TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, October 28, 2016

Weekly SSRN Tax Article Review And Roundup

This week, Daniel Hemel (University of Chicago) reviews a new article by Stephen Shay (Harvard), J. Clifton Fleming (BYU), and Robert Peroni (Texas), R&D Tax Incentives: Growth Panacea or Budget Trojan Horse?, 69 Tax Law Review 419 (2016).

HemelFollowers of this blog likely know already that any article by the trio of Shay, Fleming, and Peroni will be well worth reading. And, no surprise, their latest installment very much fits that bill. Here, they present a forceful critique of the various R&D incentives embedded in the Internal Revenue Code, culminating in an ambitious proposal to repeal these incentives and use the resulting revenues to increase direct federal spending on basic research.

One significant contribution that Shay, Fleming, and Peroni make in this article (though far from the only) is to expand our view of R&D tax incentives beyond the section 41 credit for increasing research activities and the section 174 deduction for research and experimental expenditures. 

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October 28, 2016 in Scholarship, Tax, Weekly SSRN Roundup | Permalink | Comments (0)

Weekly Tax Highlight And Roundup

This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog), discusses Jackson v. Commissioner, T.C. Summ. Op. 2016-69 (Oct. 24, 2016):

KristanSometimes love isn’t all you need. Compensation causes income tax. Gifts don’t. This made all the difference in a Tax Court case this week.

A Florida man, who we will call Mr. J., was pastor of a little church with “approximately 25 to 30 active members.” His wife was a “director” in the church.

Mr. J. made an offer to the congregation, according to Tax Court Judge Guy:

Mr. J… informed the church’s board of directors that he did not want to be paid a salary for his pastoral services but that he would not be opposed to receiving “love offerings”, gifts, or loans from the church.

Mr. J. was in a position to keep the love coming:

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October 28, 2016 in Tax, Weekly Tax Roundup | Permalink | Comments (0)

Weekly Legal Education Roundup

Florida Hosts 12th Annual International Tax Symposium

Florida Logo (GIF)The University of Florida Graduate Tax Program hosts its Twelfth International Taxation Symposium today at 8:15 am–1:00 pm EST (live stream here):

October 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

NYU Conference On Divergent Country Views Of Base Erosion And Profit Shifting

NYU Law (2016)NYU hosts a Global Tax Conference today on Divergent Country Views of Base Erosion and Profit Shifting:

Panel #1:  European Commission State Aid Cases

  • Dan Shaviro (NYU) (moderator)
  • Itai Grinberg (Georgetown)
  • Hein Vermeulen (University of Amsterdam)
  • Dennis Webber (University of Amsterdam)

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October 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Law School Formerly Known As South Texas Agrees To Change Name From Houston College Of Law, Subject To Approval Of University Of Houston

Houston South TexasFollowing up on my previous posts (links below):  Houston Chronicle, Law School in Trademark Fight Will Change its Name Again:

By the end of 2016, the private law school in downtown Houston will have yet another new name, attorneys said on Wednesday.

Houston College of Law, formerly known as South Texas College of Law, has agreed to change its name one more time in the next two weeks to avoid going to trial in a federal trademark lawsuit brought by the University of Houston, which said the new name and red-and-white color scheme was confusing to consumers.

Lynne Liberato, one of the lawyers for the school with a soon-to-be-announced name, said the college has taken down a banner on campus, removed merchandise from its store and plans to have several billboards taken down, possibly as soon as this week.

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October 28, 2016 in Legal Education | Permalink | Comments (0)

42nd Annual Notre Dame Tax And Estate Planning Institute


The 42nd Annual Notre Dame Tax and Estate Planning Institute concludes today.  Tax Profs with speaking roles include:

  • Mitchell Gans (Hofstra), The Most Important Estate and Income Tax Decision No One Knows: The Impact of the 1958 Supreme Court Decision in Fidelity-Philadelphia Trust Co. v. Smith on Installment Sales and Private Annuities 
  • David Herzig (Valparaiso), The Intersection of Business Transactions and Estate Planning: What Every Estate Planner Needs to Know About Business Law in the Context of Tax Planning

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October 28, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1268: Sen. Whitehouse — Republicans Are Using Koskinen Impeachment To Bring IRS To Heel On Dark Money Campaign Financing

IRS Logo 2The Hill op-ed: The Republican Mission to Quell the IRS, by Sen. Sheldon Whitehouse (D-RI):

It looks like any other slick political ad on your TV. There’s ominous music, a dramatic voice-over, a grainy picture of President Obama. But this isn’t just another campaign commercial.

The news broke recently that a Republican mega-donor plans to spend about $1 million a week on ads calling on Congress to impeach John Koskinen, the commissioner of the IRS. It seems like an odd way to spend your millions. While it’s true that the IRS is the right’s favorite whipping boy, why the campaign-style ad blitz?

Well, in my years as a prosecutor, it’s become a habit to consider motive. So it got me thinking: What motive do the Republicans have to impeach the IRS commissioner? Maybe it’s just emotional acting-out against an agency they hate because it collects the taxes they hate. Maybe it’s an outbreak of political madness.

Or maybe there is method to their madness.

Let’s look at the Republican Party and how it is funded. While it raises a healthy amount for its campaign committees, Republicans and their allies depend increasingly on the super PACs and shadowy outside spending groups made possible by the Supreme Court’s 2010 Citizens United decision. ...

An under-funded and harried IRS has been unwilling to police the activities of powerful social welfare groups after an effort to separate out new applicants blew up in its face. In 2013, the IRS signaled it would begin the process of drafting a rule to better enforce our laws limiting dark money in elections. It later put the rulemaking process on hold after an especially loud outcry from conservative groups. The agency also came under heavy fire in the press from conservatives and Republicans in Congress who feared having the hose to their political oxygen crimped. And since Republicans took control of the House of Representatives in 2011, they’ve worked to slash the IRS budget. Funding in 2016 was $11.2 billion, or 17 percent below 2010 levels, adjusted for inflation.

