TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Friday, November 20, 2015

Weekly SSRN Tax Roundup

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November 20, 2015 in Scholarship, Tax | Permalink | Comments (0)

Women, African-American Lawyers Make Little Progress At Big Law Firms

NALP New LogoNALP, Women, Black/African-American Associates Lose Ground at Major U.S. Law Firms:

Women and Black/African-Americans show declines in representation at major U.S. law firms, according to the latest law firm demographic findings from the National Association for Law Placement (NALP). NALP's recent analyses of the 2015-2016 NALP Directory of Legal Employers (NDLE) — the annual compendium of legal employer data published by NALP — shows that although women and minorities continue to make small gains in their representation among law firm partners in 2015, the overall percentage of women associates has decreased over the majority of the last five years, and the percentage of African-American associates has declined each year since 2009. 

New York Times:  Women and Blacks Make Little Progress at Big Law Firms, by Elizabeth Olson:

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November 20, 2015 in Legal Education | Permalink | Comments (1)

Treasury, IRS Issue New Rules To Curb Tax Inversions

Florida Coastal Law Grad Seeks Supreme Court's Help To Discharge $260,000 Student Loan Debt In Bankruptcy

Florida CoastalFollowing up on my previous post, 7th Circuit: Florida Coastal Law Grad Cannot Discharge $260,000 Student Loan Debt In Bankruptcy: Patrick Gregory (Bloomberg BNA), Law School Debt, 'Hopelessness' and the Supreme Court:

Mark Tetzlaff has close to $300,000 in law school debt and is seeking the U.S. Supreme Court’s help in getting it discharged in bankruptcy (Tetzlaff v. Educ. Credit Mgmt. Corp., petition for cert. filed, 84 U.S.L.W. 3222 (U.S. Oct. 15, 2015) (No. 15-485)).

Courts including the U.S. Courts of Appeals for the Seventh and Eighth circuits are split on what constitutes “undue hardship” that makes a debtor eligible for such a discharge. The U.S. Court of Appeals for the First Circuit is also considering this issue.

Tetzlaff has fallen on hard times, James M. Wilton of Ropes & Gray LLP, Boston, who represents Tetzlaff, told Bloomberg BNA. He has massive debt and is “10 years from retirement age,” Wilton said.

The issue of law school debt has been getting more attention recently. Lawmakers on both sides of the aisle have “sharply criticized U.S. law schools” for burdening students with crushing debt and non-marketable degrees, according to Bloomberg Business.

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November 20, 2015 in Legal Education | Permalink | Comments (5)

NTA 108th Annual Conference on Taxation

Cover2The three-day National Tax Association 108th Annual Conference on Taxation continues today in Boston.  Today's highlights:

International Corporate Tax Policy

U.S. Wealth Inequality Measurement

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November 20, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Wake Forest Symposium: Revisiting Langdell — Legal Education Reform And The Lawyer’s Craft

Wake 4Wake Forest Law Review Symposium, Revisiting Langdell: Legal Education Reform and the Lawyer’s Craft:

Embracing the inseparability of legal doctrine and legal practice sheds much light on the lawyer’s craft, on useful law school curriculum reform, and on what the bar might reasonably expect from law schools. Through this unified lens, the Symposium will look beyond Langdell’s “Socratic” method focused on redacted appellate cases and will explore a richer theoretical understanding of legal education and scholarship and the lawyer’s craft. To paraphrase Kant, the Symposium will explore how doctrine without practice is empty, how practice without doctrine is blind, and how, as a correlate of this separate emptiness and blindness, the humanities play a critical role in law and legal education and scholarship.

The Symposium will expand upon Harold Lloyd (Wake Forest), Exercising Common Sense, Exorcising Langdell: The Inseparability of Legal Theory, Practice and the Humanities, 49 Wake Forest L. Rev. 1213 (2014).

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November 20, 2015 in Legal Education, Scholarship | Permalink | Comments (1)

The IRS Scandal, Day 925

IRS Logo 2WND, IRS Target: 'Justice in Their Hands Is a Mockery':

On Friday, [Oct. 23,] the Justice Department announced it was closing its investigation of former IRS official Lois Lerner and would not be filing any charges, chalking up the scandal instead to mismanagement.

However, the head of one of the grassroots organizations that endured unwarranted scrutiny by the IRS says the decision is simply more proof of a “lawless administration” that is making a “mockery” of justice. ...

True the Vote is one group that endured years of IRS harassment over its application for tax-exempt status. Its president, Catherine Englebrecht, is disgusted but not surprised by the Justice Department’s announcement.

“This is a lawless administration,” she said in an interview with WND and Radio America. “They write the rules and then play by those if they choose to follow. It is certainly not a surprise at all that they’ve chosen to try to wipe the slate clean of the IRS scandal, as they have so many other scandals. They don’t look to police themselves. They’re not interested in the better interests of their fellow countrymen. They’re interested in the survival of their party.”

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November 20, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (2)

Thursday, November 19, 2015

Osofsky Reviews Oh's Will Tax Reform Be Stable?

JotwellLeigh Osofsky (Miami), A New Tax Policy Criterion: Stability (Jotwell) (reviewing Jason Oh (UCLA), Will Tax Reform Be Stable?):

Fairness, efficiency, simplicity, and revenue-raising capability (not necessarily in that order) have long been the hallmarks of good tax policy. In a forthcoming article, Will Tax Reform Be Stable?, Jason Oh introduces a new criterion: stability. Oh persuasively argues that certain tax reform may be more or less stable than others, and contends that it is possible to analyze and predict stability. Moreover, as Oh explains, understanding stability is essential in order to determine the durability of any good (or bad) tax reform.

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November 19, 2015 in Scholarship, Tax | Permalink | Comments (1)

Pittsburgh Tax Review Publishes New Issue

Pittsburgh Tax Review (2015)The Pittsburgh Tax Review has published Vol., 12, No. 2 (Spring 2015):

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November 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

$23 Billion In Annual Federal Tax Credits For Higher Education Have No Effect On College Attendance

NBER, Who Benefits From Federal Tax Credits For Higher Education?:

Researchers find that tax credits for higher education have little or no effect on college attendance; the credits are essentially transfer payments - and not primarily to the needy.

