Comment: Is the Shelter a Sham? an Analysis of the Treatment of Foreign Taxes in the Economic Substance Doctrine’s Pre-Tax Profit Test

The United States taxes all income earned by a taxpayer, regardless of its source. To prevent double taxation of income and to encourage international trade, Congress created the “Foreign Tax Credit,” which allows a taxpayer to take a credit for any tax paid to another country on income earned abroad. This Comment discusses how the courts should apply the “pre-tax profit” test of the economic substance doctrine to challenge transactions where the taxpayer would incur a loss after paying foreign taxes, but a gain after applying the foreign tax credit. The Internal Revenue Service (IRS) has challenged these transactions, arguing that they lack economic substance. To test for economic substance, the court uses a two-prong test called the “Economic Substance Doctrine.” The first prong, commonly called the “pre-tax profit” test, asks if the transaction had a possibility of a profit absent tax consequences. The second prong, commonly called the “Business Purpose” test, asks if the transaction has a non-tax business purpose that furthers the taxpayer’s economic position. If one of the prongs is met, the transaction will usually be found to be legitimate, and the foreign tax credit will be granted. A circuit split has developed regarding whether foreign taxes should be factored into calculating profit with respect to the pre-tax profit test. The United States Court of Appeals for the Fifth and Eighth Circuits hold taxes paid to a foreign country should be excluded from the test because factoring them in would “stack the deck” against finding the transaction legitimate. The United States Court of Appeals for the First, Second and Federal Circuit hold otherwise, arguing that foreign taxes should be treated as an expense of the transaction because doing so more accurately reflects the taxpayer’s change in economic position. The correct approach is that of the First, Second, and Federal Circuits. By including foreign taxes paid as an expense of the transaction, the court remains consistent with the language of the codified economic substance doctrine, and with the underlying policies of the foreign tax credit. Including foreign taxes in the determination of profit more accurately assesses whether the transaction meaningfully changed the taxpayer’s net economic position, and furthered international trade. Since a taxpayer must pay tax on its foreign income to at least one country, the amount of the tax is implicit in the transaction. Since a prudent investor is assumed to consider those tax effects when estimating the profitability of a venture, a test that considers foreign taxes as an expense of the transaction more accurately reflects the net change in the taxpayer’s economic position. If a prudent investor would not invest in the transaction without the tax benefits that it generates, then the transaction is likely a shelter, and is not the type that Congress intended to encourage by granting the foreign tax credit

Instrumentation progress at the Giant Magellan Telescope project

Instrument development for the 24m Giant Magellan Telescope (GMT) is described: current activities, progress, status, and schedule. One instrument team has completed its preliminary design and is currently beginning its final design (GCLEF, an optical 350-950 nm, high-resolution and precision radial velocity echelle spectrograph). A second instrument team is in its conceptual design phase (GMACS, an optical 350-950 nm, medium resolution, 6-10 arcmin field, multiobject spectrograph). A third instrument team is midway through its preliminary design phase (GMTIFS, a near-IR YJHK diffraction-limited imager/integral-field-spectrograph), focused on risk reduction prototyping and design optimization. A fourth instrument team is currently fabricating the 5 silicon immersion gratings needed to begin its preliminary design phase (GMTNIRS, a simultaneous JHKLM high-resolution, AO-fed, echelle spectrograph). And, another instrument team is focusing on technical development and prototyping (MANIFEST, a facility robotic, multifiber-feed, with a 20 arcmin field of view). In addition, a medium-field (6 arcmin, 0.06 arcsec/pix) optical imager will support telescope and AO commissioning activities, and will excel at narrow-band imaging. In the spirit of advancing synergies with other groups, the challenges of running an ELT instrument program and opportunities for cross-ELT collaborations are discussed

Serpentine Soils Do Not Limit Mycorrhizal Fungal Diversity

Background: Physiologically stressful environments tend to host depauperate and specialized biological communities. Serpentine soils exemplify this phenomenon by imposing well-known constraints on plants; however, their effect on other organisms is still poorly understood. Methodology/Principal Findings: We used a combination of field and molecular approaches to test the hypothesis that serpentine fungal communities are species-poor and specialized. We conducted surveys of ectomycorrhizal fungal diversity from adjacent serpentine and non-serpentine sites, described fungal communities using nrDNA Internal Transcribed Spacer (ITS) fragment and sequence analyses, and compared their phylogenetic community structure. Although we detected low fungal overlap across the two habitats, we found serpentine soils to support rich fungal communities that include representatives from all major fungal lineages. We failed to detect the phylogenetic signature of endemic clades that would result from specialization and adaptive radiation within this habitat. Conclusions/Significance: Our results indicate that serpentine soils do not constitute an extreme environment for ectomycorrhizal fungi, and raise important questions about the role of symbioses in edaphic tolerance and the maintenanc

Making Research Data Accessible

This chapter argues that these benefits will accrue more quickly, and will be more significant and more enduring, if researchers make their data “meaningfully accessible.” Data are meaningfully accessible when they can be interpreted and analyzed by scholars far beyond those who generated them. Making data meaningfully accessible requires that scholars take the appropriate steps to prepare their data for sharing, and avail themselves of the increasingly sophisticated infrastructure for publishing and preserving research data. The better other researchers can understand shared data and the more researchers who can access them, the more those data will be re-used for secondary analysis, producing knowledge. Likewise, the richer an understanding an instructor and her students can gain of the shared data being used to teach and learn a particular research method, the more useful those data are for that pedagogical purpose. And the more a scholar who is evaluating the work of another can learn about the evidence that underpins its claims and conclusions, the better their ability to identify problems and biases in data generation and analysis, and the better informed and thus stronger an endorsement of the work they can offer

