Important Cases NOTES - Important Cases/articles SUPER BOWL...

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Important Cases/articles SUPER BOWL In order to bid on superbowl, state and locality must agree not to charge sales tax on ticket sales. Hotel occupancy and car rental surcharge make it up. Make up revenue. “Jock tax” also for entertainers. How states and localities tax their nonresidents who come into their jurisdiction for purpose of performing their trade. Other than NY, highest taxing in country is in California where Super bowl was. They take all of compensation from performance of their trade (salary and supplemental income). States do apportionment. Total working days of year and days in jurisdiction times total compensation get from performance of their trade. In addition to sales tax and other taxes imposed by location, people that perform in superbowl get additional stipend in addition to their salary. Subject to apportionment. JURIS/TOTAL DAYS Performers and athletes can actually lose more money by being in superbowl. At location for good week adding more days to numerator. Because in superbowl, numerator goes up so fraction goes up. Now WHOLE salary is being taxed higher rate. Even though they got stipend of additional comp, b/c theyre in California the state is now taxing more of their income they earned all year and they can actually lose money by being in superbowl. PSB Holdings IRS lost. TP challenged validity of revenue ruling. Deference of revenue ruling. PSB Holdings was a US company had a 100% owned subsidiary. Subsidiary invested in muni bonds, tax exempt. If Tp uses their own funds to buy muni bonds great. If TP borrows money and use borrowed money to invest in munis. Should I still get an interest deduction? IRS says no. PSB parent thought they would borrow money and put equity contributions to subsidiary so it has no debts. Subsidiary will invest in muni and parents will deduct interest. PSB thought on consolidated basis can separate deductions. Underlying tax law is unclear how this would apply. IRS issued rev ruling 90-44. We’re combining taxpayers and disallowed interest expense deduction bc deemed to be purchasing municipal bonds. TP contested deficiency and said IRS agent disallowing interest expense deduction show me where you’re authorized to combine. Court says NO. IRS you stay on your side. Separation of function. IRS can enforce law, not make law. In Rev ruling 90-44, by combining you are going beyond the scope of your authority. Rev ruling is not totally bulletproof. Regulations are harder to fight b/c pursuant to delegation of authority congress gave IRS. Rev ruling is just interpretation of IRS without delegation of authority from congress.
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Evans Case Gain or loss on sale of an asset Loss on foreclosure, TP wants ordinary loss vs. capital loss Realization recognition issue and equitable right of redemption – year of recognition – what is appropriate year of recognition event. Ordinarily year of sale. TP thought in 2009. Court brings up issue “equitable right of redemption” in a foreclosure sale. The ERR (equitable right of redemption) is a state law right – if property is foreclosed on, function of state law. If your property is sold in foreclosure, you
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