In 2014, the federal government spent about $23 billion on three programs offering tax credits to households paying for higher education. In The Returns to the Federal Tax Credits for Higher Education (NBER Working Paper No. 20833), George B. Bulman [UC-Santa Cruz] and Caroline M. Hoxby [Stanford] find that the credits have little or no effect on college-going in the U.S. The credits do not affect whether students enroll at all, whether they attend four-year colleges, how expensive their colleges are, or the scholarships and grants they receive. The authors conclude that the tax credits are primarily "a transfer from some individuals to others." ...

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November 19, 2015 in Legal Education, Scholarship, Tax | Permalink | Comments (0)

McMahon: Gendering the Marriage Penalty

InfantiStephanie Hunter McMahon (Cincinnati), Gendering the Marriage Penalty, in Controversies in Tax Law: A Matter of Perspective (Anthony C. Infanti, ed. Ashgate 2015):

In 1969 Congress amended the Internal Revenue Code to create a marriage penalty. The penalty was not felt by all married couples: Only those couples in which spouses earned roughly equal amounts and who filed joint tax returns paid a penalty. Thus, the 1969 change in law had a gendered effect of discouraging some wives from earning income, but the alternative was not without its own gendered results. If gender marks the impact of the 1969 legislation, was gender what motivated the change in law? It would be easy to assume that at the end of the 1960s, a socially conservative legislature reacted to a developing women’s movement. From the legislative debates, sexism certainly pervaded congressional discussion of women’s role in the family and the economy. However, this only tells part of the story and does so by focusing on the result that remains of interest today. Economic forces were a larger part of the story.

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November 19, 2015 in Scholarship, Tax | Permalink | Comments (0)

NY Court: Ethics Rules Bar Whistleblower Suit By Former Vanguard Tax Lawyer Alleging Mutual Fund Giant Evaded $1 Billion in Taxes

VanguardFollowing up on my previous posts (links below): Philadelphia Inquirer, Danon Barred From Whistleblower's Cut in Vanguard NY Case:

A New York State Supreme Court justice has ruled that a former Vanguard Group tax lawyer cannot expect to collect a whistleblower's cut of potential back state taxes owed by the mutual-fund giant because he was employed by Vanguard at the time he secretly filed the complaint.

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November 19, 2015 in New Cases, Tax | Permalink | Comments (0)

NTA 108th Annual Conference on Taxation

Cover2The three-day National Tax Association 108th Annual Conference on Taxation kicks off today in Boston.  Today's highlights:

Alan Auerbach (UC-Berkeley), Presidential Address

Topics in Business Taxation:

  • Session Chair:  Diane Ring (Boston College)
  • Mirit Eyal-Cohen (Alabama), Taxing Economies of Scale
  • Shu-Yi Oei (Tulane) &  Diane Ring (Boston College), Regulation by Crowd
  • David Hasen (Colorado), Taxation and Innovation
  • Jacob Nussim (Bar-Ilan), Taxation and Innovation
  • Discussants:  Shu-Yi Oei (Tulane), Diane Ring (Boston College), Jacob Nussim (Bar-Ilan)

Charitable Giving of High-Income Households

  • Session Chair:  Jon Bakija (Williams)
  • Brian Galle (Georgetown), Law and the Problem of Restricted Spending Philanthropy
  • Brian Galle (Georgetown) & Benjamin Marx (Illinois), Do Private Foundation Donors Care About State Law?
  • Nicolas Duquette (USC), Philanthropy, Inequality, and the Income Tax: High-Income Households’ Charitable Giving 1917–2012
  • Jon Bakija (Williams) & Brian Raub (IRS), How Estate Taxation Affects Charitable Donations and Wealth Accumulation: Evidence from the Divergence in Estate Tax Rates across States After 2001
  • Discussants:  Yair Listokin (Yale), Chistine Exley (Harvard)

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November 19, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Chicago-Kent Symposium: Nonprofit Oversight Under Siege

Chicago-KentChicago-Kent hosts a symposium today on Nonprofit Oversight Under Siege:

The View from the U.S.:

  • Evelyn Brody (Chicago-Kent) & Marcus Owens (Loeb & Loeb, Washington, D.C.), Exile to Main Street: The I.R.S.’s Diminished Role in Overseeing Tax-Exempt Organizations 
  • Linda Sugin (Fordham), Politics, Disclosure, and State Law Solutions for 501(c)(4) Organizations
  • Lloyd Hitoshi Mayer (Notre Dame), Fragmented Oversight of Nonprofits in the United States: Does It Work? Can It Work?

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November 19, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Inaugural International Conference on Taxpayer Rights Concludes Today In Washington, D.C.


The two-day inaugural International Conference on Taxpayer Rights concludes today in Washington, D.C. (agenda):

The National Taxpayer Advocate of the Internal Revenue Service is convening the Inaugural International Conference on Taxpayer Rights in Washington, D.C. This ground-breaking conference will present panelists from around the world to explore how taxpayer rights globally serve as the foundation for effective tax administration.

Today's speakers include:

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November 19, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Clausing: The Effect Of Profit Shifting On The Corporate Tax Base In The U.S. And Beyond

Kimberly A. Clausing (Reed College), The Effect of Profit Shifting on the Corporate Tax Base in the United States and Beyond:

This paper estimates the effect of profit shifting on corporate tax base erosion for the United States. Using Bureau of Economic Analysis survey data on U.S. multinational corporations over the period 1983 to 2012, the analysis estimates the sensitivity of foreign incomes to tax burdens for major foreign direct investment destinations. Controlling for a host of other variables as well as country fixed effects, I find that taxable income is very sensitive to corporate tax rates. Estimates of tax sensitivity are used together with data on reported foreign income to calculate how much “extra” income is booked in low-tax countries due to profit shifting;

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November 19, 2015 in Scholarship, Tax | Permalink | Comments (1)

The IRS Scandal, Day 924

IRS Logo 2Family Security Matters, Why Lois Lerner and the IRS Scandal Are Not Unique:

Bottom Line Up Front:  Political appointees run the nation's bureaucracies.  Former political appointees who are "burrowed" into the system bolster political ideology and decisions.  Furthermore, those who are hired and promoted by the appointee and/or former appointee in charge of an organization are most probably of similar political ilk.

