Textualism and Tax Shelters

A substantial debate about the approaches employed by courts to interpret statutes and regulations has developed during the last decade. Some have argued that the search for a statute\u27s meaning and purpose should focus on the text, itself, and should not include consulting legislative history. In contrast, others have argued that it is difficult to determine the meaning of a statute without consulting legislative history to determine the legislature\u27s purpose for the statute. The debate about the appropriate method for interpreting statutes underlies a crisis in the administration of tax law. The recent proliferation of tax shelters has at least in part been facilitated by the ascendancy of textualism. Our conversations with practitioners indicate that tax advisors have become more aggressive in structuring transactions that comply with the form of the tax statutes even though the transactions may be highly questionable in light of the legislation\u27s history or underlying purpose. The result has been a cottage industry where investment banks and accounting firms market tax shelters that triumph in form, but not substance, at the expense of the fisc. Because most tax shelter activity is hidden, it is difficult to ascertain its revenue impact. It is estimated that tax shelters reduced tax revenues by approximately $10 to$24 billion in 1999. In addition, practitioners and government officials worry that the use of shelters is eroding confidence in the tax system. Although the majority of courts have not adopted textualism, the legal community\u27s acceptance of textualism as a plausible method of interpretation has dramatically affected the practice of tax law. Taxpayers often invest in tax shelters based upon the opinion of counsel assessing the probability that the desired tax results from the transaction, if challenged, will be sustained. These opinion letters are essential to attract investors because they protect taxpayers from various penalties that otherwise might be imposed if the Service successfully challenges the transaction. Under the textualist approach, it is much easier for an attorney to write a favorable opinion for transactions that are designed to comply with the letter of the law, but not its spirit, for at least two reasons. First, the attorney is permitted to ignore, or at least downplay, any legislative history that would argue against, or undercut, the desired tax results. Second, under a textualist approach, it is arguable that various well-accepted judicial doctrines, such as the business purpose doctrine, are suspect. At the extreme, a textualist might argue that these doctrines are the product of judicial activism and either should no longer be followed, or at a minimum should not be extended into new areas of the law. Tax shelter promoters have exploited the move towards textualism by designing transactions that comply with the letter of the law, but that generate results clearly never contemplated by Congress or the Treasury. Some promoters believe that the more detailed and complex the underlying law is, the more likely it is that a transaction complying with the letter of the law will be respected. One area in tax law that is particularly detailed and complex is Subchapter K, the partnership tax provisions. Subchapter K also has several special rules not otherwise available in the Internal Revenue Code. It is, therefore, not surprising that Subchapter K has become the vehicle of choice for a wide variety of abusive transactions. Transactions are designed so that a partnership is created or joined just to take advantage of these special rules (reverse engineered transactions). In an attempt to stem the tide, the IRS adopted a general anti-abuse rule for Subchapter K. This rule requires that the provisions of Subchapter K be interpreted consistent with the intent of subchapter K. Oversimplified, the regulations assert that there is an overall legislative intent underlying Subchapter K, and if a partnership is formed or availed of in connection with a transaction to substantially reduce federal taxes in a manner inconsistent with this intent, the transaction may be recast. The regulations make clear that for a transaction to pass muster, doctrines that originated with the judiciary, i.e., the requirements of a business purpose, economic substance, and substance over form, must be taken into account. In addition, the regulations require that the purposivist method of statutory interpretation be used to interpret Subchapter K. The anti-abuse regulations caused an unprecedented furor within the tax bar. They have been severely criticized by academics and practitioners alike on a variety of bases, the most damning of which is that Treasury lacked the authority to promulgate the rules and that therefore they are not valid. Indeed, it is fair to say that there is a general consensus that the partnership anti-abuse regulations are an extreme example of administrative overreaching. We disagree. Although we do not endorse all the policy choices in the anti-abuse regulations, we believe that they are not only valid, but suggest a way in which transactions that are the product of reverse engineering can and should be attacked, both within and without Subchapter K. Initially, it may seem inappropriate for Treasury to instruct the judiciary on how and when the courts should apply judicial doctrines and what tools they should use in interpreting statutes. After all, as every law student knows, [i]t is emphatically the province and duty of the judicial department to say what the law is. Marbury v. Madison, 5 U.S. 137, 177 (1803). Where does Treasury get the authority to instruct a court as to which method of interpretation it should use to interpret a tax statute? On reflection, however, we believe that Treasury acted well within its authority under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) and was simply filling a gap in the statute left by Congress. The judicial doctrines that are implicit in the intent of subchapter K were well-developed when Subchapter K was first enacted in 1954 and continue to be applied in a variety of contexts by the courts. At that time, however, it was not clear exactly how and when these doctrines should be applied in the context of Subchapter K. There is little doubt Congress could have clarified this issue by statute. It could have insisted that these doctrines (or variations thereof) be applied with full force, or it could have forbidden their application altogether. Congress, however, chose not to address this issue, leaving a gap in the statute. Under current administrative law principles, this silence constitutes an implied delegation of authority by Congress to Treasury to fill that gap. In addition to being valid, we also believe that, as a general proposition, it is sound tax policy to use broad standards to administer the tax law. Historically this had been accomplished by the courts through the use of these judicial doctrines. Although the ascendancy of textualism cast doubt on the continuing viability of the doctrines, Treasury eliminated that doubt by promulgating these regulations (if valid), and requiring lawyers and courts to consider the intent of subchapter K. This approach allows the IRS to use broad standards to administer the tax law in place of a collection of narrow rules that must be constantly changed in a hopeless attempt to keep pace with the latest tax gimmick. To assure proper consideration of these doctrines by tax advisors, we recommend that the IRS amend its standards for practice to require advisors opining on the validity of tax shelters to apply the doctrines to the specific facts of the tax shelter in their opinion letter

