Category: General Law


An Apology


Oatmeal raisin cookie, you are much loved, by many, many vocal fans. Please, oatmeal raisin cookie, accept my apology for suggesting that one could ever write a paper that indicated otherwise. O, oatmeal raisin cookie, is any cookie loved as much as you?

Image: dizznbonn, cinammon-raisin-oatmeal cookies sweetened with maple syrup (; used under a Creative Commons Attribution 2.0 license


SEC Authority

Suppose Congress authorizes an agency to promulgate standards. The agency delegates that authority. Congress later enacts laws preserving the agency’s promulgation authority but strictly limiting its delegation power to organizations meeting stated criteria. Suppose the agency then delegates the function to an organization lacking those criteria. May the agency do so?

The SEC plans to do exactly that. It has congressional power to set accounting standards and has delegated that to FASB, a private domestic standard-setter for whom the later statute is tailor made. The SEC instead wants to delegate this authority to IASB, an international organization lacking many of the requirements. Congress has raised doubts about the SEC’s statutory authority to take this position but SEC officials have testified before Senate committees that it has the authority. It seems illegal and irresponsible for the SEC to take this position as (somewhat technical) analysis below explores.

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The Sleepiest Tax Lawyer

Being a tax lawyer can be quite creatively inspiring. For example, when I was working as a tax lawyer in New York City a number of years ago I wrote a (still unpublished, for some reason) children’s book. The text follows.

The Sleepiest Tax Lawyer in New York City

Once upon a time there was a very sleepy tax lawyer. She could not stay awake. She slept on her desk, under her desk, and next to her desk. One day she decided to find out if there was any tax lawyer in the city who was as sleepy as she was.

First she went to Cravath. She met a very tall tax lawyer.

“Are you a sleepy tax lawyer?” she asked the Cravath lawyer.

“If a U.S. shareholder acquires, directly or indirectly, stock of a foreign or domestic corporation, which, by reason of the acquisition, then becomes a related controlled foreign corporation or a member of the affiliated group, then in determining excess related group indebtedness or excess U.S. shareholder indebtedness, the indebtedness and assets of the acquired corporation shall be taken into account only at the end of the acquisition year and in following years,” the Cravath lawyer said.

The Cravath lawyer didn’t seem very sleepy, although he had made the sleepy tax lawyer feel even sleepier. So she took a nap. When she woke up, she went to midtown to visit Skadden. At Skadden she met a very fat tax lawyer.

“Are you a sleepy tax lawyer?” she asked the Skadden lawyer.

“In applying section 108(e)(8) to any case to which subparagraph (A) applies, there shall not be taken into account any indebtedness for interest described in subparagraph (C),” the Skadden lawyer said.

“You don’t sound very sleepy either,” said the sleepy tax lawyer. She took a short nap and then went to visit Sullivan and Cromwell, where she met a very bald tax lawyer.

“Are you a sleepy tax lawyer?” she asked the Sullivan and Cromwell lawyer.

“Any ownership interest that otherwise would be treated as stock under paragraph (f)(18)(i) of this section shall not be treated as stock if treating the interest as not stock would result in an ownership change,” said the Sullivan and Cromwell lawyer.

“You don’t sound sleepy at all,” said the sleepy tax lawyer. “I must be the sleepiest tax lawyer in New York City! I’d better go back to my office and take a nap.” And so she did.

The End


Put Your Hands Together

In an episode of Friends, Joey, a notorious womanizer, is eating fresh-made jam directly from the jar. Chandler says, “Hey, Joe. I gotta ask. The girl from the Xerox place–buck naked [holding up one hand], or [holding up the other hand] a big tub of jam?” And Joey says, “Put your hands together.” That is how I feel about movies and tax. Put your hands together! Lucky for me, such a fantasy place does exist: movie tax credits.

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Pro Bono? Cui Bono?

Some large law firms require all their attorneys to do a certain amount of pro bono work. But a better approach might be to require the attorneys either to do a certain number of pro bono hours or to donate a certain amount of money to public interest law firms. (The law firm and lawyer could together donate the value of the lawyer’s time and the amount the firm would have spent on support staff, copying, tech support, and so forth had they taken on the project.) And perhaps an even better approach would be for law firms to do away with pro bono work altogether and just donate money. So why doesn’t this happen? Why services instead of money?

After the jump, an explanation of why money might be better, and some speculation about why law firms donate services.

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Thanks and Goodbye

Today is my last day guest blogging, so I want to thank Dan and the rest of the staff here at Concurring Opinions for allowing me to spend the last month here. Let me end with one last post on empirical work and the law. Andrew Gelman makes the nice point here about the difference in empirical work in political science and psychology — psychologists run experiments while political scientists analyze data that already exists. For the most part, legal empiricists are far more like political scientists than psychologists. True legal experiments are few and far between. Of course, this fact does not prevent good work from being done. As an example of one of the most interesting and important pieces of work on the life of real lawyers, all law students, prospective law students, and law professors should be following Bill Henderson’s discussion of the bimodal nature of lawyer salaries.


LILO (with apologies to the Kinks)

Over on PrawfsBlawg they are talking about teachers who sing in class. I could never sing in class (I sang two lines of a song in the car the other day and my partner looked at me with a combination of horror and pity), but I will admit that I have been known to write a tax-related song or two. Unfortunately, the following song is funny only if you have a fairly good understanding of lease-in-lease-out transactions and you know the song Lola, and it’s probably not funny even then. That said…


(with apologies to the Kinks)

I heard about this thing from a guy I know

Where the cash goes around in a circular flow

He emailed me and outlined the plan

I asked for its name and he wrote right back, it’s called LILO

L-I-L-O LILO li-li-li-li LILO

I hadn’t yet seen at that particular time

Rev. Rul. 2002 dash 69

Oh my LILO li-li-li-li LILO

Well I’m not dumb but I didn’t know

Why it looked like a lease, but we’d have no control

Oh my LILO li-li-li-li LILO li-li-li-li LILO

Well I drank black coffee and read all night

Under electric candlelight

I picked the Code up, sat it on my knee

I thought, “This thing’s just too good to be!”