The IRS scandal was felt heavily by those of us who are retired from federal service.  After having spent decades within the bowels of federal bureaucracies - decades that, for us, were not defined at all by politics - the intentional targeting of Americans of ANY political persuasion came as a horrific shock. 

In our day, civil servants would NEVER have targeted political opponents of the ruling administration. Even if a rogue employee had tried, such actions would never have been tolerated.  Warnings against any defiance of the limitations imposed by the Hatch Act of 1939 kept virtually all civil servants from holding much more than personal political opinions expressed only in private.  Politics were certainly not discussed in the office, let alone acted upon.  Until recently, federal employees were decidedly "non-partisan."

The evidence surrounding the Lois Lerner case has shown us how different our government has become. The initial shock that came with revelations of the extent to which government officials within the IRS had been able to intervene in and delay the processing of specific tax-exempt requests (virtually all of which were from conservative organizations) gave way to outrage following testimony to Congress about the "loss" of emails and other files pertinent to the investigation.  When combined with the disreputable conduct associated with the VA, ATF, EPA, DoE, DoD, GSA, and the highest levels of the State Department, is it any wonder that Americans feel exasperated and retired federal workers feel estranged from the very government they had so long served? 

Question:  What has changed?  Answer:  The manner in which political appointees are filtered into the bureaucracies. ...

This is yet another dilemma that the next President will inherit.  If the process does indeed encourage institutionalized political bias, something must be done about it.  Hopefully the next administration will find a way to end the overt expression of bias by employees who see themselves as political avengers, and terminate the practice that gave us the IRS scandal.

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November 19, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (10)

Wednesday, November 18, 2015

Inaugural International Conference on Taxpayer Rights Kicks Off Today In Washington, D.C.


The two-day inaugural International Conference on Taxpayer Rights kicks off today in Washington, D.C. (agenda):

The National Taxpayer Advocate of the Internal Revenue Service is convening the Inaugural International Conference on Taxpayer Rights in Washington, D.C. This ground-breaking conference will present panelists from around the world to explore how taxpayer rights globally serve as the foundation for effective tax administration.

Today's speakers include:

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November 18, 2015 in Conferences, Scholarship, Tax | Permalink | Comments (0)

Mazur: Transfer Pricing Challenges In The Cloud

CloudOrly Mazur (SMU), Transfer Pricing Challenges in the Cloud, 52 B.C. L. Rev. ___ (2016):

Cloud computing - the provision of information technology resources in a virtual environment - has fundamentally changed how companies operate. Companies have quickly adapted by moving their businesses to the cloud, but international tax standards have failed to follow suit. As a result, taxpayers and tax administrations confront significant tax challenges in applying outdated tax principles to this new environment. One particular area that raises perplexing tax issues is the transfer pricing rules. The transfer pricing rules set forth the intercompany price a cloud service provider must charge an affiliate using its cloud services, which ultimately affects in which jurisdiction the company’s profits are taxed. This Article argues that the fundamental features of cloud computing exacerbate some of the more difficult transfer pricing problems that already exist.

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November 18, 2015 in Scholarship, Tax | Permalink | Comments (0)

Law Prof Perspectives On The Student Protests

Richard A. Epstein (Chicago), Spineless Leadership at Yale (Hoover Institution):

Students ... want universities to protect them from any unpleasant thought or idea that may upset them. They of course can lash out against others from their “safe spaces,” but everyone else must back-peddle or face the consequences.

This approach is ruinous to the intellectual and moral development of students, and leaves them ill-prepared for life’s challenges. If only on educational grounds, it is critical to rise up and challenge these students by insisting that the exchange of views, often hostile and disagreeable, is essential for the cultural and intellectual health of a university. ...

As an alumnus of Yale, I want its president to resist with all of the words at his command the groundless charges brought against it by righteous students and commentators. But Salovey unfortunately lacks the courage to tell the critics that their indictment of the university is deeply flawed [Salovey statement]. By assuming a position of weakness, Yale is inviting its harshest critics, both inside and outside the school, to tee off against faculty and students with whom they disagree. The only way to get responsible discourse is to stand up for what you hold dear in the face of reckless charges. There is a desperate need for reconciliation at Yale, but the institution can only begin to heal if its critics face the same relentless scrutiny that they heap on the university.

Jeannie Suk (Harvard), A New Family Feeling On Campus (The New Yorker):

I often informally ask my students, at Harvard Law School, what their most important ideals are and how they hope to fulfill them in their lives and careers. In the past several years, I’ve been touched to hear a significant plurality of students name a priority that I didn’t hear much when I began teaching, nearly a decade ago: their close relationships with their parents. As a forty-two-year-old parent myself, I’m gratified by the idea that my own children might feel, as young adults, that our bond was so sustaining as to be central to their visions of their lives. But I’m struck that this theme was not on my agenda when I was a student, twenty years ago, and I don’t recall it being important to my peers, either.

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November 18, 2015 in Legal Education | Permalink | Comments (6)

Ex-IRS Official, Successor Clash Over Tax-Free Spinoffs; Darden, Yahoo! Caught By IRS's Sudden Shift

IRSSThe Deal, Ex-IRS Official, Successor Clash Over Tax-Free Spinoffs; Darden, Yahoo! and Other Firms Planning Splits Caught by Dramatic IRS Policy Shift:

When William Alexander left the IRS to take a position at Skadden in January his departure was cited privately by some IRS watchers as another example of Washington's revolving door between government and the private sector.

At the IRS, Alexander, in the position of associate chief counsel, was a central figure in the agency's decision over the years to let operating companies complete tax free REIT and other spinoffs. Bolstered by IRS rulings, activist hedge funds have increased efforts in recent years to have companies with extensive real estate conduct tax free spinoffs, arguing that the moves extract shareholder value at operating companies with misrepresented assets.

It is in this context that Skadden lawyers were hired to advise Yahoo!, which ultimately came to the conclusion in January that it would conduct a tax-free spinoff of its 15% stake in Chinese e-commerce giant Alibaba. ...

