TaxProf Blog

Saturday, May 29, 2004

The IRS participated with FBI and INS agents in a raid of a Philadelphia mosque. For more details, see here

Saturday, May 29, 2004

Germany will end the tax-free treatment of life insurance next year, according to press reports.

Friday, May 28, 2004

Today marks the 1-year anniversary of the signing of the Jobs and Growth Tax Relief Act of 2003. In a press release, Treasury Secretary Snow crows that the bill “unleashed the enormous potential of our free-market economy and the results are a great victory for hardworking Americans.”

The traditional 1-year anniversary gift is paper — so perhaps 600 billion pieces of paper would be appropriate to represent the increase in the accumulated federal debt since the passage of the 2003 Act (from other parts of Secretary Snow’s Treasury Department web site):
• $6.6 trillion in May 2003
• $7.2 trillion in May 2004

Friday, May 28, 2004

Americans United for Separation of Church and State has urged the IRS to investigate a Colorado Bishop’s Pastoral Letter stating that “any Catholics who vote for candidates who stand for abortion, illicit stem cell research or euthanasia suffer the same fateful consequences [as the candidates who support these issues].” According to the Bishop, such people “place themselves outside full communion with the Church and so jeopardize their salvation.” The group alleges that the Bishop’s letter is designed to endorse President Bush and other Republican candidates and thus crossed crossed the line into unlawful partisan politicking, jeopardizing the diocese’s tax exemption. For prior TaxProf Blog coverage, see here and here.

Friday, May 27, 2004

James Poterba (MIT) has posted Taxation and Corporate Payout Policy (NBER Working Paper No. 10321) on the National Bureau of Economic Research web site. Here is the abstract:

This paper presents new evidence on how corporate payout policy responds to the differential between the tax burden on dividend income and that on accruing capital gains. It describes the construction of weighted average marginal tax rate series for the period since 1929, and it suggests that the enactment of the Job Growth of Taxpayer Relief Reconciliation Act of 2003 should raise the after-tax value of dividends relative to capital gains by more than five percentage points. The impact of this change on payout depends on the elasticity of dividend payments with respect to the after-tax value of dividend income relative to capital gains. Time series estimates suggest an elasticity of more than three, and imply that the recent tax reform could ultimately increase dividends by almost twenty percent.

A non-technical summary is available in the June 2004 NBER Digest

Friday, May 27, 2004

The BNA Money & Politics Report notes that an ABA Task Force has called on the IRS to to clarify the limits on political activities by section 501(c)(4) groups. (Thanks to Donald Tobin (Ohio State) for the tip.)

Thursday, May 27, 2004

The Treasury Department today issued JS-1693:

The Treasury Department and IRS issued guidance today to clarify when film producers may recover costs incurred in acquiring or developing screenplays, scripts, and other creative properties that are not scheduled for production.

“For many years, the industry accounted for these costs in the same way for both tax and financial reporting purposes,” stated Acting Assistant Secretary for Tax Policy Gregory Jenner. “After a change in the applicable financial reporting rules, the industry asked us to address the tax treatment of these costs as part of the Industry Issue Resolution (IIR) program.”

The revenue ruling issued today (Rev. Rul. 2004-58) holds that a film producer may not claim an abandonment loss for the capitalized costs of acquiring or developing creative properties unless the producer establishes an intention to abandon the property and an affirmative act of abandonment occurs. The revenue ruling also holds that a film producer may not claim a deduction for worthlessness unless identifiable events evidencing a closed and completed transaction establishing worthlessness occur.

The revenue procedure issued today (Rev. Proc. 2004-36) provides a safe harbor method of accounting that permits taxpayers to amortize over a fifteen-year period costs for creative properties that are not scheduled for production within three years of acquisition

Thursday, May 27, 2004

Tax Analysts reports that Kevin Knopf, Benefits Tax Counsel for the Treasury Department, stated at the May 26 Silverstein & Mullens Tax Management Luncheon that the IRS may lack the resources to prevent people from using tax-free funds in health savings accounts (HSAs) for reasons other than to pay medical expenses. Unlike other tax-preferred health savings vehicles, trustees of HSAs are not required to police spending from the accounts.