Hester Prynne, Lydia Bennet, and Section 306 Stock: The Concept of Tainting in the American Novel, the British Novel, and the Internal Revenue Code

Did Nathaniel Hawthorne\u27s novel, The Scarlet Letter, inspire Section 306 of the Internal Revenue Code? This code provision adopts a peculiarly Hawthorne-like solution to a tax avoidance scheme known as the preferred stock bailout. Section 306 taints the stock used in the scheme as Section 306 stock. Special rules then govern all subsequent dispositions of the tainted stock. With its concept of a taint that can dog a stock from acquisition to disposition, Section 306 might have been designed by a novelist rather than a tax technician

The Suitability Rule and Economic Theory

The published rules of both the National Association of Securities Dealers (NASD) and the Securities and Exchange Commission (SEC) provide that a broker or dealer in the securities market may recommend the purchase of a security only when there is a reasonable basis for believing that the security is suitable for the customer

Taxing Stock Dividends and Economic Theory

Since 1936, the Internal Revenue Code has treated elective stock dividends on common stock, which are taxed on receipt as shareholder ordinary income gain, differently from pro rata stock dividends on common, which are received tax-free. This difference in treatment was reenacted in Section 305 of the 1954 Code; and while the Tax Reform Act of 1969 changed many details of stock dividend taxation, the basic distinction between elective and pro rata stock dividends was, if anything, reinforced. The major purpose of the 1969 amendments to Section 305 was to impose a shareholder ordinary income tax on transactions with the same substance, but lacking the formal indicia, of the receipt of elective stock dividends on common stock. Therefore, a reexamination of the rationale for current distinctions between taxable and nontaxable stock dividends is particularly appropriate

Seg Academies, Taxes, and \u3ci\u3eJudge\u3c/i\u3e Ginsburg

This essay recounts the historical, political, and legal context in which Judge Ginsburg’s ruling in the Wright case arose. This context explains the importance of her decision to the battle against segregated education and highlights as well the repeated efforts of powerful political forces, including the Reagan administration and congressional conservatives, to cripple efforts to prohibit racially discriminatory private schools from receiving federal subsidies through the tax system. This essay also aims to highlight Wright’s place in the modern doctrine of educational discrimination

Tax Metamorphosis

My favorite course ever, fourth-year high school Latin, was also the most demanding. We translated all twelve books of Virgils epic poem, The _Eneid, line by dactylic hexameter line, and large chunks of Ovids Metamorphoses besides. The course was valuable in many ways, not least of which was that only my youthful reading of Ovid\u27s Metamorphoses later enabled me to make sense of the U.S. Tax Court\u27s otherwise inscrutable decision in Edwards v. Commissioner

Reconciling Business Purpose with Bail-out Prevention: Federal Tax Policy and Corporate Divisions

Corporate divisions-spin-offs, split-offs, and split-ups-unfortunately pose a more complex problem than Senator Humphrey\u27s childlike vision would lead one to believe: the reconciliation of competing goals of maximizing business flexibility and minimizing tax avoidance. It is widely believed that divisions are essential to business planning; thus, tax-free treatment promotes business flexibility. Yet, an untaxed division may allow tax avoidance through bail-out of corporate earnings and profits at capital gain rates

Thurgood Marshall: Tax Lawyer

During his twenty-four years on the Supreme Court, Justice Thurgood Marshall wrote better opinions on the law of federal income taxation than any of his fellow Justices. This is, of course, a subjective appraisal which others may dispute. Nevertheless, from two decades of teaching federal income taxation, I am convinced of the quality of Marshall\u27s work

Conditioning U.S. Security Assistance on Human Rights Practices

In the United States, with its government of separated powers and functions, it is the executive branch, and in particular the Department of State, that bears responsibility for implementing legislation on foreign relations. The success of implementation will depend on political decisions, involving competing national interests, as well as on institutional and personal considerations of I he officials concerned. Inevitably, there is a gap between legislation and execution, especially when the Executive is not wholly sympathetic to the law. The gap may even devour legislated policies as the Executive refuses to take Care that the Laws be faithfully executed, and bureaucratic and personal considerations distort judgments, exploit the generality and uncertainty of language, and lead to abuse of discretion. A notable instance of this problem has been executive implementation of legislation on international human rights