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Abstract:
In Moneyball, Michael Lewis takes an inside look at how in recent years the Oakland A's have achieved one of the best records in baseball despite having one of the lowest player payrolls. Cass Sunstein and Richard Thaler have argued that the book has large and profound implications for other professions. This review essay by a tax law professor and a labor law professor explores the book's large and profound implications for law schools.

Beane succeeded by ruthlessly exploiting inefficiencies in major league baseball caused by the inability to properly evaluate players. He replaced traditional subjective measurements of players by scouts with new objective statistical methods pioneered by baseball outsiders.

In many ways, legal education is teeming with more inefficiencies than Beane uncovered in baseball. We argue that changes in the economic conditions of higher education and the legal profession, combined with increasing demands for accountability and transparency, created the market demand for measuring organizational success which U.S. News & World Report met with its annual law school rankings. We explore the implications of Moneyball for legal education in three areas.

First, we argue that law school rankings are here to stay and that the academy should work to devise ways to more accurately measure law school success. We advocate the comprehensive collection of data that users and organizations can weigh differently in arriving at competing rankings systems.

Second, we applaud efforts begun in the past decade to quantify individual faculty contributions to law school success. We support measures that take into account both quantitative and qualitative measurements of faculty performance. We provide data that confirm the relationship of productivity and impact measures of scholarship and provide support for isolating background and performance characteristics in predicting future faculty scholarly work.

Third, we use Billy Beane as a prototype and identify the qualities that enabled him to revolutionize baseball. We shift the focus here to deans and present data measuring decanal scholarly productivity and impact. We contrast these figures with the corresponding faculty data and distinguish deans' scholarly performance both in the period prior to becoming dean and while serving as dean. We also offer some surprising predictions, based on the data, of the qualities that a future dean will need to assume the mantle of the Billy Beane of legal education.

Tax, Legal Education, Law Schools

Abstract:
There are several methods for ranking the scholarly performance of law faculties, including reputation surveys (U.S. News, Leiter); publication counts (Lindgren and Seltzer, Leiter); and citation counts (Eisenberg and Wells, Leiter). Each offers a useful but partial picture of faculty performance. We explore here whether the new "beta" SSRN-based measures (number of downloads and number of posted papers) can offer a different, also useful, albeit also partial, picture. Our modest claim is that SSRN-based measures can address some of the deficiencies in these other measures and thus play a valuable role in the rankings tapestry. For example, SSRN offers real-time data covering most American law schools and many foreign law schools, while citation and publication counts appear sporadically and cover a limited number of U.S. schools. The SSRN measures favor work with audiences across disciplines and across countries, while other measures are more law-centric and U.S.-centric. SSRN is relatively new and thus favors younger scholars and improving schools, while other measures favor more established scholars and schools. At the same time, the SSRN measures have important field and other biases, as well as gaming risks. We assess the correlations among the different measures, both on an aggregate and on a per-faculty-member basis. We find that all measures are strongly correlated; that total and per faculty measures are highly correlated; and that SSRN measures based on number of papers are highly correlated with measures based on number of downloads. Among major schools, all measures also correlate with school size.

For commentary on this article and the role of SSRN in law faculty rankings, see:

• Lawrence A. Cunningham, Commentary, Scholarly Profit Margins and the Legal Scholarship Network: Reflections on the Web, 81 IND. L.J. 271 (2006).

• Theodore Eisenberg, Commentary, Assessing the SSRN-Based Law School Rankings, 81 IND. L.J. 285 (2006).

Law Schools, Legal Education, Rankings, Corporate, Tax

Abstract:
Law schools (and indeed all of higher education) have witnessed an explosive growth in the use of technology in the classroom. Many law professors now deploy a wide array of technological bells and whistles, including PowerPoint slides, web-based course platforms, in-class Internet access, and the like. Students, in turn, increasingly come to class armed with laptop computers to harvest the fruits of the classroom experience. Yet in recent years there has been somewhat of a backlash, with various law professors arguing that this technology is interfering with, rather than improving, pedagogy in the classroom. According to the critics, this technology increases student passivity and thus interferes with the active learning that should be the hallmark of a law school classroom. In addition, the critics complain that laptops provide too much competition for the students' attention, enticing them to play computer games or DVDs and, with in-class Internet access, to read and send email (or instant messages), shop on-line, or check out the latest political, financial, or sports news. This Article opens a new chapter in this debate, explaining how law professors can use both old and new technologies to increase student engagement in the classroom.