So the dark-money floodgates remain wide open, deluging our politics in special-interest slime.

The GOP’s crusade against Commissioner Koskinen may seem overblown, but it makes a lot of sense when you consider motive: Republicans need dark money, and dark money needs a cowering IRS.

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October 28, 2016 in IRS News, IRS Scandal, Political News, Tax | Permalink | Comments (2)

Thursday, October 27, 2016

Yale Student Newspapers Risk 501(c)(3) Tax-Exempt Status To Endorse Hillary Clinton; 94% Of Yale Profs' Political Donations Go To Democrats, 95% Of Conservative Students Feel Their Opinions Are Unwelcome At Yale

YHRCDaily Caller, Tax-Exempt Yale Daily News Appears To Violate Law By Endorsing Hillary Clinton:

The Yale Daily News appears to have violated tax laws by endorsing Hillary Clinton on Wednesday, despite being prohibited from doing so as a tax-exempt 501(c)3 organization.

Yale Daily News, News’ View: Hillary Clinton Law ’73 for President:

In 1969, the same year Yale College went coed, a young woman entered Yale Law School. Like many of us, she was an idealist: She took on child abuse cases and provided free legal advice to the poor. Like many of us, she was a go-getter who worked at the Child Study Center and conducted research on migrant labor. Long before she became Secretary of State Hillary Clinton LAW ’73, Hillary Diane Rodham was working to make our country a better place. Almost four decades later, the News is proud to endorse her for president.

We do not endorse Clinton solely because of the disqualifying flaws of her opponent, Donald Trump, whose campaign has disgusted and astonished our board. Indeed, our endorsement of Clinton should come as no surprise: A recent survey conducted by the News found that a vast majority of students support her candidacy. We endorse her because we, as young people, recognize this election is a turning point for our country. And the choice couldn’t be more clear.

Voting for Clinton is our obligation to ourselves and to future generations. ... Like the young woman who arrived in New Haven in 1969, we have the power to realize a different future. That power lies in our vote. Let’s use it to elect Hillary Clinton.

Independent Journal Review, Non-Profit Yale Record Magazine Taunts IRS With Editorial 'Not Endorsing' Hillary Clinton:

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October 27, 2016 in Political News, Tax | Permalink | Comments (5)

BigLaw Moneyball, Big Law Moneyball:

Littler Mendelson is the second Am Law 100 firm (after Drinker Biddle & Reath) to follow in the Oakland A’s footsteps by hiring a dedicated head of data analytics. It’s only a matter of time before Brad Pitt and Jonah Hill are playing Big Law partners.

In job interviews with half a dozen law firms last year, Zev Eigen quizzed firm leaders as much as they probed him. They wondered what a data scientist with a Ph.D. from the Massachusetts Institute of Technology could do for them.

He was curious what they would let him do.

Eigen, a Cornell-educated lawyer who was on the faculty at Northwestern University School of Law at the time, developed a test for what he calls “status quo bias” at law firms. He told managing partners that their firms should be teaching and training their own would-be first-year associates in jurisdictions such as California and New York that allow apprentices to sit for the bar exam. The plan would save firms $880,000 in salary per associate over a 10-year timeframe.

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October 27, 2016 in Legal Education | Permalink | Comments (0)

Sales Factor Apportionment Would Eliminate Global Profit-Shifting, Inversions, And Favoring Multinational Over U.S. Companies (And Should Unite Democrats And Republicans)

American Prospect, The Progressive Tax Reform You’ve Never Heard Of:

AP“Profit Shifting” is the biggest lawful tax avoidance strategy in the United States and the world. Tax professor Kimberly Clausing of Reed College estimates that 31 percent of corporate tax revenue was lost due to profit shifting in 2012. In other words, the IRS collected $242 billion in corporate tax revenue that year, but should have collected another $111 billion if profit shifting to foreign jurisdictions did not exist. The problem rapidly accelerated from 2004 to 2012, and continues to increase dramatically. In 2016, it is possible that more than 40 percent of potential corporate tax revenue will be lost.

Some reformers on the Democratic side may be missing the mark when focusing on tax loopholes, tax breaks, and statutory rates while preserving the taxation of U.S. corporations’ worldwide income. Most developed countries tax income generated in their country; this is called a “territorial” income tax system. While the worldwide taxation system we have may, at first, seem like a good idea to progressives who want U.S. multinationals to be taxed properly, our system is having the opposite effect, and it can’t be corrected through tinkering.

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October 27, 2016 in Tax | Permalink | Comments (6)

Florida Seeks To Hire Professor Of Tax Practice

Florida Logo (GIF)The University of Florida Fredric G. Levin College of Law seeks to hire a full-time, non-tenure track Professor of Practice in Taxation to begin no later than the fall 2017 semester:

The Professor of Practice will be expected primarily to teach graduate level tax classes to LL.M. and S.J.D. students as part of the College's highly regarded Graduate Tax Program. Applicants for this position should hold a J.D. or LL.B. degree from an accredited law school and have significant legal experience in the field of taxation, with a national or international record of distinction in non-academic achievement, and have demonstrated applied and practical professional experience in taxation. This position will require ongoing professional engagement in taxation, including maintaining professional credentials, and contributions to teaching, research, and service. Salary will be commensurate with qualifications and experience.

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October 27, 2016 in Tax, Tax Prof Jobs | Permalink | Comments (0)

Holderness:  The Unexpected Role Of Tax Salience In State Competition For Businesses

Hayes R. Holderness Jr. (Illinois),  The Unexpected Role of Tax Salience in State Competition for Businesses, 84 U. Chi. L. Rev. ___ (2017):

Competition among the states for mobile firms and the jobs and infrastructure they can bring is a well-known phenomenon. However, in recent years, a handful of states have added a mysterious new tool to their kit of incentives used in this competition. Unlike more traditional incentives, these new incentives — which this Article brands “customer-based incentives” — offer tax relief to a firm’s customers rather than directly to the firm. The puzzle underling customer-based incentives is that tax relief provided to the firm’s customers would seem more difficult for the firm to capture than relief provided directly to the firm — strange, as a state’s primary goal is to subsidize the firm’s investment in the state.