Patterns of Life: Integrating Mathematics with Science, Culture, and Art

We offered undergraduate students an interdisciplinary course Patterns of Life that develops mathematical reasoning strategies to solve complex problems. In its most essential form, mathematics is the study of patterns; and mathematical (patterned) reasoning is the ability to think with a plan and a purpose. Students personally experience and use patterns of reasoning in diverse disciplines, and then work in groups to form a valid strategy for solving a selected problem. Patterns of Life is designed as guided, on-site, active-learning experiences, in cooperation with local scientific, cultural and fine arts communities. Course goals for students include: (1) to increase mathematical understanding, find mathematical thinking more relevant to their own programs and build mathematical perspectives and strategies to become more confident problem-solvers, and (2) to develop a life-long ability to reason more effectively on a wider variety of problems, including those that may be unfamiliar or seem to have no answer. The following four activities were an integral part of Patterns of Life: (1) biologists at the Golden Gate Raptor Observatory engaged students in the study of the raptor population crossing the Golden Gate section of the Western Flyway; (2) National Park Service scientists, students and instructors studied ecological, environmental and cultural patterns in Yosemite National Park; (3) students studied structure and vitality of traditional human cultures through their use of mathematical patterns: model and map-making, navigation, time, recording devices, networks, linear programming, probability, geometric growth rates, binary codes, fair division and appointment, measurement and systems of influence and power; and (4) with members of the San Francisco Bay Area Fine Arts Community, students discovered patterns in artistic expression, including symmetry, balance, scale, repetition of motif, and geometry in visual arts and architecture

Transcriptomes of parents identify parenting strategies and sexual conflict in a subsocial beetle