Well I’m not the world’s most rule-loving guy

But substance over form meant I couldn’t fall for that LILO

li-li-li-li LILO li-li-li-li LILO

LILO li-li-li-li LILO li-li-li-li LILO

I pushed it away

I walked to the door

I fell to the floor

I got down on my knees

Then I looked at it and it at me

Well that’s the way that I want it to stay

And I just wish it would go away, oh my LILO

A loan is a lease and a lease is a loan

It’s a mixed-up muddled-up shook-up Code thanks to LILO

li-li-li-li LILO

Well I’d left school just a week before

And I’d never even read a reg before

But LILO looked good, fit the Code to the letter

And I thought, this’ll make the client like me better!

Well I’m not the world’s most ethical man

But I know what I am and I’m know I’m no sham, unlike LILO

li-li-li-li LILO li-li-li-li LILO

LILO li-li-li-li LILO li-li-li-li LILO

(Concurring Opinions guys, I apologize! I apologize! Please don’t kick me off the blog!)



This was not a planned blog post, but I’m so excited I just have to share: I just got my 2008-2009 Federal Income Tax Code and Regulations Selected Sections. It’s purple!

It’s not that I love purple so much, but I absolutely love getting the new code and regs. I’m a CCH gal myself, though certainly opinions can differ about whether CCH is the best source for the code and regs, but seriously, opinions cannot differ about whether it’s awesome to get the new code and regs.

It’s awesome in part because it’s necessary; tax law changes all the time, and 2007’s version is actually out of date now. But it’s also awesome because this book and I are going to be very, very close over the next year. By next July, it’s going to be a mess. I will have crossed out the numbers in the sections with inflation adjustments and written in this year’s numbers. The cover will be torn. There will be tabs in odd places (2007’s Selected Sections features a tab by Section 62(a)(4), “Deductions Attributable to Rents and Royalties.” Why? I do not know). There will be once-useful and eventually mysterious notes on the empty pages in the back. (Examples from 2007: Useful: “Discuss 170(f)(8)? Procedural, not substantive.” Mysterious: “Discuss Pascal’s Wager?” Yes, “?” indeed.)

Also, this is the shorter tax law (a mere 2027 pages, as opposed to the far more massive eight-volume full set). While getting the full set is of course exciting, the one-volume version has its own special benefits. True conversation from a recent trip to NY to visit a friend of mine–let’s call him Jeff.

Jeff: “Jeez, why is your suitcase so heavy? You’re only here for three days.”

Me: “Because it has tax law in it.”

Jeff: “You brought the code? Why?” [Note: He may actually have said “Loser!” but I prefer to remember it as “Why?”]

Me: “You never know when you might need it. And of course I didn’t bring the code–only selected sections!”

Yeah, it’s true I didn’t need the code on that trip. But you never know! Really!

Finally, these books (either selected sections or full code and regs) can be useful even after other, more updated books have come to take their place. We’re talking about thick, sturdy volumes here. Sure, it might not be realistic to build a chair out of them (though it might be, actually…need to think about this more…), but I have used them to bring my home speakers to the correct height; to block open doors; to hold down boxes; to keep my cat away from things that could suffer cat damage; and on and on.

So, this is a great day for me. 2008-2009 Edition Federal Income Tax Code and Regulations Selected Sections, welcome!


Present and Future Value

I teach the concept of present and future value in my basic tax law class, to help students understand why timing is so important in tax law–that is, why it is better to take a deduction now than next year, and why it is better to recognize taxable income next year rather than this year.

The future value of money is the amount of money you will have some time in the future if you invest a certain amount today. For example, if you put money into your bank account now, how much will be there in ten years, including interest? Of course, you need to know how much you’re starting with, how long that amount grows, and the interest rate it grows at (also the compounding period). The present value of money is how much an amount of money to be received in the future is worth today; you need to know all the same information to figure out present value.

You need to know present and future value whenever you want to figure out how much a stream of payments is worth, and whenever you want to compare amounts that are received or paid at different times.

Here are some examples of present and future value, assuming a 10% rate of interest, if you allow the money to grow for five years and compound it annually:

FV($100) = $161

PV($100) = $62

Here are some additional examples of present and future value:

PV(Comedy) = Tragedy

FV(Ice Cream) = Dippin’ Dots

Please add more in the comments (preferably more along the lines of the latter two than the former two, though if doing present and future value calculations makes you happy, far be it from me to stop you!).


The 3-Year JD-MBA

Northwestern University generated extensive discussion recently after announcing a program to let students complete legal studies in 2 years instead of 3, also done at University of Dayton. Less discussed, Northwestern has for a decade offered an alternative that lets students get both the JD and MBA in 3 years instead of the usual 4 or 5. Although analysis applicable to the speedy JD may likewise apply to the speedy dual degree, there may be some differences warranting a separate look.

We considered adapting the fast track dual degree, also done at St. Thomas University, when I was Academic Dean at Boston College . A modicum of reverse engineering was required to connect Northwestern’s bulletin description to the driving regulatory requirements. And special tailoring for specific attributes of BC was necessary. In the end, the BC faculty opted to forego the step. Yet it may work well for some schools in some locations and be of interest to many more students than Northwestern or St. Thomas can accommodate.

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