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October 27, 2016 in Scholarship, Tax | Permalink | Comments (0)

Wendi Adelson's Novel: Art Imitating Life?

AdelsonFollowing up on my previous post, What Wendi Adelson's Novel Reveals About Dan Markel's Murder:  Above the Law, The Dan Markel Case: Insights From Wendi Adelson’s Novel:

Over at Outside the Law School Scam, blogger “dybbuk123” took one for the team and read This Is Our Story, the “criminally lousy” novel written by Dan Markel’s ex-wife, Wendi Adelson. ...

A source of mine who also read This Is Our Story shared additional interesting observations:

The basic premise of Attorney Lily’s life is that she married a professor (Joshua Stone). She says that she married him too quickly, and that at the time she was “absolutely sick and tired of dating” and saw “dating, at its best, as nothing more than a romantic interview. ‘Are you the kind of person who would produce good looking, smart and nice children and never cheat on me and help me clean up the kitchen and love me even when I’m grouchy and not trade me in for a younger model and not join the other team?'”

This is, you may recall, pretty much exactly what Wendi said about Dan in her writing-class podcast — that she married a man she lacked passionate love for because she figured he would be a good father.

Joshua gets a job at North Florida State University in Hiawassee Springs (“the ‘Wassee), a small town in the Florida panhandle. Lily moves there because that’s where his job is, but she hates it. She takes many digs at “the Wassee” throughout the book — making fun of the people, their speech, their clothing, calling the town “irrelevant.”

This is consistent with what sources have described as Wendi’s dislike and disdain for Tallahassee, which she fled in favor of cosmopolitan Miami as soon as she could after Dan’s death.

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October 27, 2016 in Book Club, Legal Education | Permalink | Comments (1)

Yale:  Residential Solar And The Federal Income Tax

Ethan Yale (Virginia), Residential Solar and the Federal Income Tax:

Residential solar systems are becoming commonplace in many regions of the United States. Use of such systems raises issues in tax doctrine and policy that are not well appreciated and have not yet been systematically analyzed. The goals of this article are threefold: (1) to identify the main issues and to organize them into a coherent framework, (2) to analyze the doctrinal and policy ramifications of present law, and (3) to suggest improvements to present law.

October 27, 2016 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 1267: Court Orders IRS to Give Account For Targeting Conservatives

IRS Logo 2One News Now, IRS to Give Account for Targeting Conservatives:

A Christian legal group recently scored a legal victory against the IRS, which was ordered to issue outstanding determinations and answer for its political targeting of conservative groups and citizens to whom it unjustly denied tax exemptions for years. ...

The American Center for Law and Justice (ACLJ) was pleased to announce last week its latest victory against the agency many Americans love to hate. “Three years after we filed a lawsuit on their behalf – and for some, nearly seven years after they submitted their applications for tax-exempt status – the grassroots conservative groups that were targeted by the IRS for their political views are finally receiving some of the relief to which they have long been entitled – determinations on those applications.”

After the IRS refused to change its unlawful discriminatory dealings with conservatives by continuing its abuse of the system through punishing those not embracing the administration’s Leftist politics, the lawsuit filed against it pressed forward in the courts.

“In early August, the federal appellate court for the District of Columbia Circuit held that the plaintiffs who filed suit in Linchpins of Liberty, et al. v. United States, et al. in 2013 had set forth allegations sufficient to obtain actual evidence about the IRS’s targeting of conservative tax-exempt applicants based on their names and political positions,” the ACLJ reported. “The D.C. Circuit thus reversed the decision of the district court (which had previously dismissed the claims on the grounds that the IRS had apparently ceased the targeting conduct) and sent the case back to the lower court, explaining that the IRS had failed to demonstrate that either the targeting scheme, or its effects on plaintiffs, had actually ended.”

ACLJ Chief Counsel Jay Sekulow maintains that the court was no longer willing to allow the IRS to drag its feet – ordering it provide information about its alleged shady dealings targeting conservative groups over the years. “[Earlier this month], District Judge Reggie B. Walton held a status conference to resume the lower court proceedings in the case,” Sekulow announced. “While the IRS’s attorney, once again, took the position that most of the claims are moot because most of the plaintiff organizations have received determinations, the court picked up where the D.C. Circuit left off, and ordered that the IRS cease delaying determinations on any outstanding tax-exempt applications of Tea Party groups and other grassroots organizations. He gave the IRS 30 days to comply.”

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October 27, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (0)

Wednesday, October 26, 2016

Ainsworth Presents Blockchain Technology Might Solve VAT Fraud Today At Pennsylvania

AinsworthRichard T. Ainsworth (Boston University) presents Blockchain Technology Might Solve VAT Fraud, 83 Tax Notes Int'l 1165 (Sept. 26, 2016) (with Andrew B. Shact (Mimecast, Boston)), at Pennsylvania today as part of its Tax Policy Workshop Series hosted by Chris Sanchirico and Reed Shuldiner:

At the World Economic Forum in Davos, Switzerland, January 20-23, 2016, more than 800 technology executives and observers were asked when they think governments will begin collecting taxes using blockchain, a type of cryptographic software. The average response was 2023, with 73 percent of respondents saying 2025. The survey did not ask respondents to name the tax collected or the jurisdiction that would collect it, so we do not know where they expect blockchain to be used or what they expect it to collect. This article argues that the EU VAT will be an early adopter, if not the earliest adopter, of blockchain, which will bring substantial efficiency to VAT collection and reduce costs and build trust in intergovernmental relationships.