This work was funded by UK NERC grants to M.G.R. and A.J.M. an NERC studentship to D.J.P. the University of Georgia and a US NSF grant to A.J.M. and M.G.R.Parenting in the burying beetle Nicrophorus vespilloides is complex and, unusually, the sex and number of parents that can be present is flexible. Such flexibility is expected to involve specialized behaviour by the two sexes under biparental conditions. Here, we show that offspring fare equally well regardless of the sex or number of parents present. Comparing transcriptomes, we find a largely overlapping set of differentially expressed genes in both uniparental and biparental females and in uniparental males including vitellogenin, associated with reproduction, and takeout, influencing sex-specific mating and feeding behaviour. Gene expression in biparental males is similar to that in non-caring states. Thus, being ‘biparental’ in N. vespilloides describes the family social organization rather than the number of directly parenting individuals. There was no specialization; instead, in biparental families, direct male parental care appears to be limited with female behaviour unchanged. This should lead to strong sexual conflict.Publisher PDFPeer reviewe

Can Text Messages Increase Empathy and Prosocial Behavior? The Development and Initial Validation of Text to Connect

To what extent can simple mental exercises cause shifts in empathic habits? Can we use mobile technology to make people more empathic? It may depend on how empathy is measured. Scholars have identified a number of different facets and correlates of empathy. This study is among the first to take a comprehensive, multidimensional approach to empathy to determine how empathy training could affect these different facets and correlates. In doing so, we can learn more about empathy and its multifaceted nature. Participants (N = 90) were randomly assigned to receive either an empathy-building text message program (Text to Connect) or one of two control conditions (active versus passive). Respondents completed measures of dispositional empathy (i.e. self-perceptions of being an empathic person), affective empathy (i.e. motivations to help, immediate feelings of empathic concern), and prosocial behavior (i.e. self-reports and observer-reports) at baseline, and then again after the 14 day intervention period. We found that empathy-building messages increased affective indicators of empathy and prosocial behaviors, but actually decreased self-perceptions of empathy, relative to control messages. Although the brief text messaging intervention did not consistently impact empathy-related personality traits, it holds promise for the use of mobile technology for changing empathic motivations and behaviors

CD40 ligand and MHC class II expression are essential for human peripheral B cell tolerance

Hyper-IgM (HIGM) syndromes are primary immunodeficiencies characterized by defects of class switch recombination and somatic hypermutation. HIGM patients who carry mutations in the CD40-ligand (CD40L) gene expressed by CD4+ T cells suffer from recurrent infections and often develop autoimmune disorders. To investigate the impact of CD40L–CD40 interactions on human B cell tolerance, we tested by ELISA the reactivity of recombinant antibodies isolated from single B cells from three CD40L-deficient patients. Antibody characteristics and reactivity from CD40L-deficient new emigrant B cells were similar to those from healthy donors, suggesting that CD40L–CD40 interactions do not regulate central B cell tolerance. In contrast, mature naive B cells from CD40L-deficient patients expressed a high proportion of autoreactive antibodies, including antinuclear antibodies. Thus, CD40L–CD40 interactions are essential for peripheral B cell tolerance. In addition, a patient with the bare lymphocyte syndrome who could not express MHC class II molecules failed to counterselect autoreactive mature naive B cells, suggesting that peripheral B cell tolerance also depends on major histocompatibility complex (MHC) class II–T cell receptor (TCR) interactions. The decreased frequency of MHC class II–restricted CD4+ regulatory T cells in CD40L-deficient patients suggests that these T cells may mediate peripheral B cell tolerance through CD40L–CD40 and MHC class II–TCR interactions