However, those plans were cast in doubt when Alexander's replacement at the IRS, Bob Wellen, led the agency to issue a notice in September that has since chilled new spinoff activity. The notice and subsequent remarks made by Wellen have also raised serious questions about whether existing spinoffs in the works will ultimately be treated as tax-free.

"It is a sea change in attitudes," said Robert Willens, president of tax and accounting consulting firm Robert Willens LLC. "Bill Alexander was very permissive of tax-free spinoffs and Wellen has turned against everything Bill stood for. They couldn't be more diametrically opposed to each other." ...

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November 18, 2015 in IRS News | Permalink | Comments (1)

Elizabeth Warren Delivers Major Speech Today On International Corporate Tax Reform

National Press Club:

U.S. Senator Elizabeth Warren, D-Mass., will speak about corporate international tax reform at the National Press Club on Wednesday, Nov. 18.

The livestream begins at 1:00 p.m. ET: The text of the speech will be available here beginning at 12:40 p.m. ET.

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

November 18, 2015 in Tax | Permalink | Comments (3)

Church Of The Flying Spaghetti Monster Treated As 'Religion,' Adherent Issued Driver's License Photo Wearing A Colander

MassBoston Globe, Woman Allowed to Wear Spaghetti Strainer in Mass. License Photo:

A woman who identifies herself as a Pastafarian, a follower of a religion that teaches that an airborne “spaghetti monster” could have created the universe, has succeeded in her bid to wear a colander on her head in her driver’s license photo.

Lindsay Miller claims the spaghetti strainer is a sign of her devotion to the Church of the Flying Spaghetti Monster.

In August, the Lowell resident was denied a renewed license by the Massachusetts Registry of Motor Vehicles, she said, for wearing the metal cookware. ...

According to the RMV’s website, drivers are barred from wearing hats or head covers in their photos, unless the clothing items are “for medical or religious reasons.”

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November 18, 2015 in Tax | Permalink | Comments (9)

Law Schools Need To Be More Fox, Less Hedgehog

HedgehogDaniel J. Myers (Provost, Marquette University), Of Foxes, Hedgehogs, and Marquette Law School:

It has become an accepted truism in academia that there are two fundamental intellectual styles: the fox and the hedgehog. The ancient Greek poet Archilochus observed that “the fox knows many things, but the hedgehog knows one big thing.” Following Sir Isaiah Berlin’s famous interpretation of the line, we have come to believe that intellectual pursuits (and careers) are characterized by either a singular, coherent, abiding focus or a collection of approaches and ideas that are seemingly unconnected, eclectic, and even disorganized. ...

While hedgehogs and foxes sometimes cast aspersions toward one another of being either myopic or unfocused, they usually are content to ignore one another and go about their pursuits (or pursuit, in the case of the pure hedgehog) without worrying about the failings of the other. At times, however, some can recognize the value of both styles: the fox can bring in novel insights from flitting around the disciplines, while the hedgehog uses those outsights to bear down on the fundamental problem monopolizing its gaze.

Law schools, like most academic divisions, have a natural tendency to operate more like hedgehogs than foxes, and this tendency is reinforced by an administrative structure that sets the law school in a somewhat peripheral functional location at a university.

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November 18, 2015 in Legal Education | Permalink | Comments (0)

One Law School’s Change In Fortune: Southern Illinois

SIUKyle McEntee (Law School Transparency), One Law School’s Change In Fortune:

The New York Times chose to highlight Southern Illinois University when it reported on our investigation late last month. I objected to the focus on SIU because it had relatively affordable tuition, above-average job rates, and a very high bar passage rate in 2013. With many more egregious examples to choose from, I didn’t think SIU merited special attention. Still, July 2015 bar exam outcomes drive home why SIU found its way into our report in the first place, and why high bar pass rates from even a couple of years ago can be very deceiving to prospective students. It also demonstrates that even respectable state schools are not immune to the pressures that have driven so many law schools to admit far too many at-risk students.

SIU2Between 2010 and 2014, as with many law schools, the school’s admissions profile changed drastically. The school earned an “extreme risk” label for its 2014 entering class based on a bottom quartile LSAT score of 144 (22.9 percentile). The chart below plots SIU’s LSAT numbers for each of the last five entering classes for which we have data. The 25th, 50th, and 75th percentile LSAT scores are plotted on top of the national LSAT distribution curve. From this you can see that the school’s 75th percentile in 2014 was its 25th percentile in 2010.

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November 18, 2015 in Legal Education | Permalink | Comments (1)

University Of New South Wales Issues Call for 2016 Tax Research Fellows

ATax (2015)The School of Taxation and Business Law (TBL) at the University of New South Wales, Australia, will offer three Research Fellowships ($5,000) in taxation, business law and related disciplines in 2015. Research Fellows normally spend four weeks working at TBL on a mutually agreed area of research. The application deadline is February 28, 2016.  See more details here.

Fellowship duties:

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November 18, 2015 in Scholarship, Tax | Permalink | Comments (0)

The IRS Scandal, Day 923

IRS Logo 2Politico, Under the Radar:

President Barack Obama's public comments appearing to prejudge the outcome of Justice Department investigations don't affect the decisions in those inquiries, Attorney General Loretta Lynch said Tuesday.

In her first appearance before the House Judiciary Committee since taking office in April, Lynch was questioned by panel chairman Rep. Bob Goodlatte (R-Va.) about remarks Obama made last year declaring there was "not even a smidgen of corruption" in the IRS's handling of applications from nonprofit groups and a statement the president made last month that former Secretary of State Hillary Clinton's private email set-up posed no national security problem.

"With respect to the president's comments, they have no influence or bearing on how the department manages these matters," Lynch said.

Goodlatte tried a couple of times to get Lynch to comment on whether it was unwise for Obama to make such comments while an investigation was pending, but she declined to do so.

"I really don’t have a comment on the president’s expression of his view," Lynch said.

Washington Examiner, Gowdy on IRS Probe: How Much More Evidence Could You Need?:

Rep. Trey Gowdy blasted the Justice Department for stating last month that there was "no evidence" of criminal intent in the Internal Revenue Service's targeting of conservative groups.