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October 26, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Market Myth And Pay Disparity in Legal Academia: We Should Amend The Equal Pay Act To Prohibit Market Excuses For Pay Differentials

Paula A. Monopoli (Maryland), The Market Myth and Pay Disparity in Legal Academia, 52 Idaho L. Rev. 867 (2016):

The definition of merit in academia is highly subjective, based in large part on the rank of the journal one publishes in and how often one publishes. ... There have been two high profile cases in legal academia in the past several years. ... The first case is that of Professor Lucy Marsh ... of the University of Denver Sturm College of Law. Marsh was the lowest paid faculty member at the school after forty years of teaching. The second case involved the release of documents pursuant to a Texas Public Information Act request by faculty members at the University of Texas School of Law documenting previously undisclosed compensation in the form of six-figure forgivable loans to certain faculty members, very few of whom were women. A discussion of the two cases ... illustrates why market excuses are so pernicious in terms of gender pay disparities in legal academia. ...

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October 26, 2016 in Legal Education, Scholarship | Permalink | Comments (3)

Scharff:  Limits On Municipal Taxing Authority And What to Do About Them

Erin Adele Scharff (Arizona State), Powerful Cities?: Limits on Municipal Taxing Authority and What to Do About Them, 91 N.Y.U. L. Rev. 292 (2016):

Cities are once again on the rise and have become the site of major public debates, from income inequality and immigration policy to where and how Americans should live. While municipal leaders are often eager to fill the void in political leadership left by Congress and state elected officials, they are often hamstrung by state home rule laws, which define the powers states grant to municipalities. These laws limit, among other things, municipal taxing authority. Recently, local government scholars have wrestled with whether and how to grant municipalities more fiscal authority, but such scholarship has not provided a unified theory of municipal taxing authority.

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October 26, 2016 in Scholarship, Tax | Permalink | Comments (1)

Using Machine Learning To Predict Outcomes In Tax Law

BlueJBenjamin Alarie, Anthony Niblett & Albert Yoon (Toronto), Using Machine Learning to Predict Outcomes in Tax Law:

Recent advances in artificial intelligence and machine learning have bolstered the predictive power of data analytics. Research tools based on these developments will soon be commonplace. For the past two years, the three of us have been working on a project called Blue J Legal. We started with a view to understanding how machine learning techniques can be used to better predict legal outcomes. In this paper, we report on our experiences so far. The paper is set out in four parts.

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October 26, 2016 in Scholarship, Tax | Permalink | Comments (2)

Millennial International: Sponsor A Millennial Today

October 26, 2016 in Legal Education, Tax | Permalink | Comments (9)

A Boy’s Allowance: Never Safe From The IRS

FATCAWall Street Journal op-ed: A Boy’s Allowance: Never Safe From the IRS, by Ragheed I.Moghrabi:

My 10-year-old wanted to open a bank account with $100. Then the trouble began.

As an American banker based in the Middle East for over 10 years, I have links back home that alternate between infrequent visits as well as the occasional get-together with compatriot working professionals in Abu Dhabi, Beirut and Dubai. Living in Lebanon with my family, I’ve grown used to the Byzantine world of U.S.-initiated tax rules on Americans abroad. But when a tax rule extends to my children—in this case an unemployed fifth-grader—I sit up, take notice and worry.

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October 26, 2016 in Tax | Permalink | Comments (2)

CrimeStoppers Reduces Reward For Tips In Dan Markel Murder Investigation From $25k To $3k

Markel 3WCTV, Reward for Information in Dan Markel Case Decreased:

Big Bend Crime Stoppers announced Tuesday that the reward for information leading to an arrest in the murder case of Florida State professor Dan markel has been decreased.

BBCS says effective immediately, tipsters will receive the standard amount, which is up to $3,000. They say the adjustment is due to a change in donor reward participation.

Tallahassee Democrat, Reward in Dan Markel Case Reduced

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October 26, 2016 in Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 1266: Obama Denies Any ‘Major Scandals’ In His Administration — What About The IRS Scandal?

IRS Logo 2The Daily Signal, 9 Controversies Obama Didn’t Mention When He Denied Any ‘Major Scandals’:

President Barack Obama discarded eight years of controversies surrounding his administration, including the targeting of conservative groups, veterans lacking health care, the administration’s response to a terrorist attack weeks before the 2012 election, and a botched gun sting.

During a Democratic fundraising event in San Diego Sunday, Obama attacked Rep. Darrell Issa, R-Calif., the former chairman of the House Oversight and Government Reform Committee, for the various investigations into the administration.

“Here’s a guy who called my administration perhaps the most corrupt in history, despite the fact that actually, we have not had a major scandal in my administration,” Obama told Democratic donors. ...

Here’s a list of nine controversies that Obama didn’t mention at the Democratic fundraiser, but that nevertheless leave many unanswered questions. ....

1. IRS Targeting Scandal

In 2013, Lois Lerner, former director of the IRS Exempt Organizations division, admitted that officials in the IRS’ Cincinnati office acted improperly. The move was meant to preempt the release of a Treasury Inspector General for Tax Administration, which found a sustained targeting of conservative groups applying for tax-exempt status.

Lerner asserted her innocence in the matter before the House Oversight and Government Reform Committee, then invoked her Fifth Amendment rights against self-incrimination to avoid cross-examination of her claims. The House voted to find her in contempt of Congress.

Justice Department prosecutor Barbara Bosserman, who had donated $6,750 to Obama’s campaign and the Democratic National Committee from 2004 to 2012, investigated the matter and declined to bring up charges.

House investigators did not find a direct link from the White House to the IRS scandal.

The Justice Department was aware of the matter two years before Congress and took no action, according to documents obtained by the government watchdog group Judicial Watch through the Freedom of Information Act.