Rendering an Account: An Open-State Archive in Postgraduate Supervision

The paper begins with a brief account of the transformation of research degree studies under the pressures of global capitalism and neo-liberal governmentality. A parallel transformation is occurring in the conduct of research through the use of information and communication technologies. Yet the potential of ICTs to shape practices of surveillance or to produce new student-supervisor relations and enhance the processes of developing the dissertation has received almost no critical attention. As doctoral supervisor and student, we then describe the features and uses of a web-based open state archive of the student's work-in-progress, developed by the student and accessible to his supervisor. Our intention was to encourage more open conversations between data and theorising, student and supervisor, and ultimately between the student and professional community. However, we recognise that relations of accountability, as these have developed within a contemporary "audit revolution" (Power, 1994, 1997) in universities, create particular "lines of visibility" (Munro, 1996). Thus while the open-state archive may help to redefine in less managerial terms notions of quality, transparency, flexibility and accountability, it might also make possible greater supervisory surveillance. How should we think about the panoptical potential of this archive? We argue that the diverse kinds of interactional patterns and pedagogical intervention it encourages help to create shifting subjectivities. Moreover, the archive itself is multiple, in bringing together an array of diverse materials that can be read in various ways, by following multiple paths. It therefore constitutes a collage, which we identify as a mode of cognition and of accounting distinct from but related to argument and narrative. As a more "open" text (Iser, 1978) it has an indeterminacy which may render it less open to abuse for the technologies of managerial accountability

The significance of 'the visit' in an English category-B prison: Views from prisoners, prisoners' families and prison staff

A number of claims have been made regarding the importance of prisoners staying in touch with their family through prison visits, firstly from a humanitarian perspective of enabling family members to see each other, but also regarding the impact of maintaining family ties for successful rehabilitation, reintegration into society and reduced re-offending. This growing evidence base has resulted in increased support by the Prison Service for encouraging the family unit to remain intact during a prisoner’s incarceration. Despite its importance however, there has been a distinct lack of research examining the dynamics of families visiting relatives in prison. This paper explores perceptions of the same event – the visit – from the families’, prisoners’ and prison staffs' viewpoints in a category-B local prison in England. Qualitative data was collected with 30 prisoners’ families, 16 prisoners and 14 prison staff, as part of a broader evaluation of the visitors’ centre. The findings suggest that the three parties frame their perspective of visiting very differently. Prisoners’ families often see visits as an emotional minefield fraught with practical difficulties. Prisoners can view the visit as the highlight of their time in prison and often have many complaints about how visits are handled. Finally, prison staff see visits as potential security breaches and a major organisational operation. The paper addresses the current gap in our understanding of the prison visit and has implications for the Prison Service and wider social policy

Is there a causal relationship between acute stage sensorimotor cortex activity and the development of chronic low back pain? : a protocol and statistical analysis plan

Introduction: Why some people develop chronic pain following an acute episode of low back pain is unknown. Recent cross-sectional studies have suggested a relationship between aberrant sensorimotor cortex activity and pain persistence. The UPWaRD (Understanding persistent Pain Where it ResiDes) cohort study is the first prospective, longitudinal investigation of sensorimotor cortex activity in low back pain. This paper describes the development of a causal model and statistical analysis plan for investigating the causal effect of sensorimotor cortex activity on the development of chronic low back pain. Methods and analysis: Sensorimotor cortex activity was assessed within 6 weeks of low back pain onset using somatosensory evoked potentials and transcranial magnetic stimulation mapping techniques. Chronic low back pain is defined as ongoing pain (Numerical Rating score ≥1) or disability (Roland Morris Disability Questionnaire score ≥3) at 6 months follow-up. Variables that could confound the relationship between sensorimotor cortex activity and chronic low back pain were identified using a directed acyclic graph and content expertise was used to specify known causal paths. The statistical model was developed ‘a priori’ to control for confounding variables identified in the directed acyclic graph, allowing an unbiased estimate of the causal effect of sensorimotor activity in acute low back pain on the development of chronic pain. The statistical analysis plan was finalised prior to follow-up of all participants and initiation of analysis. Ethics and dissemination: Ethical approval has been obtained from Western Sydney University Human Research Ethics Committee (H10465) and from Neuroscience Research Australia (SSA: 16/002). Dissemination will occur through presentations at national and international conferences and publications in international peer-reviewed journals. Trial registration number: ACTRN12619000002189 (retrospectively registered)