"Never do you have direct evidence of intent," Gowdy, a former prosecutor, said during a House Judiciary Committee hearing Tuesday.

The South Carolina Republican cited numerous examples of "circumstantial evidence," all of which resulted in discrimination against Tea Party nonprofits, regardless of the tax agency's intent.

Gowdy noted Lois Lerner, former head of the IRS tax-exempt unit, had sent several emails that indicated she harbored a bias against conservatives.

Washington Examiner, Jordan Blasts Attorney General on IRS Investigation:

Rep. Jim Jordan pressed Attorney General Loretta Lynch Tuesday on why the head of the IRS has not faced consequences for misleading Congress about the status of documents.

"That sure looks like [IRS Commissioner] John Koskinen and the Internal Revenue Service concealed information and destroyed information," Jordan said after outlining a timeline that suggests employees under Koskinen deleted requested emails after he had promised to provide them to lawmakers.

The Ohio Republican noted IRS employees had erased back-up tapes containing the emails of Lois Lerner, former head of the tax agency's nonprofit unit, after receiving three separate preservation orders and two subpoenas for the tapes.

"With respect to the matter that you've raised, we did review the issues surrounding Ms. Lerner's emails and the backup tapes," Lynch told Jordan during a House Judiciary Committee hearing Tuesday. "We are looking for evidence of criminal intent."

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November 18, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

Tuesday, November 17, 2015

Hassett Presents The Response Of Deferred Executive Compensation To Changes In Tax Rates Today At Columbia

HassettKevin A. Hassett (American Enterprise Institute) presents The Response of Deferred Executive Compensation to Changes in Tax Rates (with Aspen Gorry (Utah State), Glenn Hubbard (Dean, Columbia Business School) & Aparna Mathur (American Enterprise Institute)) at Columbia today as part of its Davis Polk & Wardwell Tax Policy Colloquium Series hosted by Alex Raskolnikov and Wojciech Kopczuk:

Given the increasing use of stock options in executive compensation, we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes. To account for this option in the empirical analysis, we explore deferral by estimating how executives’ choice of compensation between current and deferred income depends on changes in tax policy.

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November 17, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

Law Schools Are Admitting More At-Risk Students

National JuristNational Jurist, Law Schools Admitting More At-Risk Students, Study Says:

Law schools are accepting more at-risk students which will likely lead to lower bar passage rates in the near future, according to a study by Law School Transparency. 

“The bargain is clear: take larger, riskier classes now to survive and deal with the accreditation challenges, angry alumni, and bad press that follow later,” the report states.

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November 17, 2015 in Legal Education | Permalink | Comments (0)

After 58% Decline In Enrollment, Seton Hall Law School Adapts To New Market

Seton Hall, Law Schools Rebound From Years of Declining Enrollment:

As fewer people enroll in law school, institutions across the country have been forced to adapt to a legal marketplace hurt by fewer jobs, outsourcing and the impact of the Internet.

Seton Hall and Rutgers University law schools, like many of those elsewhere, have reduced the number of students they admit, offered larger scholarships or grants, and readjusted their programs so students are better-prepared for the competitive and evolving job market. ...

At Seton Hall, the average class size of incoming students has steadily shrunk in recent years. In 2010, the Seton Hall law program peaked with an incoming class of 360 students. The next year, the school enrolled only 271. By 2013, the acceleration of class size reduction, which was averaging about 70 students less each year, had slowed. The school's most recent incoming class totaled 152 students, 17 students fewer than in 2014.

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November 17, 2015 in Legal Education | Permalink | Comments (11)

Polsky Comments On The Disguised Payments For Services Proposed Regs

Gregg D. Polsky (North Carolina), Comments on the Proposed Regulations on Disguised Payments for Services:

On July 23, 2015, the Internal Revenue Service (IRS) and Treasury Department (Treasury) issued proposed regulations under section 707(a)(2)(A) of the Internal Revenue Code (the Code) relating to disguised payment-for-services transactions between partnerships and partners. These are my comments on the proposed regulations.

My overall conclusions are as follows. I support the proposed regulations and urge that they be finalized as quickly as possible with some relatively minor clarifications. The proposed regulations are faithful to the statutory text, legislative purpose, and legislative history of section 707(a)(2)(A). Furthermore, the proposed regulations represent a very reasonable approach to the necessary task (given the clear statutory directive in section 707(a)(2)(A)) of distinguishing between disguised payments for services, on the one hand, and bona fide partnership allocations and distributions, on the other hand. I also support the positions explained in the preamble regarding the government’s view of the current scope of Rev. Proc. 93-27 and the stated intention to revise Rev. Proc. 93-27 to carve out profits interests received in lieu of fixed fees.

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November 17, 2015 in Scholarship, Tax | Permalink | Comments (0)

Putting Legal Writing Faculty On The Tenure Track: One Law School's Experience

Catherine Martin Christopher (Texas Tech), Putting Legal Writing on the Tenure Track: One School's Experience, 31 Colum. J. Gender & L. 65 (2015):

This Article discusses the statistics behind the gendered segregation of law school faculties, in which women occupy a disproportionate number of legal writing and other low-status positions, while men continue to hold a disproportionate number of tenured faculty positions. The Article explores the rationales for and against converting legal writing faculty to tenure-track, and shares one law school’s experience of doing so. The Article then suggests lessons and approaches that other schools may wish to take in converting their own legal writing faculty to tenure-track positions.


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November 17, 2015 in Legal Education, Scholarship | Permalink | Comments (11)

Steve Jobs' Lessons For Law Firms (And Law Schools): Work Backwards From The Client (And Student)

JobsThe American Lawyer:  How to Take Market Share: Lessons for Law Firms, by William Henderson (Indiana):

U.S. law firms are locked in a fierce battle over market share. It is a new and unfamiliar dynamic that is causing you and other law firm leaders to worry whether your firm will be among the survivors. Thus you are looking for the best possible strategy and the requisite leadership skills to communicate that vision to your partnership.