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October 26, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Tuesday, October 25, 2016

IRS Releases 2017 Inflation Adjustments

IRS Logo 2The IRS has released various inflation-adjustments for 2017 (IR-2016-139 & Rev. Proc. 2016-55), including:

  • Gift Tax Exemption:  $14,000 (same as 2016)
  • Unified Credit:  $5,490,000 (up $40,000 from 2016)
  • Top 39.6% Income Tax Rate:  $415,050 single/$466,950 joint (up $1,850/$2,100 from 2016)
  • Standard Deduction:  $6,350 single/$12,700 joint (up $50/$100 from 2016)
  • Personal Exemption:  $4,050 (same as 2016)

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October 25, 2016 in IRS News, Tax | Permalink | Comments (0)

Clemens Presents The Minimum Wage And The Great Recession Today At Columbia

ClemensPhoto2Jeffrey Clemens (UC-San Diego) presents The Minimum Wage and the Great Recession (with Michael Wither (UC-San Diego)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

We estimate the minimum wage’s effects on low-skilled individuals’ employment and income trajectories following the Great Recession. Our approach exploits two dimensions of the data we analyze. First, we compare individuals in states that were fully bound by the 2007 to 2009 increases in the federal minimum wage to individuals in states that were not. Second, we use variation in the minimum wage’s bite across skill groups to separate our samples into “target” and “within-state control” groups. Using the 2008 panel of the Survey of Income and Program Participation and the Current Population Survey, we find that binding minimum wage increases had significant, negative effects on the employment and income growth of targeted workers.

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October 25, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

The Use Of Metrics To Assess Scholarly Performance: The Emperor’s New Clothes?

BibliometricsInside Higher Education, Can Your Productivity Be Measured? (reviewing Yves Gingras (University of Quebec), Bibliometrics and Research Evaluation: Uses and Abuses (MIT Press, 2016):

“Since the first decade of the new millennium, the words ranking, evaluation, metrics, h-index and impact factors have wreaked havoc in the world of higher education and research.” ...  Ultimately, Bibliometrics concludes that the trend toward measuring anything and everything is a modern, academic version of “The Emperor’s New Clothes,” in which — quoting Hans Christian Andersen, via Gingras — “the lords of the bedchamber took greater pains than ever to appear holding up a train, although, in reality there was no train to hold.”

Gingras says, “The question is whether university leaders will behave like the emperor and continue to wear each year the ‘new clothes’ provided for them by sellers of university rankings (the scientific value of which most of them admit to be nonexistent), or if they will listen to the voice of reason and have the courage to explain to the few who still think they mean something that they are wrong, reminding them in passing that the first value in a university is truth and rigor, not cynicism and marketing.”

Although some bibliometric methods “are essential to go beyond local and anecdotal perceptions and to map comprehensively the state of research and identify trends at different levels (regional, national and global),” Gingras adds, “the proliferation of invalid indicators can only harm serious evaluations by peers, which are essential to the smooth running of any organization.”

And here is the heart of Gingras’s argument: that colleges and universities are often so eager to proclaim themselves “best in the world” -- or region, state, province, etc. -- that they don’t take to care to identify “precisely what ‘the best’ means, by whom it is defined and on what basis the measurement is made.” Put another way, he says, paraphrasing another researcher, if the metric is the answer, what is the question?

Without such information, Gingras warns, “the university captains who steer their vessels using bad compasses and ill-calibrated barometers risk sinking first into the storm.” The book doesn’t rule out the use of indicators to “measure” science output or quality, but Gingras says they must first be validated and then interpreted in context. ...

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October 25, 2016 in Book Club, Legal Education, Scholarship | Permalink | Comments (0)

American University Symposium:  Taxing Remote Sales In The Digital Age

AmericanSymposium, Taxing Remote Sales in the Digital Age, 65 Am. U. L. Rev. 1115-1271 (2016):

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October 25, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Soled & Thomas:  Regulating Tax Return Preparation

Jay A. Soled (Rutgers) & Kathleen DeLaney Thomas (North Carolina), Regulating Tax Return Preparation, 58 B.C. L. Rev. ___ (2016):

Every year the U.S. government collects nearly $3 trillion of income and employment taxes, a large share of which is used to deliver social welfare benefits to the poor. With respect to these collections and deliveries, the Form 1040 (U.S. Individual Income Tax Return) seeks to ensure taxpayer accuracy. In the twenty-first century, there are two sets of key players that dominate the Form 1040 preparation and submission process, namely, tax return preparers and tax return preparation software companies. The former hand-hold taxpayers through the entire tax return preparation and submission process while the latter provide taxpayers with the necessary tools to complete and submit tax returns on their own. These two groups – tax return preparers and tax software companies – thus stand as vital intermediaries between the government and taxpayers, assisting in the preparation of over 90 percent of all individual tax returns.

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October 25, 2016 in Scholarship, Tax | Permalink | Comments (3)

Santa Clara Welcomes 246 1Ls, Down 5% From 2015 (But Up 62% From 2014)

Santa Clara Law School (2016)Santa Clara Law School (ranked #129 in U.S. News) welcomed 246 1Ls this Fall, down 5% from 2015 (260) and down 22% from 2010 (314), but up 62% from 2014 (152). Here are Santa Clara's 25%/50%/75% LSAT scores for those years:

  • 2010 class of 314:  158/160/162
  • 2014 class of 152:  156/157/160
  • 2015 class of 260:  153/155/157
  • 2016 class of 246:  151/154/157 

Here are Santa Clara's admission data for the prior six years from Law School Transparency:

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October 25, 2016 in Legal Education | Permalink | Comments (9)

Chicago Tax Lawyer Reaps $30 Million From 900 Whistleblower Lawsuits Against Internet Retailers For Failing To Collect State Taxes On Purchased Goods

ABA Journal, Chicago Lawyer Has Filed More Than 900 Qui Tam Actions Against Internet Retailers:

Chicago lawyer Stephen Diamond has made a business out of filing qui tam cases accusing internet retailers of failing to pay correct taxes to the state of Illinois.

