The Carryforward of Net Operating Losses and Other Tax Attributes after Bankruptcy Reorganizations.

When stock is exchanged for debt in a bankruptcy reorganization, potentially abusive tax situations can result if the reorganization occurs strictly for the carryforward of tax attributes to the acquiring corporation. The basic question is to what extent the discharge of indebtedness provisions, the application of the various statutory and judicial requirements, and the consolidated return regulations prohibit or restrict the carryforward of the tax history of the debtor corporation. Bankruptcy reorganization for a corporation under Chapter 11 of the Bankruptcy Code can take the form of either a recapitalization or a reorganization. Because a “G” reorganization involves a discharge of debt, Internal Revenue Code (I.R.C.) § 108 determines the tax treatment for the debtor corporation and the extent of any reduction of the tax attributes to the debtor based on the debt discharge. I.R.C. § 381(a)(2) allows the acquiring corporation in a “G” reorganization to receive the tax attributes of the debtor corporation, such as net losses. Nevertheless, the disallowance provisions of the consolidated return regulation may limit or prohibit the use of such tax benefits. While the Internal Revenue Service may not have a pre-petition tax liability claim during a bankruptcy proceeding, the tax consequences of a confirmed plan may be significant with potential tax-attribute carryover. The discharge of indebtedness provisions, the applications of the various statutory and judicial requirements, the tax attribute limitation rules, and the consolidated return regulations are effective to prohibit abusive situations involving net operating losses and other tax attributes. The complexity and scope of the limitation\u27s provisions and the proposed consolidated return regulations are so encompassing that the ability to currently structure an acquisition solely for carryover of tax attributes from a non-affiliated corporation is somewhat comparable to Sir Galahad’s quest for the Holy Grail

Bacterial Gut Symbionts Contribute to Seed Digestion in an Omnivorous Beetle

Obligate bacterial symbionts alter the diets of host animals in numerous ways, but the ecological roles of facultative bacterial residents that colonize insect guts remain unclear. Carabid beetles are a common group of beneficial insects appreciated for their ability to consume insect prey and seeds, but the contributions of microbes to diet diversification in this and similar groups of facultative granivores are largely unknown.Using 16S rRNA gene clone libraries and terminal restriction fragment (tRF) length polymorphism analyses of these genes, we examined the bacterial communities within the guts of facultatively granivorous, adult Harpalus pensylvanicus (Carabidae), fed one of five dietary treatments: 1) an untreated Field population, 2) Seeds with antibiotics (seeds were from Chenopodium album), 3) Seeds without antibiotics, 4) Prey with antibiotics (prey were Acheta domesticus eggs), and 5) Prey without antibiotics. The number of seeds and prey consumed by each beetle were recorded following treatment. Harpalus pensylvanicus possessed a fairly simple gut community of approximately 3-4 bacterial operational taxonomic units (OTU) per beetle that were affiliated with the Gammaproteobacteria, Bacilli, Alphaproteobacteria, and Mollicutes. Bacterial communities of the host varied among the diet and antibiotic treatments. The field population and beetles fed seeds without antibiotics had the closest matching bacterial communities, and the communities in the beetles fed antibiotics were more closely related to each other than to those of the beetles that did not receive antibiotics. Antibiotics reduced and altered the bacterial communities found in the beetle guts. Moreover, beetles fed antibiotics ate fewer seeds, and those beetles that harbored the bacterium Enterococcus faecalis consumed more seeds on average than those lacking this symbiont.We conclude that the relationships between the bacterium E. faecalis and this factultative granivore's ability to consume seeds merit further investigation, and that facultative associations with symbiotic bacteria have important implications for the nutritional ecology of their hosts

Quantifying Earth system interactions for sustainable food production via expert elicitation

Several safe boundaries of critical Earth system processes have already been crossed due to human perturbations; not accounting for their interactions may further narrow the safe operating space for humanity. Using expert knowledge elicitation, we explored interactions among seven variables representing Earth system processes relevant to food production, identifying many interactions little explored in Earth system literature. We found that green water and land system change affect other Earth system processes strongly, while land, freshwater and ocean components of biosphere integrity are the most impacted by other Earth system processes, most notably blue water and biogeochemical flows. We also mapped a complex network of mechanisms mediating these interactions and created a future research prioritization scheme based on interaction strengths and existing knowledge gaps. Our study improves the understanding of Earth system interactions, with sustainability implications including improved Earth system modelling and more explicit biophysical limits for future food production

The Reasonable Expectation Requirement for Oil and Gas Production Payments after Yates v. Commissioner.

This article addresses the issue of whether an interest in nonproducing oil and gas property constitutes a production payment or an overriding royalty. The significance of the interest depends on whether a lease or sale has been created for the purposes of establishing taxable income. The most relevant determining factors exist at the time the interest is created. The landmark case, Yates v. Commissioner, set the guidelines from which the courts analyze the appropriate facts and circumstances of each case. This study discusses the relationships of the legal concepts which define the production payment and the differences in tax consequences for various types of production payments within I.R.C. §636. The Yates decision represents a case of first impression where the sole termination of an interest burdening “unproven property” was made by a percentage-of-the-reservoir formula. The economic interest test was developed to determine whether a taxpayer was entitled to a depletion allowance. An overriding royalty interest creates a continuing economic interest in the minerals and therefore results in a lease situation. Conversely, even though a production payment qualifies as an economic interest, if it is treated by the Service as a loan under I.R.C. section 636, a sale results. The Yates court correctly held that a percentage-of-the-reservoir termination “formula alone does not satisfy petitioners’ obligation to show that the formula had substance.” This “substance” must be shown by the application of the Morgan test at the time of creation of the interest and not at some uncertain and speculative time in the future. Preferential tax treatment should be established to encourage exploration of new fields, to increase secondary recovery from mature reservoirs and to improve the economics of natural gas usage