Impact Metrics

Virtually every evaluative task in the academy involves some sort of metric (Elkana et al. 1978; Espeland & Sauder 2016; Gingras 2016; Hix 2004; Jensenius et al. 2018; Muller 2018; Osterloh and Frey 2015; Todeschini & Baccini 2016; Van Noorden 2010; Wilsdon et al. 2015). One can decry this development, and inveigh against its abuses and its over-use (as many of the foregoing studies do). Yet, without metrics, we would be at pains to render judgments about scholars, published papers, applications (for grants, fellowships, and conferences), journals, academic presses, departments, universities, or subfields. Of course, we also undertake to judge these issues ourselves through a deliberative process that involves reading the work under evaluation. This is the traditional approach of peer review. No one would advocate a system of evaluation that is entirely metric-driven. Even so, reading is time-consuming and inherently subjective; it is, after all, the opinion of one reader (or several readers, if there is a panel of reviewers). It is also impossible to systematically compare these judgments. To be sure, one might also read, and assess, the work of other scholars, but this does not provide a systematic basis for comparison – unless, that is, a standard metric(s) of comparison is employed. Finally, judging scholars through peer review becomes logistically intractable when the task shifts from a single scholar to a large group of scholars or a large body of work, e.g., a journal, a department, a university, a subfield, or a discipline. It is impossible to read, and assess, a library of work

Comment: Is the Shelter a Sham? an Analysis of the Treatment of Foreign Taxes in the Economic Substance Doctrine’s Pre-Tax Profit Test

The United States taxes all income earned by a taxpayer, regardless of its source. To prevent double taxation of income and to encourage international trade, Congress created the “Foreign Tax Credit,” which allows a taxpayer to take a credit for any tax paid to another country on income earned abroad. This Comment discusses how the courts should apply the “pre-tax profit” test of the economic substance doctrine to challenge transactions where the taxpayer would incur a loss after paying foreign taxes, but a gain after applying the foreign tax credit. The Internal Revenue Service (IRS) has challenged these transactions, arguing that they lack economic substance. To test for economic substance, the court uses a two-prong test called the “Economic Substance Doctrine.” The first prong, commonly called the “pre-tax profit” test, asks if the transaction had a possibility of a profit absent tax consequences. The second prong, commonly called the “Business Purpose” test, asks if the transaction has a non-tax business purpose that furthers the taxpayer’s economic position. If one of the prongs is met, the transaction will usually be found to be legitimate, and the foreign tax credit will be granted. A circuit split has developed regarding whether foreign taxes should be factored into calculating profit with respect to the pre-tax profit test. The United States Court of Appeals for the Fifth and Eighth Circuits hold taxes paid to a foreign country should be excluded from the test because factoring them in would “stack the deck” against finding the transaction legitimate. The United States Court of Appeals for the First, Second and Federal Circuit hold otherwise, arguing that foreign taxes should be treated as an expense of the transaction because doing so more accurately reflects the taxpayer’s change in economic position. The correct approach is that of the First, Second, and Federal Circuits. By including foreign taxes paid as an expense of the transaction, the court remains consistent with the language of the codified economic substance doctrine, and with the underlying policies of the foreign tax credit. Including foreign taxes in the determination of profit more accurately assesses whether the transaction meaningfully changed the taxpayer’s net economic position, and furthered international trade. Since a taxpayer must pay tax on its foreign income to at least one country, the amount of the tax is implicit in the transaction. Since a prudent investor is assumed to consider those tax effects when estimating the profitability of a venture, a test that considers foreign taxes as an expense of the transaction more accurately reflects the net change in the taxpayer’s economic position. If a prudent investor would not invest in the transaction without the tax benefits that it generates, then the transaction is likely a shelter, and is not the type that Congress intended to encourage by granting the foreign tax credit

GMTIFS: Challenging optical design problems and their solutions for the GMT integral-field spectrograph

GMTIFS is a first generation instrument for the Giant Magellan Telescope (GMT). It is a combined Imager and Integral Field Spectrograph (IFS) designed to work with the Adaptive Optics (AO) Systems of the GMT. Working at the diffraction limit of the GMT and satisfying the challenging AO interface requirements and constraints results in unique optical challenges. We describe two of these challenges and how we have addressed them. The GMT has a direct feed architecture that maximizes transmission and reduces emissivity. This means that the cryostat window is tilted to reflect visual wavelengths to the external Visual Wave Front Subsystem (VWS). For a plane-parallel window, this tilt causes astigmatism in the transmitted beam that must be corrected. A corrective system using two plates, tilted and slightly wedged in opposite directions, is used. Geometry and performance of the system is described. Another challenging problem is the optical design of the anamorphic field projector. The Integral Field Unit of GMTIFS requires that a small field delivered to it be projected onto an Image Slicer at much larger scale, with the magnification in the spectral direction being twice that in the spatial direction so that the spaxels are square when referred to the sky. Output images must be coincident in the spectral and spatial projections in both the field and pupil domains. Additionally, field and pupil image locations must be independently controllable so that they can be made coincident for interchangeable units that provide a range of output field scales. A two-mirror system that satisfies these requirements is described

Design of a truth sensor for the GMT laser tomography adaptive optics system

The GMT laser tomography adaptive optics (LTAO) system design has a truth sensor guiding on a natural guide star. The truth sensor is used to measure telescope segment piston errors and measure slowly varying non-common path aberrations. The challenge lies in measuring segment piston using faint natural guide stars and the wavefront delivered by the LTAO system. This requires a sensor that can make a direct phase measurement. It is demonstrated that an infrared, AO-corrected, unmodulated pyramid or roof wavefront sensor can make the required measurements at 10 Hz for stars brighter than magnitude 17 at H- or K-band