We first lay out the pedagogical case for creating an active learning environment in the law school classroom and then examine the critics' charge that technology impedes these goals. The Article offers a competing vision of how technology can be harnessed to increase active student learning and, in the process, empower students to resist their laptop's siren song. In particular, we describe how in our tax and labor law courses we combine both old (substituting word processing text for PowerPoint slides) and new (using handheld wireless transmitters) technologies to inject more active learning into the classroom.

Teaching, Active Learning, Computers & the Law

Abstract:
Two related myths have a remarkable currency among law students, lawyers and the general public. The first myth is that tax lawyers are somehow different from other lawyers. Part I of this Article documents how this misperception pervades law schools, the legal profession, and the popular culture. Although this Part chronicles the disparagement of tax lawyers in a light-hearted fashion (as suggested by the reference to the Willie Nelson song in the title), the Article focuses on the serious consequences caused by the related second myth that tax law is somehow different from other areas of the law.

As suggested by the reference to tax myopia in the title, the Article contends that tax law too often is mistakenly viewed by lawyers, judges, and law professors as a self-contained body of law. Part II of the Article explains how this misperception has impaired the development of tax law by ignoring insights from other areas of law that should inform the tax debate. Similarly, other areas of law have been impoverished by the failure to consider how tax law can enrich their development. The Article advocates a synergistic relationship between tax and nontax law through which each benefits from the insights of the other.

Part III of the Article addresses this theme through several fundamental issues concerning the allocation of legislative, executive, and judicial power in our constitutional system. The Article first injects various statutory construction and legislative process theories developed in the nontax area into the debate over whether the complexity of the Internal Revenue Code requires that tax legislative history be treated differently from its nontax counterparts. The Article then considers how recent Supreme Court administrative law decisions and the statutory reenactment doctrine affect the amount of deference that courts should give to the Treasury Department's interpretation of tax statutes. Finally, the Article examines how the empirical and nontax models of the tax litigation system should inform the litigant's choice of the appropriate tax forum, Congress's allocation of tax jurisdiction, and the federal courts' application of state law in tax controversies.

Although I offer my views on these issues, the thrust of the Article is its advocacy of a cross-pollination approach, rather than a definitive resolution of these structural concerns that have bedeviled tax and nontax law for decades. By replacing the myopic vision of the tax law with an appreciation of the symbiotic relationship between tax and nontax law, the ultimate resolution of these tax issues will be facilitated by nontax learning, and tax, in turn, will provide a useful laboratory within which to test and refine these nontax principles.

Tax, Legislative History, Statutory Construction, Legislative Process, Chevron, Statutory Reenactment, Choice of Forum, Erie Doctrine

Abstract:
This Article looks at the Supreme Court's recent decision on the use of race in law school admissions through the lens of the famous hypothetical about human cannibalism constructed by Lon Fuller (62 Harv. L. Rev. 616 (1949)). The hypothetical has challenged law students and legal scholars for over half a century, and in recent years scholars have issued dozens of new "opinions" to take into account contemporary legal theories (including symposia in 112 Harv. L. Rev. 1834 (1999) and 61 Geo. Wash. L. Rev. 1731 (1993)). This Article is the first to take the opposite approach and view a real-life legal issue through the eyes of the fictional Justices in The Case of the Speluncean Explorers.

We argue that the various opinions in Grutter find their intellectual forebears in the opinions in The Case of the Speluncean Explorers. For all of the heat and light generated by Grutter, the opinions merely mark another way station in the centuries-old debate among competing jurisprudential philosophies of the role of law and government. By examining the Grutter opinions in the context of this rich jurisprudential tradition, we hope to elevate much of the current debate about the case, in which labels like "liberal" and "conservative" are hurled about like epithets, toward a more sophisticated understanding of how the various approaches of the Justices embody alternative views of the proper judicial function in our democratic system.