I am going to tell you about the greatest market share story in modern business history. Remarkably, the primary operating principles were revealed in advance of the miraculous feat. Then I'll discuss those principles in the context of the U.S. law firm looking to take market share.

The most impressive market share story in modern times—and one that gives realistic hope to all underdogs—is what happened at Apple Computer after Steve Jobs returned to the company in 1997. The key elements of Jobs' strategy are contained in a grainy 71-minute video filmed at a trade show at the moment when most industry insiders were getting ready to write Apple off.

I encourage all law firm leaders to watch this video, because it's a time capsule of the mindset and mental discipline needed to conquer formidable odds.

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate.)

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November 17, 2015 in Legal Education | Permalink | Comments (0)

NY Times: After Outcry, Ireland Adjusts Its Corporate Tax Draw

New York Times, After Outcry, Ireland Adjusts Its Corporate Tax Draw:

In recent years, other European countries have accused the country of acting like an unfair low-tax haven. The European Commission, for example, is investigating whether Ireland gave Apple a preferential tax deal that broke the region’s tough state-aid rules. While lawmakers and the company have repeatedly denied wrongdoing, the country is already phasing out the most controversial loopholes.

Ireland has since turned to a new inducement: a low tax rate on revenue generated from patents and other intellectual property held in Ireland. Such an incentive — announced last month to be 6.25 percent, or half of the country’s corporate tax rate — could be most attractive to patent-heavy industries like technology and pharmaceuticals.

But many tax experts say the benefits will be significantly smaller than many had expected, particularly for global tech giants.

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November 17, 2015 in Tax | Permalink | Comments (0)

Yale Law Journal Releases Diversity/Inclusiveness Reports

Yale 2Yale Law Journal, Release of the Yale Law Journal Full Participation Project:

Almost two years ago, the Yale Law Journal commissioned a study of the Journal in an effort to address our diversity challenges and identify ways we can better foster an inclusive community.

The project arose out of conversations between YLJ Volume 123 and Yale Law School’s Alliance for Diversity, Yale Law Women, and other student groups about the law school’s challenges concerning gender, race, and class. Against the backdrop of these broader structures and patterns, YLJ recognized that it needed to proactively confront its own diversity challenges.

Given the complexity of these issues, the Journal realized that it would benefit from outside expertise and an independent review. As a result, the Journal partnered with Professor Susan Sturm and Professor Ian Ayres to identify our diversity challenges and learn ways to better foster an inclusive community. ...

Today we release their reports: Full Participation in the Yale Law Journal by Professor Susan Sturm and Kinga Makovi, and Patterns in Yale Law Journal Admissions and Student Scholarship by Professor Ian Ayres and Anthony Cozart. These two reports work in tandem; we urge you to read them together. Professor Sturm’s qualitative picture provides important context for Professor Ayres’s quantitative findings, and vice versa.

 YLJ Reasons

Figure 1

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November 17, 2015 in Legal Education | Permalink | Comments (0)

GAO: IRS Lacks Adequate Internal Controls

GAO LogoGovernment Accountability Office, IRS's Fiscal Years 2015 and 2014 Financial Statements (GAO-16-146):

In GAO’s opinion, the Internal Revenue Service’s (IRS) fiscal years 2015 and 2014 financial statements are fairly presented in all material respects. However, in GAO’s opinion, IRS did not maintain effective internal control over financial reporting as of September 30, 2015, because of a continuing material weakness in internal control over unpaid tax assessments. GAO’s tests of IRS’s compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements detected no reportable instances of noncompliance in fiscal year 2015.

The material weakness in internal control over unpaid tax assessments was primarily caused by financial system limitations and errors in taxpayer accounts that rendered IRS’s systems unable to readily distinguish between taxes receivable, compliance assessments, and write-offs in order to properly classify these components for financial reporting purposes. These deficiencies necessitated the use of a compensating estimation process to determine the amount of taxes receivable, the most material asset on IRS’s balance sheet. Through this compensating process, IRS made over $9 billion in adjustments to the 2015 fiscal year-end gross taxes receivable balance produced by its financial systems. To address this material weakness, in fiscal year 2015, IRS took a significant step in developing a long-term corrective action plan. However, the plan does not include milestones or related dates for most of the actions, so it is unclear when IRS will fully address the issues that cause significant inaccuracies in the unpaid tax assessments information maintained in its accounting systems.

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November 17, 2015 in Gov't Reports, IRS News, Tax | Permalink | Comments (0)

The IRS Scandal, Day 922

IRS Logo 2The Hill, Republicans to Grill Lynch on Paris, IRS:

Attorney General Loretta Lynch is set to face tough questions from lawmakers Tuesday about the Justice Department’s role on issues ranging from the IRS to the response to the terrorist attacks in Paris.

Republicans will put Lynch on the hot seat during her first appearance before the House Judiciary Committee since replacing Eric Holder as head of the Justice Department. Her scheduled appearance last month was canceled because she was sick. ...

The GOP’s often tumultuous relationship with Holder could extend to Lynch after the DOJ elected last month not to prosecute Lois Lerner, the former Internal Revenue Service official accused of targeting the Tea Party. 

"She has a lot to answer for,” Oversight Committee Chairman Jason Chaffetz (R-Utah) told The Hill. 

"Everything from Lois Lerner and the IRS, to what’s happening with emails, to how they’re operating at the Department of Justice,” he said in an interview before her first scheduled hearing. "There’s such a wide swath of issues they’re involved with."

The DOJ’s abrupt end to its two-year probe of the IRS angered many Republicans, including previous Oversight Chairman Darrell Issa (R-Calif.) who accused Lynch of “white washing” the investigation.

“There are some obvious [questions],” Issa told The Hill last month. “Why they saw no violation at the IRS? Why they could close it out completely without any support for the [inspector general’s] recommendations?"

Issa said he has no intention of taking it easy on Lynch: “After she dismissed and white washed the investigation? Why?” he asked. “I think she made a grievous error.”

“She has to own that,” he added.

Goodlatte also (R-Va.) criticized the DOJ for dropping the investigation: “At every turn President Obama and administration officials have repeatedly and publicly undermined the investigation into the IRS’s targetting of conservative groups,” he said in a statement.

