Tax Outline

TAX
 
1/9/06
 
CHAPTER 1- ORIENTATION
 
Tax acts were automatically reenacted every two years
-1939-all the tax statutes were put into the tax code
-1954- major changes were made-then called the ’54 Code
-1986-another major change- so the current one is the income code of 1986, as amended
 
we will focus on the code, not so much the regulations
 
p 14…constitutional stuff
-16th amendment- talks about congress having the power to tax
 
 
p 21- tax practitioner’s tools
-the code (the law, what congress enacts)
-most important thing besides the code are committee things??
 
-most tax bills start out in the house and then go to the senate- those are the two groups that write the tax laws
-frequently look like committee reports- want to try to figure out what Congress’s intent was
 
bulletin’s put out once a week keeping you updated on new bills and some have the committee reports
 
p 25- Treaties
-generally, treaties supersede code
 
Administrative materials
-the regs are put out by the IRS-the service’s interpretation of the code
-if you want to challenge a reg, show that it is not a reasonable interpretation of the code
-that is for general regs
-sometimes the code may specifically say that the code be interpreted under some specific thing-those regs carry more weight (??)
 
revenue rules
-service states the facts to get the results it wants-reg rules make it simple- make sure it isn’t so simple that …
-biggest problem in practice is figuring out what the facts are
 
weekly bulletin from the Service
-aquises or nonaquieses in tax court opinions- so the service acquises or non acquiesces with those opinions
 
 
 
judicial materials- three courts you can go to to start a tax controversy
-US tax court- based in DC but travels around the country
-US district court
-federal claims court
 
-can go to tax court before you pay your tax- most cases go
-others, have to pay your tax, have it denied…
-so a lot of forum shopping
-just have to take a good look at the cases in those three jurisdictions and see where you are going to get the most favorable treatment
 
-may have more luck in US district court- the tax court judges are expert tax lawyers, very well versed/specialized
 
-appeal from tax court would go to WV district court, for example
 
 
Unofficial tax materials
-reporters- statute, regs, and annotations, and an explanation
-text-see book
-tax management portfolios
-others also…
-tax law review (NYU)
-anything by Warn, Gorman, Lamont, is good tax stuff
 
tax policy
 
 
justice
-civil end have a lower burden of proof than criminal does
-the Service has lawyers all over- big ones, ruins division and tax corp.- could get pigeon holed in ruins-
 
 
1/11/06- Wednesday
 
Section 61
-income including more than just wages
 
Cesarini v. U.S., p 49
-tax year of 1964- year the transaction that they are reporting for occurred (but is reported in April of 1965)
-bought the piano in 1957, in 1964, they found over 4,000 dollars inside the piano- file a refund claim- service denies the claim- then they go to court
-argue three things- shouldn’t be included in gross income, statute of limitations (if tax year is 1957), or should be entitled to capital gains treatment
-filing an estimated return if you sell a lot of stock or something???
-is included in gross income- section 61(a) is very broad (1)-(15)- language in general is very broad- those 15 don’t include found moneies- but the other thing doesn’t specifically exclude it- 61(a) flush (the statute without any of the subsections)-this stuff is included unless it is specifically excluded—so treasure trove is income
-regs that neither party cites, but it says that treasure trove is income
-tax year is 1964, not 1957-since that is when they found the money-statute of limitations on service’s ability to make an assessment for an additional tax is –title vested when the money is actually found- must find the money in order for it to actually be vested-that’s when they had title to it against all but the true owner
-capital gains treatment- tax rate would have been much lower-case doesn’t address this
-note- if you find property, you may have an argument that it isn’t income until you sell it
 
section 61
(a) is a subsection
(1) is a paragraph
if there was an (A), it would be a sub-paragraph
 
Old Colony, p 54
-Wood was president of company- company had thing where it would pay his income taxes- so pays like over 600,000 in 1919 for 1918’s income
-Board of Tax Appeals say that these taxes count as income- so income taxes paid on 1918’s salary in 1919 counts as income for 1919- this is an economic gain which should be included in his income- it is compensatory
-the discharge of a third person of an obligation to him is equivalent to receipt by the person taxed
-not a gift because it was given in consideration for his work there, was not fortuitous
-tax upon a tax- service didn’t try to do this and it was never argued before the lower court
-tax years are 1919 and 1920- he made the money in 1918 and 1919, but the taxes were paid in 1919 and 1920-those taxes paid were considered income for 1919 and 1920
 
Glenshaw Glass, p 56