This week, Doron Narotzki (Akron; Google Scholar) reviews Donald J. Kochan (George Mason; Google Scholar), When Tax Law, Textualism, Property Law, and M&A Law Converge: AbbVie Inc. v. Commissioner of Internal Revenue (Wake Forest J. Bus. & Intell. Prop. L. (forthcoming).

Donald Kochan’s forthcoming article in the Wake Forest Journal of Business and Intellectual Property Law provides a valuable analysis of AbbVie Inc. v. Commissioner, a 2025 Tax Court decision on the tax treatment of a large merger termination fee. The case could be described as a narrow dispute over Section 1234A(1), but Kochan shows why the stakes are broader. AbbVie paid Shire roughly $1.6 billion after their planned merger collapsed following Treasury regulatory developments, and AbbVie deducted the payment as an ordinary business expense. The IRS treated it as a capital loss and asserted a deficiency of approximately $572 million. The Tax Court rejected the IRS position, and Kochan argues that the court was right as a matter of statutory text, property law, and economic policy.

The article’s strongest tax point is its insistence that Section 1234A(1) does not apply simply because a failed transaction has some commercial connection to property. The statute applies to gain or loss from the termination of a right or obligation with respect to property that is, or upon acquisition would be, a capital asset. The court resolved the case on the first requirement.

The court’s textual analysis is most persuasive when it focuses on what the Cooperation Agreement actually did. It did not require AbbVie, Shire, or their shareholders to buy, sell, or exchange shares. Instead, it required the corporate parties to take practical steps toward a possible combination, including seeking regulatory approvals, recommending the transaction to shareholders, cooperating with one another, and creating the conditions in which the merger might later be completed. That matters because the termination fee was triggered by the end of those facilitative commitments, not by the cancellation of a binding obligation to transfer property. Understood this way, the payment looks less like a capital loss from abandoning a property right and more like an ordinary cost incurred in pursuing, and ultimately abandoning, a business strategy.

Kochan’s main contribution is his use of the property law maxim nemo dat quod non habet, the idea that one cannot transfer what one does not own. The shares that would have moved in the proposed AbbVie Shire merger belonged to shareholders, not to corporate managers. Managers could recommend, negotiate, and facilitate, but they could not convey the shareholders’ property. Kochan argues that this property law baseline helps explain why the Cooperation Agreement could not be treated as a property transfer agreement for purposes of Section 1234A(1).

I find this to be the article’s most elegant legal move. By tying Section 1234A’s reference to property to the background rule that only an owner, or someone authorized by the owner, can transfer property, Kochan gives the Tax Court’s textual analysis a deeper private law foundation. The point is persuasive, but not beyond challenge. A tax lawyer might reasonably ask whether the phrase “with respect to property” must incorporate common law limits on transfer authority, or whether it is enough that AbbVie had a contractual right closely connected to a proposed acquisition of shares. The IRS’s strongest textual argument was not that corporate managers owned the shares, but that AbbVie’s contractual position was sufficiently related to the acquisition of shares to fall within the statute. Kochan’s answer is that this approach overlooks the central property law question of who actually had authority over the shares. That answer is powerful, even if it does not fully eliminate the competing textual reading.

Kochan also argues that the IRS’s litigating position departed from earlier administrative treatment of termination fees. He cites a 2004 TAM and a 2008 PLR in which the Service treated comparable termination fee receipts as ordinary and did not apply Section 1234A. That history matters because tax administration depends on predictability, especially in transactional planning. Still, TAMs and PLRs are not precedent in the formal sense. They are evidence of prior administrative thinking, not binding authority for other taxpayers. Kochan’s broader point survives that caveat. The IRS position in AbbVie was aggressive, and the Tax Court’s decision brought the treatment of these fees closer to the Service’s earlier practical understanding.

Kochan’s policy argument is straightforward: break-up fees are a normal part of M&A practice because they help parties allocate the risk that a deal may fail. They give buyers some protection for the time and expense of pursuing a transaction, while allowing target boards to preserve flexibility for fiduciary reasons. If those fees receive capital loss treatment, their tax value may be delayed or reduced, which could make companies less willing to pursue risky but potentially valuable deals. Kochan may press the economic benefits of M&A more confidently than some readers would, but his basic point is persuasive: tax classification affects deal costs, and deal costs affect whether transactions happen.

One of the article’s virtues is that it treats tax law as part of a larger legal structure. Corporate law tells us who may act for the firm and what decisions remain with shareholders, property law supplies the basic rules of ownership and authority, and M&A practice explains why parties use termination fees to allocate deal risk. For Kochan, a proper textual reading of Section 1234A should take those legal realities seriously, rather than treating every obligation connected to a proposed acquisition as automatically “with respect to property.”

Overall, the article is timely and engaging, and Kochan gives tax readers a clear account of AbbVie, while also showing why the case should matter to property law scholars and transactional lawyers. The decision does not answer every difficult question about termination payments or property related contract rights, but Kochan’s defense of the Tax Court’s result is thoughtful and persuasive.

Here’s the rest of this week’s SSRN Tax Roundup:

Harald Amberger (Vienna U. Econ, & Bus.), Henning Giese (Paderborn U.) & Kim Alina Schulz (Paderborn U.), Tax Department Workforce Heterogeneity and Tax Planning, TRR 266 Acct. for Transparency Working Paper Ser. No. 241, WU Int’l Tax’n Rsch. Paper Ser. No. 2026-05)

Karen C. Burke (Florida), The Original Meaning of “Limited Partner,” 104 Taxes: The Tax Magazine _ (forthcoming 2026)

Karen C. Burke (Florida), Active Limited Partners Flunk Functional Test, 78 Tax Law. 405 (2026)

Jay Butler (UVA), Global Tax for Repair, 59 NYU J. Int’l Law & Pol’y _ (forthcoming 2027))

Marcela Distefano (Austral U.), Ethics in Algorithms Applied to Tax Administrations (Dec. 26, 2025)

Antonio Lopo Martinez (U. Coimbra Inst. L. Rsch.), Preventing Transfer Pricing Disputes Under Brazil’s New Regime: Structural Limits of the Unilateral APA Under Law No. 14,596/2023 and the Constitutional Challenge of Regulatory Design (May 20, 2026)

Javier Mateos (Independent), Verifiable Invoice Commitment: An EVM-Native Standard for Committing Fiscal Metadata to On-Chain Payments (Apr. 1, 2026)

Bradley Pough (Baltimore), The Property Appraisal Pinch (May 15, 2026)

Vijay R. Singh (Inst. Chartered Acct. India), Parliament’s Closed List: Specified Professions, Section 62(4) of the Income-Tax Act, 2025, and the Unfinished Reform of Presumptive Taxation

Laura Snyder (Assn. Am. Resident Overseas), Taxation Affects 14th Amendment Citizenship: A Critical Lesson, 191 Tax Notes Fed. 771 (May 4, 2026)