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November 17, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (1)

Monday, November 16, 2015

Faulhaber Presents Designing R&D Credits And Patent Boxes In The Age Of BEPS Today At Loyola-L.A

FaulhaberLily Faulhaber (Georgetown) presents Tax Incentives for Innovation: Designing R&D Credits and Patent Boxes in the Age of BEPS at Loyola-L.A. today as part of its Tax Policy Colloquium Series:

For decades, governments have turned to their tax codes to support research and development and innovation. In recent years, countries have added yet another tool to their repertoire of tax incentives for R&D: innovation boxes, sometimes referred to as patent boxes or IP boxes, which provide benefits to income from intellectual property. In response to the increasing number of innovation boxes, the forty-four OECD and G-20 member countries involved in the recent BEPS Project developed a requirement known as the nexus approach that places limits on the design of these tax incentives.

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November 16, 2015 in Colloquia, Scholarship, Tax | Permalink | Comments (0)

NY Times: Blame Congress, Not Pfizer, For Tax Inversion

APFollowing up on my previous posts (links below):  New York Times, A Tax-Cutting Move That Pfizer Can Hardly Resist:

Give Pfizer, the giant drug maker, points for boldness and persistence: The company has bravely put “tax inversions” back in the headlines.

Pfizer, which already holds roughly $140 billion overseas and is quite skillful at minimizing its taxes, is considering a deal that could move its legal tax headquarters from New York to Dublin, where it could save bundles more.

This has drawn plenty of criticism, naturally. ...

The core problem is that, from a purely financial viewpoint, tax inversions make sense for companies like Pfizer. While rarely, if ever, paid in full, the 35 percent statutory corporate tax rate in the United States is higher than in other countries. Most important, the United States taxes the worldwide income of its domestic companies, while many major countries do not. Even though there are ways around that requirement, it is tempting for American companies to move their tax homes elsewhere.

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November 16, 2015 in Tax | Permalink | Comments (1)

G-20 To Adopt Corporate Tax Overhaul

WSJ 2Wall Street Journal, G-20 Leaders Set to Approve Overhaul of Corporate-Tax Rules:

A push to close international corporate-tax loopholes is expected to spur competition for lower rates overseas and increase pressure in Washington for a bipartisan deal to revamp the corporate-tax code.

Leaders from the Group of 20 largest economies, meeting in Turkey on Sunday and Monday, are set to give their final stamp of approval to a major overhaul of the international rules governing corporate taxes.

The change is aimed at preventing companies from using myriad tactics to shift profits among different jurisdictions to avoid taxation. Such practices cost governments between $100 billion to $240 billion in lost revenue each year, according to the Organization for Economic Cooperation and Development. ...

Stricter tax collection would mean governments could vie for investment and jobs mainly by lowering corporate tax rates—potentially shining a spotlight on the U.S. rate, which at 39% is much higher than that of other developed countries. ...

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November 16, 2015 in Tax | Permalink | Comments (0)

It's Time To Replace Student-Edited Law Reviews With Peer-Reviewed Journals

Times Higher EducationTimes Higher Education op-ed:  U.S. Law Reviews’ Dirty Game: Review by Student, by Ken Levy (LSU):

In Times Higher Education’s recent feature on the vagaries of peer review (“On the receiving end”, 6 August), one of the essayists describes being subjected to the scrutiny of one’s colleagues as “the worst form of review, except for all those other forms that have been tried”. Lest any reader doubt this claim, let me explain what awfulness results when an entire field forgoes this traditional form of gatekeeping.

Submissions for almost all American general law reviews and for more than half of the specialised ones are reviewed by law students, selected by more senior law students based on their first-year academic performance. Unfortunately, however intelligent and ambitious they are, students just don’t have the expertise to judge the quality of submissions. As a result, an article’s fate is determined by the application of several superficial criteria.

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November 16, 2015 in Legal Education | Permalink | Comments (7)

NY Times: The Tax Code Can Be Simpler, But Not Three Pages

CarlyNew York Times:  The Tax Code Can Be Simpler. But Not Three Pages, by Josh Barro:

All the Republican presidential candidates say they want to make the tax code simpler. But no candidate has been more aggressive about simplicity than Carly Fiorina, who says “our tax code needs to go from 73,000 pages down to about three pages.”

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November 16, 2015 in Political News, Tax | Permalink | Comments (1)

Iowa Tax Prof Andy Grewal's Role In The Pivotal Moment Of Saturday's Democratic Presidential Debate

Hillary 2016Washington Post, A Defensive Hillary Clinton Lost Last Night’s Debate:

The Des Moines debate will ultimately be remembered for just one moment: Clinton playing both the gender card and invoking the Sept. 11 attacks to defend her coziness with and campaign cash from Wall Street. 

Here is the exchange that everyone is talking about:

  • Sanders attacks: “Let’s not be naive about it. Why, over her political career, has Wall Street been a major, THE major, campaign contributor to Hillary Clinton? You know, maybe they’re dumb and they don’t know what they’re going to get, but I don’t think so. … Why do they make millions of dollars of campaign contributions? They expect to get something! Everybody knows that!”
  • Clinton pulls out a rhetorical bazooka: “Wait a minute, he has basically used his answer to impugn my integrity. Let’s be frank here: … Not only do I have hundreds of thousands of donors, most of them small. And I’m very proud that for the first time a majority of my donors are women, 60 percent. So, I represented New York, and I represented New York on 9/11 when we were attacked. Where were we attacked? We were attacked in downtown Manhattan, where Wall Street is. I did spend a whole lot of time and effort helping them rebuild. That was good for New York. It was good for the economy and it was a way to rebuke the terrorists who had attacked our country.” ...

Clinton tried to walk it back: Later in the debate, as Twitter exploded, CBS presented her with an emblematic viewer tweet. University of Iowa law professor Andy Grewal wrote:


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November 16, 2015 in Political News, Tax | Permalink | Comments (1)

Bar Exam Carnage Continues: 10 Of 15 New York Law Schools Suffer Bar Pass Rate Declines

NYFollowing up on my previous post, New York Bar Exam Pass Rate Hits Historic Low:  New York Law Journal, Most New York Law Schools See Decline in Bar Pass Rates:

Ten of New York's 15 law schools had their pass rates decline from last year on the July 2015 bar examination, according to figures that the law schools provided to the Law Journal.