The Article introduces a novel jurisprudential approach to judicial decision-making ­ what we refer to as a "jurisprudence of humility." Building on the recent work of ideologically diverse scholars, we argue that a jurisprudence of humility recognizes that judges and lawyers hold no monopoly on wisdom and that, in certain situations, institutions other than courts may be better positioned to resolve a particular issue. This jurisprudence of humility construct enables us to draw some rather surprising connections between The Case of the Speluncean Explorers and Grutter and span the gulf in the legal literature between statutory construction and constitutional interpretation.

Affirmative Action, Jurisprudence, Judicial Humility

Abstract:
This paper provides an overview and introduction of the second edition of the Tax Stories book, which unpacks ten seminal U.S. Supreme Court federal income tax cases, as well as a recent decision of the U.S. Court of Appelas for the District of Columbia Circuit. Each of the chapters sets forth the social, factual, and legal background of the case, discusses the various court proceedings and judicial opinions, and explores the immediate impact and continuing importance of the case. The University of Cincinnati School of Law's companion web site contains the complete record of the case, including the court opinions, briefs of the parties and amicus curiae, and oral arguments (audiotapes and transcripts, where available).

The paper discusses the concept behind the book, the criteria for selecting the eleven leading cases, and the doctrinal and institutional lessons drawn from the cases. Along the way, the paper explores the pedagogical impetus behind such an archaeological approach. The paper is critical of the performance of the courts and of the government in these cases. But in the end, the fault may lie not in the judges and lawyers for supplying the wrong answers but rather in the Administrations and Congresses that created a tax system that inevitably asks the wrong questions. Until fundamental reform of our income tax becomes more than a chimera, Tax Stories will remain without a happy ending.

Tax, Income Tax, Tax Policy, Tax Litigation, Tax Administration, Tax Procedure, Legal History

Abstract:
This paper provides an overview and introduction of the new Tax Stories book, which unpacks the ten seminal U.S. Supreme Court federal income tax cases. Each of the chapters sets forth the social, factual, and legal background of the case, discusses the various court proceedings and judicial opinions, and explores the immediate impact and continuing importance of the case. The University of Cincinnati School of Law's companion web site contains the complete record of the case in the Supreme Court, including the lower court opinions, briefs of the parties and amicus curiae, oral arguments (audiotapes and transcripts, where available), and the Supreme Court's opinion.

The paper discusses the concept behind the book, the criteria for selecting the ten leading cases, and the doctrinal and institutional lessons drawn from the cases. Along the way, the paper explores the pedagogical impetus behind such an archaeological approach. The paper is critical of the performance of the Supreme Court (in superintending the tax litigation structure) and of the government (in its litigation strategies) in these ten cases. But in the end, the fault may lie not in the lawyers and judges for supplying the wrong answers but rather in the income tax itself for asking the wrong the questions. Until fundamental reform of our income tax becomes more than a chimera, Tax Stories will remain without a happy ending.

The paper appears as a chapter in a book entitled Tax Stories: An In-Depth Look at Ten Leading Federal Income Tax Cases (Foundation Press, 2003). Additional financial support for the project was provided by the American Tax Policy Institute.

Income Tax, Legal History, Tax Policy

Abstract:
This paper provides an overview and introduction of the forthcoming Tax Stories book, which unpacks the ten seminal U.S. Supreme Court federal income tax cases. Each of the chapters sets forth the social, factual, and legal background of the case, discusses the various court proceedings and judicial opinions, and explores the immediate impact and continuing importance of the case. The University of Cincinnati School of Law's companion web site (Tax Stories) contains the complete record of the case in the Supreme Court, including the lower court opinions, briefs of the parties and amicus curiae, oral arguments (audiotapes and transcripts, where available), and the Supreme Court's opinion.

The paper discusses the concept behind the book, the criteria for selecting the ten leading cases, and the doctrinal and institutional lessons drawn from the cases. Along the way, the paper explores the pedagogical impetus behind such an archaeological approach. The paper is critical of the performance of the Supreme Court (in superintending the tax litigation structure) and of the government (in its litigation strategies) in these ten cases. But in the end, the fault may lie not in the lawyers and judges for supplying the wrong answers but rather in the income tax itself for asking the wrong the questions. Until fundamental reform of our income tax becomes more than a chimera, Tax Stories will remain without a happy ending.