Diamond and his law firm have filed more than 900 qui tam cases in Cook County, Illinois, courts and obtained nearly $30 million in settlements over a 15-year period, Bloomberg Big Law Business reports. Diamond’s share of the proceeds is $11.6 million, which includes his share of the settlements, attorney fees and costs. ...

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October 25, 2016 in Tax | Permalink | Comments (2)

The Dan Markel Murder Investigation: Why Was Katherine Magbanua's First Degree Murder Charge Reduced To Second Degree Murder?

MagnaubaAbove the Law, The Dan Markel Case: Is Katherine Magbanua Cutting A Deal?:

A source of mine on the ground in Tallahassee alerted me to an interesting change in the criminal docket for Katherine Magbanua, the woman accused of acting as a conduit in the Dan Markel murder between the two alleged hitmen and whoever ordered Professor Markel’s murder.

When Katie Magbanua was arrested earlier this month in connection with the crime, she was charged with first-degree murder. ... [A]t some point between last week and today, Katherine Magbanua’s exposure got downgraded from first-degree to second-degree murder. What might this mean?

One possibility: Magbanua has entered into a plea agreement and is cooperating with the police. This would not be shocking. ...

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October 25, 2016 in Legal Education | Permalink | Comments (10)

The IRS Scandal, Day 1265: Treasury & IRS CIOs Receive IT Leadership Awards

IRS Logo 2Sonny Bhagowalia (Deputy Assistant Secretary for Information Systems & Chief Information Officer, U.S. Treasury Department) and Gina Garza (Chief Information Officer, IRS) received 2016 FedScoop 50 Leadership Awards. From an internal IRS memo (sent to me by a reader, who says he an IRS IT subcontractor):

Congratulations to CIO Gina Garza and Treasury CIO Sonny Bhagowalia for winning a 2016 FedScoop 50 award. Gina and Sonny were both recognized in the Federal Leadership category.

The FedScoop awards honor the federal and industry leaders who made significant contributions in the areas of cybersecurity and technological modernization. More than 340,000 votes were cast over the one-month voting period to narrow the field to 50 from the more than 1,000 original nominees.

"Receiving this award is such a great honor for me, IT and the IRS. It shows that we are recognized among our governmental technology-sector peers for the great work we do," said Gina.

Congratulations to Gina and Sonny.

From my reader (the IRS IT subcontractor):

"Cybersecurity" in this case being keeping emails from prying Congressional eyes, and "technological modernization" being spending $12 million on an email system that the IRS can't use. Or maybe "recycling" backup tapes on an accelerated schedule.

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October 25, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, October 24, 2016

Polsky Presents The Up-C Revolution Today At Loyola-L.A.

Polsky (2015)Gregg D. Polsky (Georgia) presents The Up-C Revolution (with Adam H. Rosenzweig (Washington University)) at Loyola-L.A. today as part of its Tax Policy Colloquium Series hosted by Ellen Aprill and Katherine Pratt:

Over the past few years, a revolutionary new tax structure, known as the Up-C, has become increasingly popular, particularly in instances where an LLC is being taken public. In such an Up-C IPO, a newly formed C corporation is placed on top of the existing LLC, which continues to operate the business. Shares of the C corporation are sold to new investors, and the proceeds are used by the C corporation to buy an interest in the LLC. Meanwhile, the legacy owners of the LLC (typically, founders and private investment funds) retain their interests in the LLC, while receiving exchange rights that allow them to swap their LLC interests for equivalent-value shares of the C corporation. In addition, the legacy owners often receive the benefit of tax receivables agreements (TRAs), which provide that the owners will receive a specified percentage (usually 85 percent) of the tax benefits to the C corporation resulting from future exchanges. In combination, these features seem to provide a near-nirvana of tax efficiency. It is therefore unsurprising that the popularity of Up-Cs is growing at an exponential rate.

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October 24, 2016 in Colloquia | Permalink | Comments (0)

Frank Presents Papers On High-End Inequality Today At NYU

FrankRobert Frank (Cornell) presents five short articles today at the NYU High-End Inequality Colloquium Series (more here) hosted by Robert Frank (Cornell) and Dan Shaviro (NYU):

The discussant is K. Anthony Appiah (NYU).


October 24, 2016 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Succession Planning in Law Schools

Bales 2TaxProf Blog op-ed: Succession Planning in Law Schools, by Rick Bales (Former Dean, Ohio Northern):

In business, one of the principal responsibilities of a leader is to groom a successor. At General Electric, for example, CEO Jeff Immelt spends about 40% of his time on developing the company’s future leaders. At Eli Lilly, half the variable compensation for senior executives is tied to mentoring skills and leadership development.

The impact of succession planning in business is often obvious and public. On the negative side, consider Sumner Redstone, who is having a King Lear year as family and confidants publicly grovel for his affection and fight among each other over his media empire even while he’s on the right side of the grass. On the positive side, consider Proctor & Gamble, where for 175 years every CEO started a career there as an entry-level employee.

In law schools, and higher education generally, the impact of succession planning is equally dramatic, if less public. Universities drift; law schools become internally dysfunctional. Moreover, the change in skill sets required as one moves up the higher-education ladder are at least as significant as in business. A great faculty member is strong in the classroom (which requires lots of solo class prep) and a gifted researcher — mostly solitary work; a successful dean must be visible and social and a consensus-builder. Likewise, a great associate law dean is detail-oriented and knows precisely how the train works; a successful dean envisions future destinations and can raise money to lay the track.

The average tenure of a Fortune 500 CEO is 4.6 years — longer than the 3-odd-year tenure of an average law dean [the average tenure of serving deans is 3.6 years; the median tenure is 2.4 years]. Yet, though succession planning is institutionalized at most large companies, in law schools and higher education generally it is haphazard at best. Consider, for example, the number of  searches in which there is not a single viable internal candidate.

