Omnicare v. Indiana State District Council and Its Rational Basis Test for Allowing for Opinion Statements to Be a Misleading Fact or Omission Under Section 11 of the Securities Act of 1933

This article examines when statements in a registration statement, couched as opinion, can and cannot be considered to be misstatements of material fact that could lead to liability under Section 11 (and potentially other sections) of the Securities Act. The rest of this paper is formatted as follows. We review the Omnicare case, followed by the key cases in the Second, Third, Ninth, and Sixth Circuit Courts of Appeals. The Second, Third, and Ninth Circuits have all required that, in order for there to be an actionable claim under Section 11, the plaintiff must plead not only that the statement or omission was false, but also that the defendant had subjective knowledge that its opinion was false. The Sixth Circuit, although later reversed by the Supreme Court, applied a strict liability interpretation of Section 11 and required only that the fact or omission be false or misleading. The split decisions among the circuits may be the reason that the Supreme Court granted certiorari. Then, we explain the implications of these decisions to future registrants and to professionals preparing opinions that are to be included in registration statements. This article is important to future registrants and opining professionals because of their liability implications. We conclude with the assumption that future cases will decide how to apply the new rational basis test created by the Supreme Court in interpreting when an opinion statement becomes a misstatement of material fact, or leads to an omission that renders a registration statement false or misleading in violation of Section 11

Maximizing Ponzi Loss Deductions for Estate and Income Tax Purposes: Are Taxpayers Better Off Dead?

There is a long history of cases interpreting whether a theft loss deduction for securities fraud is allowable for personal income taxes. The cases require that for a theft loss to be actionable as such, it would have to meet the requirements of the common law definition of theft in the U.S. state in which it occurred. This generally requires direct privity between the person claiming the loss and the person who committed the theft. Because most securities transactions are brokered, the direct privity is lost and a theft loss deduction is denied in favor a capital loss. Recently, in a case of first impression, the Tax Court was presented with a similar issue involving the worth of assets for estate taxes. Instead of using the reasoning presented in income tax cases, the Tax Court allowed a theft loss deduction on estate taxes where a Ponzi scheme was uncovered while the estate owned a limited liability company. The sole assets of the company were shares of the security that was involved in the Ponzi scheme. This Article examines the history of the privity requirement for deducting a theft loss for income taxes and how that reasoning now differs from the tax treatment for estate taxes. The Article concludes that there should not be a difference in treatment and that direct privity should not be required for either income or estate taxes

After Goeller v. United States, Can the Theft Loss Treatment Now Be Applied to Investments When Corporate Deception Is Present?

Traditionally, the theft loss deduction for Federal income tax was limited in several ways. The limitations included requiring that the theft be considered a theft under the state law in which the theft occurred and that there be direct privity between the person committing the theft and the person against whom the theft occurred. The restrictions have made it hard to use the theft loss deduction in most securities fraud cases. This Article examines the history of the theft loss deduction and recent changes that may show a relaxing of some of these restrictions, and how these changes may impact allowing for the theft loss deduction in securities fraud cases

Integrative Learning and Interdisciplinary Information Systems Curriculum Development in Accounting Analytics

This paper develops the structure for an integrative model information systems curriculum on Accounting Analytics, which affords students the opportunities to develop domain knowledge along with application of data analytics. As industry experiences rapid technological change, university curricula must remain current in order to be effective. Curriculum content is further advanced and established with input from industry organizations that employ graduates of the programs. The paper output includes a curriculum review of top accounting programs, course curriculum map, accounting data skills matrix, and professional opportunities. The curriculum review utilizes an empirical text analytics methodological approach to extract patterns and develop additional insights for the advancement of accounting information systems research. To minimize curricular disruption, existing courses can be utilized as core curriculum, enhancing key courses to complete undergraduate, graduate, or certificate programs. The Accounting Analytics customized curriculum provides students an opportunity to take advantage of the growing interdisciplinary field and student interest among accounting and analytical career paths. The integrative curriculum is developed to better prepare graduates with the critical knowledge, skills, and abilities to excel in this new-age workforce

Maximizing Ponzi Loss Deductions for Estate and Income Tax Purposes: Are Taxpayers Better Off Dead?

There is a long history of cases interpreting whether a theft loss deduction for securities fraud is allowable for personal income taxes. The cases require that for a theft loss to be actionable as such, it would have to meet the requirements of the common law definition of theft in the U.S. state in which it occurred. This generally requires direct privity between the person claiming the loss and the person who committed the theft. Because most securities transactions are brokered, the direct privity is lost and a theft loss deduction is denied in favor a capital loss. Recently, in a case of first impression, the Tax Court was presented with a similar issue involving the worth of assets for estate taxes. Instead of using the reasoning presented in income tax cases, the Tax Court allowed a theft loss deduction on estate taxes where a Ponzi scheme was uncovered while the estate owned a limited liability company. The sole assets of the company were shares of the security that was involved in the Ponzi scheme. This Article examines the history of the privity requirement for deducting a theft loss for income taxes and how that reasoning now differs from the tax treatment for estate taxes. The Article concludes that there should not be a difference in treatment and that direct privity should not be required for either income or estate taxes

Does changing the timing of a yearly individual tax refund change the amount spent vs. saved?

The empirical evidence surrounding whether federal income tax refunds predominantly stimulate consumer spending or saving remains contradictory. This study is an attempt to combine income tax research findings with research on mental accounting and with the effects of estimated tax payments timing. The authors developed and administered an experiment, using college students as subjects, to test whether tax refunds administered as one lump-sum will be saved (vs. spent) more than tax refunds of the same amount refunded monthly through revised income tax withholding tables. The study also explores the types of saving and spending that result from refunds under both timing patterns. A within subjects experiment of student spending was used, and ANOVA results confirm that a refund delivered in monthly amounts (for example, by changing the federal income tax withholding tables) stimulated current spending more than if the same yearly total tax reduction was delivered in one lump-sum. The findings also suggest that the lump-sum distribution conversely will stimulate private saving more than a monthly distribution will. The study also explores other specific savings and spending tendencies, including the payment of credit cards vs. investments in securities, and the amount spent on durable goods vs. monthly expenditures across several monthly and yearly distributions. It is important to know if and how the timing of refunds affects savings and spending tendencies because tax cuts are often debated on the political stage as a means to stimulate spending, and the timing of the refund might change how effectively a tax cut meets that goal.Decision making Consumer behavior Economics Mental accounting Tax

After Goeller v. United States, Can the Theft Loss Treatment Now Be Applied to Investments When Corporate Deception Is Present?

Traditionally, the theft loss deduction for Federal income tax was limited in several ways. The limitations included requiring that the theft be considered a theft under the state law in which the theft occurred and that there be direct privity between the person committing the theft and the person against whom the theft occurred. The restrictions have made it hard to use the theft loss deduction in most securities fraud cases. This Article examines the history of the theft loss deduction and recent changes that may show a relaxing of some of these restrictions, and how these changes may impact allowing for the theft loss deduction in securities fraud cases