Shifting of Income Within the Family: Will 1986 I.R.C. Changes Bring Significant Reform

In challenging Congress and the citizenry to embrace tax reform, President Reagan stated: While most Americans labor under excessively high tax rates that discourage work and cut drastically into savings, many are able to exploit the tangled mass of loopholes that has grown up around our tax code to avoid paying their fair share-sometimes to avoid paying any taxes at all. Fairness and simplicity were clearly overriding objectives of the tax reform movement that culminated in the Tax Reform Act of 1986. From the perspectives of both fairness and simplicity, one of the most egregious features of prior law was the ability of taxpayers with accumulated wealth to thwart the effects of the progressive taxation by shifting income from such accumulated wealth from the accumulator of such wealth to family members in lower tax brackets. Often, such shifting of income has been accomplished through the use of trusts, which since the earliest days of federal income taxation have been recognized as separate taxpayers

Taxation of the Disposition of Partnership Issues: Time to Repeal I.R.C. Section 736

As part of the Internal Revenue Code of 1954 Congress enacted section 736. This section specifies the tax treatment of the various types of payments that a partnership may make to a withdrawing partner. It introduced the concept of a liquidation of a partnership interest by the partnership itself, as opposed to the sale of that interest to an outsider or to the continuing partners. In some instances it provides tax consequences for continuing and withdrawing partners which are different from those attendant to a sale. It was designed to make the law concerning disposition of partnership interests simpler and to provide flexibility to the parties in fixing the federal tax consequences thereof. After over thirty-year\u27s experience with section 736 it is time to acknowledge that it has not worked very well. The creation of the concept of a liquidation of a partnership interest, with consequences that differ from those of a sale, has not simplified the tax law in this area; it has complicated it unnecessarily. Further, while section 736 has provided flexibility to the parties to withdrawals from partnerships, this flexibility has been purchased at the expense of significant federal taxation policy. This Article examines those two propositions and advocates abrogating section 736 and the disparity it created between the tax attributes accompanying liquidations and sales of partnership interests. It proposes that all withdrawals from a partnership, whether accomplished by a sale to outsiders or to the continuing partners on one hand, or by liquidation of the interest by the partnership on the other, be treated similarly for tax purposes

Military Law: Time to Mandate Best Interests of the Child to Restrict Deployments of Parents that Affect Preschool Children

As America viewed the first massive deployment of its all-volunteer force at the beginning of the first Persian Gulf War, one journalist commented: When this war is over, Americans need to do some serious thinking about the all-volunteer armed forces, the one legacy of the Vietnam War with which the nation seemed comfortable. Among other things, we have to decide whether a single parent, and, in many cases, both parents, should be deployed in war zones. Is the nation\u27s reliance on an army of volunteers worth the emotional grief that comes from ripping military parents away from their children? Do the children of American servicemen and women have to be the first casualties of war? The composition of the United States force that deployed to the Persian Gulf at that time confronted the American people with a specter that many found agonizing—a significant number of children, sometimes very young children, were left at home without a parent. Although military deployment of soldiers has always entailed emotional disruption of families, in past wars, the American military was made up mostly of unmarried young males. Thus, military deployment was not nearly as likely to leave large numbers of children at home without a parent. This Article addresses the new harsh, adverse consequences of foreign deployment of military forces for military personnel, and especially for some of their younger children. Part II addresses these consequences and how they were brought about by changes in the population of the armed services. Part III addresses adverse consequences of depriving very young children entirely of the presence of their parents. Part IV concludes with a proposal that Congress restrict the power of the military to deploy both parents or a single parent of preschool children

Taxation of Below-Market Loans Under 7872: This Could be a Lot Simpler!

This article will explore § 7872: what it is, why it was enacted, how it has developed judicially and administratively since its enactment, and how it might be improved - mostly by reducing its complexity. It shall be contended generally that the reform intended with respect to § 7872 in several instances overshot the mark and serves no useful purpose

Directed Verdict in Maryland: Less Obvious Applications of a Simple Rule

This Article examines the implications of Maryland Rule 552 with respect to directed verdicts in Maryland. The author collects and discusses the significant cases establishing the criteria for the granting of a directed verdict

I.R.C. Section 71: Breaking up is Hard to Do

The author believes that applying the provisions of the Internal Revenue Code governing the tax treatment of payments made incident to separation and divorce has become complicated and unpredictable. In this article, Professor Lynch examines how I.R.C. sections 71 and 215 have developed, given congressional intent, with respect to the definition of an obligation of support, the differentiation between a support obligation and a property interest, and the periodic payment requirement. He concludes with suggestions aimed at simplifying the law with respect to these payments