Hester Prynne, Lydia Bennet, and Section 306 Stock: The Concept of Tainting in the American Novel, the British Novel, and the Internal Revenue Code

Did Nathaniel Hawthorne\u27s novel, The Scarlet Letter, inspire Section 306 of the Internal Revenue Code? This code provision adopts a peculiarly Hawthorne-like solution to a tax avoidance scheme known as the preferred stock bailout. Section 306 taints the stock used in the scheme as Section 306 stock. Special rules then govern all subsequent dispositions of the tainted stock. With its concept of a taint that can dog a stock from acquisition to disposition, Section 306 might have been designed by a novelist rather than a tax technician

Reconciling Business Purpose with Bail-out Prevention: Federal Tax Policy and Corporate Divisions

Corporate divisions-spin-offs, split-offs, and split-ups-unfortunately pose a more complex problem than Senator Humphrey\u27s childlike vision would lead one to believe: the reconciliation of competing goals of maximizing business flexibility and minimizing tax avoidance. It is widely believed that divisions are essential to business planning; thus, tax-free treatment promotes business flexibility. Yet, an untaxed division may allow tax avoidance through bail-out of corporate earnings and profits at capital gain rates

The Death Penalty and the Society We Want

[Excerpt] “At the local level, we can tell a lot about a community by how it treats a homeless person suffering from schizophrenia who is begging on the street. One possibility is to look upon that person with the thought that there but for grace go I, that this person is desperately in need of help, and that we—individually and as a community—must respond by giving a helping hand and making sure that the person receives food, shelter, clothing, and care for such a debilitating mental illness. Another possibility is to simply ignore the person, to step around him or her on the way to buying a five-dollar cup of coffee, asking one’s self only: “Why should I help this person? Why should I give any money? Why should I do anything at all?” Another approach—the predominant view in many communities today—is to ask, why isn’t that person in jail? Why hasn’t the person been arrested for violating one of the “quality of life crimes” which many communities have adopted to protect the quality of life of those better off at the expense of those who are worse off? They have accomplished this by criminalizing behavior such as jaywalking, loitering, panhandling, and other conduct that makes it possible for the police to arrest almost anyone to clear the street of people we do not want to see. This is the “broken windows” approach to policing that Rudolph Guiliani used in New York. It uses the criminal law to clear the streets of the homeless, the mentally ill, and other “undesirables.” So there are three possible approaches: compassion, indifference, and hostility. The one adopted by a community tells us a lot about it.

Misassigning Income: The Supreme Court and Attorneys\u27 Fees

This past term\u27s Supreme Court decision in Commissioner v. Banks and Commissioner v. Banaitis distorts foundational principles, known as assignment of income law, which help identify the person who must report income for federal tax purposes. The Court holds that assignment of income principles require a plaintiff to report as income the portion of a recovery paid to the plaintiffs attorney as a contingent fee. As a result, the plaintiff is taxed at excessively high rates, which may in some cases equal or exceed a confiscatory 100%. Taxing the plaintiff on the attorney-fee portion of a recovery also undermines the objective of federal fee-shifting statutes, which is to enable a prevailing plaintiff to act as a private attorney general by employing an attorney without cost. Although recent legislation changes the result in the future for specified categories of litigation, including a wide variety of civil rights and employment claims, there remain significant classes of cases, including nonphysical torts, physical torts with punitive damages, and environmental statutes with fee-shifting provisions, to which this recent legislation does not apply and in which plaintiffs will continue to be taxed unfairly under the Court\u27s decision

Machinists Saved $137 Million At Eastern

[Excerpt] In December 1983 the Machinists at Eastern Airlines agreed to a contract which stipulated, among other things, that in 1984 the union would work with management to identify and implement $22 million in cost savings that did not affect pay rates and benefit levels

Falling Gasoline Prices Lead to Lowest Inflation Since 2008

Overall price change was modest in 2014, with the U.S. All Items Consumer Price Index posting its smallest increase since 2008. This was primarily the result of gasoline prices, which fell sharply over the latter part of the year. However, shelter and food price indexes accelerated in 2014. In this Beyond the Numbers article, we will look at price trends for major CPI components in 2014

Thurgood Marshall: Tax Lawyer

During his twenty-four years on the Supreme Court, Justice Thurgood Marshall wrote better opinions on the law of federal income taxation than any of his fellow Justices. This is, of course, a subjective appraisal which others may dispute. Nevertheless, from two decades of teaching federal income taxation, I am convinced of the quality of Marshall\u27s work

Conditioning U.S. Security Assistance on Human Rights Practices

In the United States, with its government of separated powers and functions, it is the executive branch, and in particular the Department of State, that bears responsibility for implementing legislation on foreign relations. The success of implementation will depend on political decisions, involving competing national interests, as well as on institutional and personal considerations of I he officials concerned. Inevitably, there is a gap between legislation and execution, especially when the Executive is not wholly sympathetic to the law. The gap may even devour legislated policies as the Executive refuses to take Care that the Laws be faithfully executed, and bureaucratic and personal considerations distort judgments, exploit the generality and uncertainty of language, and lead to abuse of discretion. A notable instance of this problem has been executive implementation of legislation on international human rights