Determining an Asset\u27s Tax Basis in the Absence of A Meaningful Transfer Tax Regime

Until recently, in those circumstances where there was a valuation range with respect to a particular asset, executors faced a choice: among estates subject to the estate tax, declaring a high value would increase the estate tax liability; however, due to the Internal Revenue Code\u27s basis equal to fair market value rule applicable at death, declaring a low value would expose heirs to a greater capital gains tax on subsequent asset disposition. Because the estate tax rates were higher and that tax was immediate (as opposed to deferred until a later sale by the heir), executors typically minimized asset values, with the corresponding effect of tax basis diminishment. This commonplace strategy thus negated the possibility that taxpayers might exploit the basis equal to fair market rule. But this is often no longer the case. Through a series of exemption level increases, tax rate reductions, and other reforms, Congress has gutted the nation\u27s transfer tax system. What remains is a teetering transfer tax system that applies only to a handful of the wealthiest taxpayers. For the rest, the transfer tax system provides no disincentive to executors from assigning the highest defensible valuations to a decedent\u27s assets, opening the opportunity to capitalize upon the basis equal to fair market value rule. Unfortunately, the I.R.S. lacks the tools and resources to combat this practice. To preserve the integrity of the capital gains tax and the revenue that it produces, Congress must therefore intercede

Limits to Non-Malleability

There have been many successes in constructing explicit non-malleable codes for various classes of tampering functions in recent years, and strong existential results are also known. In this work we ask the following question: When can we rule out the existence of a non-malleable code for a tampering class ?? First, we start with some classes where positive results are well-known, and show that when these classes are extended in a natural way, non-malleable codes are no longer possible. Specifically, we show that no non-malleable codes exist for any of the following tampering classes: - Functions that change d/2 symbols, where d is the distance of the code; - Functions where each input symbol affects only a single output symbol; - Functions where each of the n output bits is a function of n-log n input bits. Furthermore, we rule out constructions of non-malleable codes for certain classes ? via reductions to the assumption that a distributional problem is hard for ?, that make black-box use of the tampering functions in the proof. In particular, this yields concrete obstacles for the construction of efficient codes for NC, even assuming average-case variants of P ? NC

Surrogate Taxation and the Second-Best Answer to the In-Kind Benefit Valuation Riddle

For well over a century, theorists have debated how the receipt of inkind benefits, such as meals and lodging furnished for the convenience of an employer and business entertainment opportunities, should be taxed. While debate participants have generally agreed that the receipt of such in-kind benefits constitutes income, the question has remained about whether to value such benefits at fair market value or at the recipient’s subjective value or to use some other metric. Because of administrative considerations in determining the tax base, the Internal Revenue Code (Code) historically used a binary approach: either include the in-kind benefit at its fair market value or exclude it entirely. This analysis explores an intermediate approach known as surrogate taxation, a process by which one taxpayer bears another taxpayer’s tax burden. Over the past several decades, surrogate taxation has evolved and grown in prominence. It is now commonly used to tax the receipt of in-kind benefits (and other forms of income) in ways that produce outcomes that are more administrable, equitable, and efficient than the Code’s binary approach. While this analysis concludes that direct taxation is preferable to surrogate taxation, administrative concerns sometimes dictate that surrogate taxation is often a necessary substitute

Call for the Gradual Phase-Out of All Paper Tax Information Statements

For nearly a century, tax information statements such as Form W-2s and Forms 1099 have dominated the tax administration process, ensuring taxpayer compliance and providing a mechanism for IRS oversight. The technological age of the Internet, however, has fundamentally transformed the availability of information, including critical tax data, to make it more readily accessible. On the basis of this accessibility, this analysis calls for the phase-out of paper tax information statements. Instead, tax data would be available at a secure IRS website that, with a few keystrokes, taxpayers could conveniently use to prepare their tax returns. Adoption of this proposal promises to create tremendous administrative efficiencies and greatly simplify the tax return preparation process