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October 24, 2016 in Legal Education | Permalink | Comments (2)

Call For Tax Papers And Panels: SEALS 2017 (Boca Raton, Florida)

SEALs Logo (2013)Now that we are deep into the fall semester, it's time to think about SEALS 2017! The conference will be held July 31-August 6 in Boca Raton, Florida. The conference submission tool is now open, and Jennifer Bird-Pollan, Leandra Lederman, Francine Lipman, and Shu-Yi Oei, as the Tax Resource team, are eager to coordinate people who are interested in presenting tax work at the SEALS conference into relevant panel groups. In addition, we have also had a very successful Tax Policy Discussion Group in recent years.

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October 24, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Johnson:  Were Trump's Fake Losses Legal As Tax Deductions?

Trump 3Calvin H. Johnson (Texas), Were Trump's Fake Losses Legal as Tax Deductions?:

Trump claimed almost a billion of tax losses on his 1995 tax return. Trump did not lose anything like that in economic substance because he never put that much money into his transactions. If he never put it, he did not lose it. Trump must have treated part of the $3.4 bank debt as a cost and tax basis, while inconsistently, not correcting his cost when it turned out not be paid. Sheppard and Lipton have proposed an S corporation or Gitlitz theory, which if applicable would allow the fake loss as a tax deduction, but real estate developers did not use S corporations in the early and middle 1990’s because S corporations trapped all losses inside the corporation where they were wasted. Trump might have reduced basis in real property, rather than taking an immediate income or NOL reduction. In any event, the losses do not “impinge on the world” and courts take away fake tax losses when they see them.

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October 24, 2016 in Political News, Tax | Permalink | Comments (8)

Weapons Of Math Destruction: How U.S. News' 'Craven' Decision To Eschew Affordability In Its Rankings Increases Inequality

WeaponsThe Traps of Big Data (reviewing Cathy O'Neil, Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy (2016)):

As O’Neil defines it, a weapon of math destruction, or WMD, has three elements: Opacity, Scale, and Damage. Combined, these factors create traps with feedback loops, capturing victims in systems they can’t understand and can’t escape, all the while exploiting them. Of the three, Scale seems the most pernicious element, enabling Damage.

After a critique of value-add theory for teachers and a refresher course on the 2008 credit-default swaps and mortgage-backed securities that led to the Great Recession’s financial meltdown, O’Neil produces a trenchant analysis of the U.S. News & World Report college rankings. After reading this chapter about how higher education has become captured by a big data system, the limitations and difficulties of the Impact Factor seem downright charming.

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October 24, 2016 in Law School Rankings, Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1264: Light Meet Tunnel

IRS Logo 2Politico Morning Tax, Light Meet Tunnel:

The Albuquerque Tea Party and Unite In Action should get a ruling on their tax-exempt status one way or another next month, under a recent order from a federal court. Judge Reggie B. Walton ordered the IRS to make a final decision on the groups’ status by Nov. 11, which will be more than six years after the organizations applied for a tax exemption. As our Toby Eckert notes, the fact that those groups still hadn’t heard from the IRS played a role in the revival of a lawsuit filed by the American Center for Law and Justice on their behalf. A lower court had tossed the suit a couple years ago, finding that the IRS was no longer improperly scrutinizing tea party groups.

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October 24, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, October 23, 2016

Tax Papers At ClassCrits IX Conference At Loyola-Chicago


Critical Perspectives on Tax Law 

  • Les Book (Villanova), Bureaucratic Oppression and the Tax System, 69 Tax Law. 567 (2016)
  • Samuel Brunson (Loyola-Chicago), Avoiding Progressivity: RICs, Pease, and the AMT
  • David Herzig (Valparaiso), Let Prophets Be (Non) Profits
  • Shu-Yi Oei (Tulane), The Troubling Case of Offshore Tax Enforcement 

Distributing Wealth, Law and Power

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October 23, 2016 in Conferences, Scholarship, Tax | Permalink | Comments (0)

More Than 30 Law Schools Pay Student Bar Review Costs: Does It Improve Pass Rates?

Bar Review LogosABA Journal, More Law Schools Are Covering Bar Review Costs: Is It Improving Pass Rates?:

Out of law schools who have July 2016 bar results for first-time test takers, many saw their pass rate percentages drop.

And of the schools that saw pass rates rise, some are increasingly covering partial or entire bar review costs for graduates.

Mike Sims, president of the test prep group BARBRI Bar Review, told that ABA Journal that more than 30 law schools now pay for their students’ bar review. According to the business’s website, courses cost between $2,595 and $3,995, depending on when someone enrolls.

“I beg for money from alumni and say it’s a great investment, because otherwise these people will keep failing,” says Lawrence W. Moore, interim dean of Loyola University New Orleans College of Law.

The school’s first-time test-taker pass rate for July 2016 was 76.69 percent;last year it was 71.53 percent.

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October 23, 2016 in Legal Education | Permalink | Comments (3)

The Top 5 Tax Paper Downloads

SSRN LogoThere is a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with a new paper debuting on the list at #4. The #1 paper is now #23 in all-time downloads among 12,295 tax papers):

  1. [3,668 Downloads]  Families Facing Tax Increases Under Trump's Latest Tax Plan, by Lily L. Batchelder (NYU)
  2. [204 Downloads]  Taxation and Human Rights: A Delicate Balance, by Reuven Avi-Yonah (Michigan) & Gianluca Mazzoni (S.J.D. 2017, Michigan)
  3. [190 Downloads]  Law and Macroeconomics: The Law and Economics of Recessions, by Yair Listokin (Yale)
  4. [155 Downloads]  Interrogating the Relationship between 'Legally Defensible' Tax Planning and Social Justice, by Daniel Shaviro (NYU)
  5. [150 Downloads]  Capital Taxation in an Age of Inequality, by Edward Kleinbard (USC)

October 23, 2016 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

Focus On Reputation/Selectivity Over Earnings/Outcomes Will Render U.S. News Rankings An Anachronism

US NewsNew York Times, How Much Graduates Earn Drives More College Rankings:

PayScale introduced its first college salary report in 2008, and the College Scorecard from the federal government followed last year, ushering an elephant into the hallowed halls of college admissions: What do the schools’ graduates actually earn?