The paper will be published as a chapter in a book to be entitled Tax Stories: An In-Depth Look at Ten Leading Federal Income Tax Cases (Foundation Press, forthcoming 2002). Additional financial support for the project has been provided by the American Tax Policy Institute.

Abstract:
This Essay explains the pedagogical theory behind the new Law Stories series of books to be published by Foundation Press. The Law Stories series is intended to enrich the use of the case method of instruction in the law school classroom. By focusing on fewer cases and pausing for an in-depth review of the seminal cases in the field, the professor can empower students to construct their own schematic understanding of the area of law. Cognitive science teaches that such active learning produces more lasting value to students who are better equipped to process new information and solve new problems within the context of their self-constructed schemata. Professors thus should resist the temptation to do this work for students, conveying our schemata in a top-down fashion, with students playing merely a passive role in receiving this oracular wisdom. As a result, Professors should not sacrifice depth of coverage at the alter of scope of coverage; rather than rush through the signature cases in our subject in order to get to the latest hot topic or fashionable theory, professors should savor the opportunity to unpack with our students what it is that makes these cases central to a deep understanding of the field. The Law Stories series provides the raw material to enhance the study of the foundation cases in different subjects. As the initial book in the series, Tax Stories provides an in-depth examination into ten pivotal United States Supreme Court cases in the development of the federal income tax that provide fresh insights both into particular doctrinal areas of tax law as well as issues of wider application across the tax law.

Abstract:
These remarks were delivered at The Future of Law Libraries Symposium at Amelia Island, FL on March 10, 2005 and have been expanded and updated to be current through February 1, 2006:

I believe we are entering a fourth phase in the deployment of modern technology in the law school classroom, in which faculty embrace technology to actively engage the twenty-first century law student. Instead of fighting losing battles against technology, or living with the problems associated with the current state of law school classroom technology, I want to discuss here three of the new technological tools that I use on a daily basis in my classes: (1) the Classroom Performance System; (2) the Law Stories Series; and (3) the Law Professor Blogs Network.

These technological tools represent the next generation of law school teaching technology and answer critics who charge that technology in the form of PowerPoint slides and laptop computers create a stultifyingly passive classroom environment. By requiring students to take a more active role in their learning, these technologies help students to thrive in the fast-paced legal world of the twenty-first century using twenty-first century tools.

Tax, Legal Education, LSN Education

Abstract:
This Article recounts the experience at the University of Cincinnati College of Law with the Associate Dean for Faculty Research and Development position in the hope that it may be of interest to those schools that either have a similar position or are contemplating establishing such a position. Along the way, we offer our thoughts on the respective roles of the Dean, Associate Dean, and Faculty in improving the quality, productivity, and visibility of a law school faculty and their scholarship. The Associate Dean position was established at Cincinnati two years ago to (1) promote excellence in scholarship and teaching, (2) facilitate and coordinate scholarly activities, and (3) publicize the scholarly activities of the faculty. Responding to the first two charges, the Associate Dean has worked to provide greater institutional support for faculty research at each stage of the production process in the form of various initiatives such as a Work-in-Progress Group, Summer Scholarship Series, Faculty Workshop Series, Scholar Exchange Program, and Law School Working Paper Series. In response to the third charge, the Associate Dean has ramped up our publicity efforts, using both old and new technologies in increasing faculty participation in our alumni magazine, monthly web-based faculty news, and periodic e-mail and print publicity. The Dean has revamped our system of scholarly incentives and rewards, combining elements of both the all-for-one-and-one-for-all approach and the eat-what-you-kill approach. In the end, all of these efforts are aimed at strengthening a scholarly community in which the whole is greater than its parts. The guiding ethos should be that a rising scholarly tide lifts all boats, and that when we row together we not only get to our common destination quicker and easier, it also makes for a more enjoyable and satisfying journey. Like the man who sets out to slay a whale armed only with a row boat and a faith that leads him to bring along a jar of tarter sauce, we come to this task armed only with the ideas described in this Article and a faith in our colleagues that allows us to experiment with different ways to build this scholarly community.

