Dominion Resources: Powering Section 1341 Toward Equity?

Administrative concerns occasionally override other aspects of tax policy. One example is the imposition of an annual reporting cycle which leads taxpayers to make assumptions about future events so that items can be reported on regularly scheduled returns. This can result in reporting items as income that are not actually earned by the taxpayer. For example, under the claim of right doctrine, created because of the annual reporting requirement, taxpayers must report certain receipts as income even though they are later required to return these amounts to the payor. In most cases they are permitted a deduction in the year that the cash is returned. However, this deduction may not fully offset the prior taxation due to rate changes and other items. As a partial remedy Congress enacted Section 1341 which allows taxpayers to calculate the tax reduction from the repayment based on the tax paid on the inclusion. The IRS has attempted to limit the application of Section 1341. In Dominion Resources, the courts reviewed the rules adopted by IRS and prior courts and applied a better reasoned, more equitable approach. The limited scope of the case did not permit the court to review all of the limitations imposed on this Section over the years and apply a consistent approach. This article will discuss the case as well as areas in which the court could, in the future, adopt its reasoning to arrive at a more equitable approach to Section 1341

The Origin of the Claim Test: A Search for Objectivity

Recently, the Ninth Circuit Court of Appeals, in United States v. Kroy (Europe) Ltd., used the origin of the claim test to determine the deductibility of financing expenses. At approximately the same time, the Tax Court, in Fort Howard Corp. v. Commissioner, concluded the use of the origin of the claim test to characterize similar expenditures was inappropriate. Given this conflict and the extensive use of this test to evaluate the deductibility of expenditures, this article reviews the development of this test and provides an analysis of the potential conflicts and uncertainties in its application

Dark sectors 2016 Workshop: community report

This report, based on the Dark Sectors workshop at SLAC in April 2016, summarizes the scientific importance of searches for dark sector dark matter and forces at masses beneath the weak-scale, the status of this broad international field, the important milestones motivating future exploration, and promising experimental opportunities to reach these milestones over the next 5-10 years

The financial reporting and tax aggressiveness implications of schedule utp

In 2010, the Internal Revenue Service (IRS) announced the requirement to disclose uncertain tax positions (UTPs) on a new schedule (Schedule UTP) to be filed with federal corporate income tax returns. Schedule UTP requires companies to report line-item detail to the IRS of the aggregate disclosure requirement of uncertain tax benefits (UTBs) established by FIN 48 (KPMG 2010a). I examine firms’ change in reporting UTBs subsequent to the announcement of Schedule UTP. Overall, the results indicate firms reduce not only the levels of reported UTB, but they also significantly reduced the year to year changes in reported UTBs. Consistent with my predictions, firms which are required to file Schedule UTP earlier have an incrementally more significant reduction in reported UTBs. Results provide mixed evidence for financially conservative firms. Contrary to expectations, the decrease in reported UTBs is not incrementally more significant for firms in the upper quartile of tax aggressiveness. Additionally, I examine whether the announcement of Schedule UTP impacts other proxies for tax aggressive behavior. Results indicate that book-tax differences decrease subsequent to Schedule UTP. However, neither measure of tax aggressiveness based on effective tax rates provides statistically significant results. This finding suggests the decrease in reported UTBs is merely a change in reporting behavior and not a change in aggressive tax behavior. (Published By University of Alabama Libraries

The ethiopian income tax system: policy, design and practice

Ethiopia used income taxes as one of the principal sources of domestic government revenue since the beginning of modern taxation in the 1940s. The Ethiopian income tax system is "schedular" in structure and orientation, the computation, assessment and collection of income taxes based on some identified sources of income, like income from employment, income from rental of property and income from business. The basic aim of this dissertation is to turn a critical attention to the design and structure of the income tax schedules and test whether the schedules, as they are currently designed, are adequate instruments for achieving the fundamental tax policy goals of Ethiopia. The dissertation uses the four schedules (identified by alphabets "A," "B," "C" and "D") of the "main" income tax system of Ethiopia to test whether the schedular design of the Ethiopian income tax system is adequate for achieving the fundamental aims of equity and administrability. The main finding of the dissertation is that the existing income tax schedules are riddled with a number of gaps as to make them inadequate instruments of the fundamental goals of tax equity and administrability. The basic principles of both horizontal and vertical equity are often observed in their breach both in the income tax laws of and the practice of income taxation in Ethiopia. Drawing upon the numerous cases of discrimination among different categories of taxpayers and sources of income, the dissertation calls for a serious rethinking of the schedular income tax system of Ethiopia. In rethinking the schedular income tax structure of the Ethiopian income tax system, the dissertation recommends two pathways of income tax reform for Ethiopia: the internal reorganization of the income tax system of Ethiopia, which maintains the schedular orientation of the income tax system but requires "internal" changes on a number of levels; and the complete overhaul of the schedular income tax system in light of the alternative models of income taxation developed both in the theoretical literature and the practice of income taxation in both developed and developing income tax systems of the world. (Published By University of Alabama Libraries