Three institutions—Touro Law School [-15.0%, to 52.5%], New York Law School [-10.6%, to 60.4%] and Albany Law School [-9.8%, to 68.2%]—had a double-digit or near double-digit slide. ...

Cornell republished this chart from The New York Law Journal:


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November 16, 2015 in Legal Education | Permalink | Comments (6)

Creighton Joins Rankings Hall Of Shame; Graduation Rate Was 43%, Not 91%

CreightonU.S. News & World Report, Update to Creighton University's 2015 Best Online Programs Ranking:

Creighton University recently advised U.S. News that it misreported data that were used in the 2015 Best Online Programs rankings. The misreported data resulted in the school's numerical rank being higher than it otherwise might have been in the 2015 Best Online Graduate Business Programs rankings, which exclude MBA programs.

Because of the discrepancy in Creighton University's ranking, U.S. News has moved the school to the "Unranked" category in the 2015 Best Online Graduate Business Programs rankings on Schools in the Unranked category do not receive numerical rankings from U.S. News. ...

Creighton University advised U.S. News that it submitted an incorrect three-year graduation rate for its 2010-2011 entering class. The school told U.S. News that its correct three-year graduation rate for that class was 43 percent; it originally reported the incorrect rate of 91 percent. This is a 48 percentage-point difference.

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November 16, 2015 in Law School Rankings, Legal Education | Permalink | Comments (0)

The IRS Scandal, Day 921

IRS Logo 2The Press Enterprise editorial, IRS Scandal Does No Harm to Ruling Party, So No Foul:

Self-government can collapse when government doesn’t police itself — when abuses of power fester too long. That has happened with the investigation into the Internal Revenue Service’s unjustified 2010 audits of numerous nonprofit conservative groups, which sidelined many of them during President Obama’s 2011-12 re-election campaign.

In a letter to Congress, the Justice Deparment said it will file no criminal charges in the case, not even against Lois Lerner, the former director of the IRS’s Exempt Organizations Office. Yet in 2013, Ms. Lerner herself sparked the uproar, telling an American Bar Association meeting that IRS auditors “actually used case names on this list. They used names like Tea Party or Patriots, and they selected cases simply because the applications had those names in the title.”

Before a congressional investigation, Ms. Lerner invoked her Fifth Amendment right against self-incrimination.

Former House Oversight Committee Chairman Darrell Issa, R-Vista, conducted one of the investigations. He said in a statement, “The Justice Department's decision to close the IRS targeting investigation without a single charge or prosecution is a low point of accountability in an administration that is better known for punishing whistleblowers than the abuse and misconduct they expose.” He charged, “Giving Lois Lerner a free pass only reinforces the idea that government officials are above the law and that there is no consequence for wrongdoing.”

With the 2016 elections approaching, restoring clean, honest government should be voters’ top priority.

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November 16, 2015 in IRS News, IRS Scandal, Tax | Permalink | Comments (3)

TaxProf Blog Weekend Roundup

Sunday, November 15, 2015

L.A. Times: Deans Of Some California Law Schools Say Low LSAT Scores Do Not Predict Bar Exam Failure

CaliforniaLos Angeles Times, As Fewer Californians Pass the Bar, Are LSAT Scores an Early Indicator of Success?:

Already faced with one of the lowest bar passage rates in the country, California students and academics shouldn't expect those statistics to improve over the next several years, according to a new study that examines the link between standardized test scores and bar passage rates.

In July 2014, only 48.6% of test-takers passed the California bar; nearly 8,500 took it. Historically, the state has one of the hardest to pass bar exams in the nation, but last summer was the first time in almost a decade that the success rate fell below half.

"It's not going to get better," said Kyle McEntee, executive director of Law School Transparency, the advocacy group that conducted the study. "If anything, it's going to get worse."

Research has found that the LSAT is a key predictor of bar performance. But some school administrators dispute those findings, saying results on the 180-point LSAT don't necessarily indicate success on the bar.

McEntee is pessimistic because the number of California schools that admit a high number of students who scored below 150 on their law school admission test is growing.

Eight [California Western, Golden Gate, La Verne, McGeorge, Southwestern, Thomas Jefferson, Western State, Wittier] out of California's 21 law schools have recently admitted classes that have a "high," "very high" or "extreme" number of students who have a poor chance of passing the bar, based on their LSAT scores, the study showed.

Chart 5

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November 15, 2015 | Permalink | Comments (16)

The Top 5 Tax Paper Downloads

SSRN LogoThere is quite a bit of movement in this week's list of the Top 5 Recent Tax Paper Downloads, with new papers debuting on the list at #4 and #5:

  1.  [384 Downloads]  Income Tax Deductions for Charitable Bequests of IRD, by Christopher R. Hoyt (UMKC)
  2.  [336 Downloads]  Big Data and Tax Haven Secrecy, by Arthur J. Cockfield (Queen's University)
  3.  [306 Downloads]  2014 Developments in Connecticut Estate and Probate Law, by Jeffrey A. Cooper (Quinnipiac) & John R. Ivimey (Reid and Riege, Hartford)
  4.  [204 Downloads]  Too Big to Tax? Vanguard and the Arm’s Length Standard, by Reuven Avi-Yonah (Michigan)
  5.  [173 Downloads]  2015 Trying Times: Important Lessons to Be Learned from Recent Federal Tax Cases, by Nancy A. McLaughlin (Utah) & Steven J. Small (Law Office of Stephen J. Small, Newton, MA)

November 15, 2015 in Scholarship, Tax, Top 5 Downloads | Permalink | Comments (0)

The Temptation Of Baylor: Can Faith And Football Coexist?

BaylorInside Higher Ed, The Temptation of Baylor:

Baylor University has one of the top football teams in the country. It's also the world's largest Baptist university. Can the two identities coexist without serious compromise?

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November 15, 2015 in Legal Education | Permalink | Comments (4)