Abstract:
Chris Anderson's book, The Long Tail: Why the Future of Business Is Selling Less of More, has attracted enormous attention since its publication in July 2006. His insight is that technology and the Internet have transformed the focus of America's culture and economy. Whereas pre-Internet firms turned out a small number of "hits" or blockbuster products (the "head" of the demand curve), today's Internet-era firms offer a broader range of niche products (the "tail"). This Essay argues that the Long Tail theory can help both explain the current state of legal scholarship and chart its future.

Legal Scholarship, Law Schools, Legal Education, Rankings, Tax

Abstract:
This Symposium is an outgrowth of our article, What Law Schools Can Learn from Billy Beane and the Oakland Athletics, 82 Tex. L. Rev. 1483 (2004). With the approaching twentieth anniversary of the first U.S. News & World Report law school rankings, it is a particularly propitious time to take a fresh look, to hear new voices, and to reconsider issues surrounding law school rankings. Many of America's most thoughtful law professors (as well as academics in other disciplines) gathered on April 15, 2005 at the Indiana University School of Law - Bloomington to discuss The Next Generation of Law School Rankings. The papers and commentary presented at the event and recorded in these pages reflect a wide array of creative, challenging, and captivating perspectives on the rankings tableau. In the pages that follow, we are confident that you will agree that we have fulfilled the goals we set for the Symposium:

The goal of this Symposium is to deepen our understanding of rankings and their effects on legal education. The participants in this Symposium will examine the need for law school rankings; the effects of rankings on legal education; and the various new approaches to addressing the public's insatiable demand for ever more and increasingly sophisticated rankings, which permeate not only legal education but also all aspects of American life.

We believe the Symposium papers and commentary make an enormous contribution to our understanding of rankings and their effects on legal education.

Legal Education, Law School, Rankings, U.S. News & World Report

Abstract:
These are the opening remarks I delivered at the Symposium on Bloggership: How Blogs Are Transforming Legal Scholarship at Harvard Law School on April 28, 2006. Part One describes how my work on TaxProf Blog and the Law Professor Blog Network led me to organize this Symposium. Part Two takes inspiration from Jim Lindgren's work, Are Scholars Better Teachers?, to ask, using our twenty-three panelists as guinea pigs, Are Scholars Better Bloggers? The data indicate that our participants include some of the most heavily-cited and heavily-downloaded legal scholars who edit many of the most heavily-trafficked law blogs. Although the data do not do not conclusively answer the question raised, they demonstrate that we have assembled an impressive array of scholar-bloggers in the first conference on the impact of blogs on legal scholarship.

The papers and commentary are organized around four themes: (1) Law Blogs as Legal Scholarship (papers by Doug Berman, Orin Kerr, Kate Litvak, and Larry Solum; commentary by Jim Lindgren and Ellen Podgor); (2) The Role of the Law Professor Blogger (papers by Gail Heriot, Gordon Smith, and Eugene Volokh; commentary by Randy Barnett and Michael Froomkin); (3) Blogs, First Amendment Law, and Co-Blogging Law (papers by Glenn Reynolds and Eric Goldman; commentary by Dan Solove and Betsy Malloy); and (4) The Many Faces of Law Professor Blogs (papers by Ann Althouse, Christine Hurt & Tung Yin, and Larry Ribstein; commentary by Howard Bashman and Paul Butler). Paul Butler perhaps best captured the spirit of the Symposium with this clarion call: Blogs are walking up to legal scholarship and slapping it in the face. Blogs say to legal scholarship: 'How dare you! Evolve or Die!' . . . I feel like I am part of a movement that could change the world.

Blogs, Legal Education, Scholarship, Law School, Tax

Abstract:
Over thirty years ago, George Cooper wrote a seminal article arguing that the estate tax was largely voluntary. Although many academics subsequently embraced Cooper's thesis that the estate tax easily can be avoided through a modicum of planning, we argue that the voluntary tax metaphor crumbles under scrutiny. The unprecedented repeal efforts over the past twenty years belie the notion that the estate tax is easily avoided. Moreover, many of the techniques described by Cooper simply no longer provide significant estate tax savings. The techniques that do work to lower the tax burden on an estate often do so by reducing the actual economic value of assets transferred to heirs.

