interpretation of the so-remote-as-to-be-negligible standard has fluctuated since its addition to the Treasury Regulations in 1939. Most recently, the Tax Court in Graev v. Commissioner, explored the meaning of the so-remote-as-to-be-negligible standard outside of the traditional grantor/grantee relationship by assessing the likelihood of IRS action. By denying the deduction in Graev, the Tax Court highlighted that a condition based on IRS action, namely the allowance of a deduction, should not be a permissible condition for qualified conservation contributions. This Note will argue that further clarification of the so-remote-as-to-be-negligible standard should be included in the Treasury Regulations. In particular, conditions based on the IRS allowance of a deduction should be explicitly barred from consideration under the so-remote-as-to-be-negligible standard