Despite the hand-wringing of many in academia, who saw the immeasurable richness of a college education crassly reduced to a dollar sign, the data has wrought a sea change in the way students and families evaluate prospective colleges. Earnings data are finding their way into a proliferating number of mainstream college rankings, shifting the competitive landscape of American higher education in often surprising ways.

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October 23, 2016 in Law School Rankings, Legal Education | Permalink | Comments (4)

The IRS Scandal, Day 1263: The Denial Of Probe Into IRS Disclosure Of Taxpayer Information Is ‘Alarming’

IRS Logo 2Bloomberg BNA, Denial of Probe Into IRS Disclosure ‘Alarming,’ Group Says:

The dismissal of an investigation into the IRS’s disclosure of protected taxpayer information by a government watchdog is “alarming,” a conservative group said.

The Cause of Action Institute in June asked the Department of Justice Inspector General and the Treasury Inspector General for Tax Administration to “examine potential legal violations arising from the October 2010 disclosure of more than one million pages of tax returns and return information to the FBI and DOJ Public Integrity Section by” the Internal Revenue Service and former agency official Lois Lerner, the group said in an Oct. 20 news release.

As part of the request, the institute asked that the DOJ watchdog examine whether the Federal Bureau of Investigation and DOJ employees violated taxpayer confidentiality laws by inspecting the disclosed data.

The DOJ Inspector General responded in an Oct. 12 letter signed by Daniel C. Beckhard, assistant inspector general for the Oversight and Review Division. It appeared that some protected taxpayer information was included on compact discs that the IRS provided to the department, the inspector general said, but when the department learned of that disclosure, it returned the CDs to the IRS and informed Congress.

“Given the absence of available information suggesting that Department employees over whom our Office has jurisdiction might have engaged in conduct that violates laws, regulations, or policy, we have determined that this matter does not warrant further investigation,” Beckhard said in the letter, which was attached to the CoA Institute’s news release.

The CoA Institute said it has filed a Freedom of Information Act request with the DOJ watchdog to “determine the exact nature of its notification to Congress.” ...

“The DOJ IG’s response is concerning,” said John J. Vecchione, vice president at the CoA Institute. “While admitting that the IRS did, in fact, disclose confidential taxpayer information, the IG failed to address the absence of any proper requests for disclosure from the DOJ,” he said. “Even more alarming, the IG refused to conduct an investigation into legal violations because of the ‘absence of available information,’ ” Vecchione said.

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October 23, 2016 in IRS News, IRS Scandal, Tax | Permalink | Comments (16)

Saturday, October 22, 2016

This Week's Ten Most Popular TaxProf Blog Posts

ABA Council Approves 75% Minimum Bar Pass Rate

ABA Section On Legal Education (2016)National Law Journal, Tighter Bar-Pass Rule Adopted by ABA Accrediting Body:

The American Bar Association body that accredits law schools voted on Friday to tighten the bar exam-passage standard that schools must meet in order to get the organization’s accreditation blessing. The ABA’s Council of the Section of Legal Education and Admissions to the Bar overwhelmingly decided to strengthen its bar pass standard for accredited law schools—a long-debated move proponents said is necessary to ensure law schools don’t admit students unlikely of passing the all-important attorney licensing exam.

The council voted for the stricter standard over the opposition of diversity advocates who warned that schools with large numbers of minority students could lose their accreditation and that the stricter rule would prompt schools to admit fewer minority students. That, in turn, would exacerbate the legal profession’s longstanding diversity problem, they argued.

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October 22, 2016 in Legal Education | Permalink | Comments (2)

Retired U.S. Tax Court Judge Pleads Guilty To Tax Fraud While She Sat On The Court

TCKFollowing up on my previous posts:

Minneapolis Star Tribune, Former Tax Court Judge From Twin Cities Pleads Guilty to Tax Fraud:

A former U.S. Tax Court judge pleaded guilty Friday to conspiring with her husband to fraudulently omit nearly $1 million of income from their tax returns while she served as judge, using the gains on personal expenses like international trips and Pilates classes.

Diane Kroupa, 61, faces up to five years in prison after pleading guilty to conspiracy to defraud the United States in federal court in St. Paul. A federal grand jury indicted Kroupa and her then-husband, Robert Fackler, 63, in April.

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October 22, 2016 in New Cases, Tax | Permalink | Comments (3)

Greg Mankiw Happily Paid $2,500 For A Hamilton Ticket, But Asks: Why Should 80% Go To Resellers Rather Than Lin-Manuel Miranda?

Hamilton 3Continuing my obsession with interest in Hamilton (links below):  Sunday New York Times op-ed: I Paid $2,500 for a ‘Hamilton’ Ticket. I’m Happy About It., by N. Gregory Mankiw (Harvard):

You may have heard that “Hamilton” tickets are hard to come by. ... We, however, had no problem getting tickets. Two weeks before our trip, I logged into StubHub, the online ticket marketplace owned by eBay. I found the performance we wanted, located some great seats and within a few minutes was printing our tickets.

The rub is the price. Including StubHub’s fee, I paid $2,500 a ticket, about five times their face value. Such a large markup is not unusual.

Now, at this point, some people might object to this price. Terms like “scalping” and “price gouging” are pejoratives used to demonize those who resell tickets at whatever high prices the market will bear.

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October 22, 2016 in Legal Education, Tax | Permalink | Comments (3)