We argue that the voluntary tax metaphor has infected analysis of estate tax empirical data and computation of the estate tax "gap." We contend that commentators confuse the concept of the effective estate tax rate in examining the efficacy of the estate tax; when one correctly computes the effective estate rate, one finds a robust tax that takes a sizeable bite out of even the largest estates. Although calculations of the estate tax gap are difficult because of the lack of reliable data, we argue that studies reporting a large estate tax gap have ignored the personal liability imposed on executors for unpaid estate taxes and the comparatively high estate tax audit rate. These factors suggest that the true estate gap may be small, a view that is corroborated by the IRS' audit results and one empirical study. We conclude that the estate tax is clearly not voluntary and is apparently more efficient than commonly thought in taxing transfers it was designed to reach.

Tax, Estate Tax, Tax Gap, Voluntary Tax, Estate Planning, Minority Discounts

Abstract:
About the only thing that all of the Justices of the Supreme Court agreed upon in the recent Bush v. Gore decision was the general principle that federal courts should defer to state courts on matters of state law. As Justice Breyer put it in his dissent, the Justices only differed as to whether "this case [was] one of the few in which we may lay that fundamental principle aside." But federal courts regularly lay aside that fundamental principle in tax cases. Where the Internal Revenue Code expressly incorporates state law, federal courts in a tax proceeding frequently must decide how much weight to give to a state court ruling on state law. In 1967, the Court relied on the Erie doctrine in Commissioner v. Estate of Bosch in requiring federal courts to give "proper regard" to state court decisions. Although in theory the "proper regard" standard appears consistent with the Bush v. Gore deference principle, this Article shows that in practice the federal courts instead have given "no regard" to state court decisions in concluding in over one-half of the cases applying Bosch over the past thirty-four years that the state court judge had misapplied state law. The enormous interest generated by the Bush v. Gore decision makes this a particularly propitious time to re-visit this nettlesome question of federal tax law. The Article argues that the federal courts should return to the Erie roots of the "proper regard" test in order to give effect to the Bush v. Gore deference principle. If this approach is followed, the Bush v. Gore decision will leave a more lasting imprint in the federal tax law than in constitutional or election law.

Tax, Bush v. Gore, Erie

Abstract:
It is not very often that an estate tax case is featured in the Harvard Law Review, as recently happened with Estate of Andrews, 850 F. Supp. 1279 (E.D. Va. 1994). In that case, the district court concluded that the value of the right of publicity embodied in a famous decedent's name is includable in the decedent's estate under section 2033. The Harvard article claims that the case 'sent shock waves through the estate planning profession,' and that 'knowledgeable estate attorneys are scrambling to determine what famous personalities must do to protect their estates from potentially devastating tax burdens.' Federal Estate Tax and the Right of Publicity: Taxing Estates for Celebrity Value, 108 Harv. L. Rev. 683, 683 (1995). This article explores the estate planning implications of the Andrews decision.

Estate Tax, Right of Publicity, Estate Planning, Tax Planning

Abstract:
This chapter from the second edition of Tax Stories (Foundation Press) unpacks the D.C. Circuit’s stunning decision in Murphy v. United States, 460 F.3d 79 (D.C. Cir. 2006), which unsettled more than a half-century of tax jurisprudence in holding, based on an originalist view of the Sixteenth Amendment, that a personal injury award for emotional and reputational injuries could not be constitutionally treated as income. The chapter explores the background of the case, examines the parties’ conduct of the litigation, and critically analyzes the flaws and negative implications of the panel’s opinion. Although the D.C. Circuit panel ultimately granted rehearing and reversed its earlier decision in Murphy v. IRS, 493 F.3d 170 (D.C. Cir. 2007), the panel could not unring the bell and undo the lasting damage to the tax system caused by its original opinion.

In his chapter on The Story of INDOPCO, Joseph Bankman argues that the income tax often asks too much of judges (and taxpayers, tax accountants, tax lawyers, and the IRS), demanding Solomonic judgments that mere mortals are incapable of consistently getting right. As a result, what initially may appear as an isolated failure instead may be a systemic flaw in the income tax itself. In Murphy, however, the income tax asked very little of the D.C. Circuit: the case merely required understanding of the constitutional source of Congress’s taxing power; the relationship between constitutional and statutory definitions of income; the meaning of tax basis and the difference between financial capital and human capital; and the courts’ duty to the tax system. Instead, the D.C. Circuit turned what should have been a run of the mill tax dispute over the application of § 104(a)(2) into a threat to the very survival of the income tax. The D.C. Circuit, prodded by the tax blogosphere, ultimately backed away from the brink, but the panel’s willingness to arm the anti-tax brigades should give pause to those committed to defend the income tax. Although questions about the taxation of damage recoveries will not bring down the income tax, the willingness of so many to shake its foundations may ultimately prove its undoing.

Tax, Sixteenth Amendment

Abstract:
I have written before about what I call "tax myopia" - the tax law's failure to consider insights from other areas of law that would inform the tax debate. (Tax Myopia, 13 Va. Tax Rev. 517 (1994); http://ssrn.com/abstract=799007). One illustration of this theme is how the tax law has ignored insights from other areas of law on perhaps the dominant social issue of our time: when does human life begin? The question was addressed in two tax cases decided over 55 years ago, and then revisited recently.

Although Wilson v. Commissioner, 41 B.T.A. 456 (1940), refused to treat an unborn child as a person for purposes of the income tax dependency exemption, Faulkner v. Commissioner, 41 B.T.A. 875 (1940), treated as unborn child as a person for purposes of the gift tax annual exclusion. The Board of Tax Appeals justified the different results on the ground that the dependency exemption benefitted the parents while the annual exclusion benefitted the unborn child. In subsequent rulings, the Service has rejected this distinction and refused to treat unborn children as persons for both income tax and gift tax purposes. In Cassman v. United States, 31 Fed. Cl. 121 (1994), the Court of Federal Claims recently denied the dependency exemption for an unborn child but accepted the Board's facile distinction permitting unborn children to be treated as persons for tax purposes where they benefit from that treatment. Cassman thus perpetuates the schizophrenic state of the tax law in this area and ignores both basic tax principles and nontax considerations in addressing this pivotal issue.

Tax, Abortion

Abstract:
Tax lawyers are abuzz over Tax Court Judge David Laro’s aggressive application of the substance-over-form doctrine in ACM Partnership v. Commissioner, T.C. Memo. 1997-115. In that case, Judge Laro rejected Colgate-Palmolive’s use of the contingent payment installment sales rules to shelter $100 million of gain. In contrast, Tax Court Judge John O. Colvin recently rejected the Service’s substance-over-form argument in Estate of Brown v. Commissioner, T.C. Memo. 1997-195, thereby permitting control of the Cincinnati Bengals football team to pass to the children of the team’s founder free of over $30 million of estate tax. The decision creates a quasi-business judgment rule in the estate tax - whatever a closely held company and the estate planning advisers of a major shareholder decide to do to shift control of the company to the shareholder’s children seemingly is automatically imbued with a business purpose as long as an unrelated shareholder receives sufficient cash to go along with the transaction. Although the technique may be difficult for other sports plutocrats to replicate, Estate of Brown gives credence in the estate tax context to matters of form rightfully scorned by ACM Partnership in the income tax context.

tax, estate tax, substance over form, Tax Court, tax planning

Abstract:
Lee Sheppard has written recently in these pages of how the Service has assisted the estate planning objectives of plutocrats who own professional sports teams to keep their franchises in their local communities. (See Tax Notes, May 15, 1995, p. 881.) As Ms. Sheppard has explained, the Service recently approved an elaborate plan devised by the late Ewing Kauffman to keep the Royals baseball team in Kansas City. When Kauffman died in 1993, he left the team to the Greater Kansas City Community Foundation, and the Service recently blessed the estate's claimed charitable deduction by ruling that the foundation served the charitable purpose of keeping the team in Kansas City. Tech. Adv. Mem. 9518002 (Jan. 23, 1995), however, may force the Bengals football team to move out of Cincinnati by its use of the substance over form doctrine to recharacterize a transaction designed by the late Paul Brown to leave the team to his children.

Tax, Estate Tax, Estate Planning, Tax Planning, Section 2036, Cincinnati Bengals