newsletter - American Bar Association

NEWSLETTER

SE

CT

IO

N

OF

T

AX

AT

IO

NS U M M E R 2 0 0 2Vo l u m e 2 1 N u m b e r 4

LOSANGELESFALL MEETING, OCTOBER 17-19, 2002

ABA LA

NEW NY C

LE RULES –

see p. 3

26945_ABA_Newletter_Summer 8/2/02 11:13 AM Page 1

SE

CT

IO

N

OF

T

AX

AT

IO

N 2

CONTENTSIMPORTANT SECTION DATES AND SERVICES . . . . .3

FROM THE EDITOR . . . . . . . . . . . . . . . . . . . . . . . . . . .4

FROM THE CHAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

FROM THE CHAIR-ELECT . . . . . . . . . . . . . . . . . . . . . .7

COUNCIL ACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

POINTS TO REMEMBER . . . . . . . . . . . . . . . . . . . . . . .10

SPECIAL REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . .15

INTERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19

SPOTLIGHT ON COMMITTEES . . . . . . . . . . . . . . . . . .23

PRO BONO AWARD RECIPIENTS . . . . . . . . . . . . . . .24

NEWS BRIEFS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26

2002 FALL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . .27

General Information . . . . . . . . . . . . . . . . . . . . . . . . .27

Preliminary Program Topics . . . . . . . . . . . . . . . . . . .29

Hotel Reservation Form . . . . . . . . . . . . . . . . . . . . . .30

Registration and Ticket Purchase Form . . . . . . . . . 32

GOVERNMENT SUBMISSIONS BOXSCORE . . . . . .33

PUBLICATIONS ORDER FORM . . . . . . . . . . . . . . . . .34

MATERIALS ORDER FORM . . . . . . . . . . . . . . . . . . . .35

NEWSLETTERABA SECTION OF TAXATIONSUMMER 2002 VOLUME 21 NUMBER 4

ISSN 0277-2361

EDITORIAL BOARDCOUNCIL DIRECTORPatricia Ann Metzer

SUPERVISING EDITORAlice G. Abreu

INTERVIEW EDITORSJasper L. Cummings, Jr.Alan J.J. Swirski

SPECIAL FEATURES EDITORChristopher S. Rizek

PRODUCTION EDITORAnne B. Dunn

ASSOCIATE EDITORSNancy M. BecknerDianne BennettDavid A. BrennenAlexander DrapatskyEdward KesselBernice J. KoplinAnnette NellenDavid L. SilvermanKathleen A. Stephenson

EDITORIAL POLICYThe ABA Section of Taxation Newsletter is

published quarterly to provide information ondevelopments pertaining to taxation, Section ofTaxation news, and other information of profes-sional interest to Section of Taxation membersand other readers.

The Newsletter cannot be responsible forunsolicited manuscripts and reserves the right toaccept or reject any manuscript and the right tocondition acceptance upon revision of materialto conform to its criteria.

Articles and reports reflect the view of theindividuals or committees that prepared themand do not necessarily represent the position ofthe American Bar Association, the Section ofTaxation, or the editors of the Newsletter.

Manuscripts and letters should be mailed to:ABA Section of Taxation, 740 15th Street, NW,10th Floor, Washington, DC 20005.

Nonmembers of the Tax Section may subscribe to the Newsletter for $15.00 per yearor may obtain back issues for $4.00 per copy. To order, contact the ABA Service Center,750 N. Lake Shore Drive, Chicago, IL 60611,tel. 800/285-2221.


3

IM

PO

RT

AN

T

SE

CT

IO

N

DA

TE

S

AN

D

SE

RV

IC

ES

FUTURE SECTION MEETINGS

2002 FALL MEETING—OCTOBER 17-19, CENTURY PLAZA AND ST. REGIS HOTEL, LOS ANGELES, CA

2003 MIDYEAR MEETING—JANUARY 23-26, MARRIOTT RIVERCENTER AND RIVERWALK, SAN ANTONIO, TX

2003 MAY MEETING—MAY 8-10, GRAND HYATT, WASHINGTON, DC

2003 FALL MEETING—SEPTEMBER 11-13, SHERATON CHICAGO, CHICAGO, IL

2004 MIDYEAR MEETING—JANUARY 29-31, GAYLORD PALMS, KISSIMEE, FL

IMPORTANT SECTION DATES AND SERVICES

ABA SERVICE [email protected]

The ABA Service Center is your one-stop shop forinquiries and orders related to ABA publications,ABA/CLE-sponsored programs, membership status anddues information, change of address requests, and theABA Member Advantage Program. You can reach theService Center by phone toll-free at 800/285-2221.

ABANETWORK—FOR MEMBERS ONLYAs a member of the ABA Tax Section, you are entitled

to browse exclusive “Members Only” content throughoutthe ABANetwork. On the Tax Section website, SectionMembers can download articles from the Newsletter andThe Tax Lawyer, research materials on Comm-Online,join committees, and view career opportunities for taxprofessionals.To access this privileged content, membersmust log in.

To log in, your username on the ABANetwork is yourABA Membership ID number, and your password is yourlast name. If you do not know your password, or if you

encounter problems when you attempt to log in, pleasecontact the ABA Service Center at [email protected],or by phone at 312/988-5522, or toll-free at 800/285-2221. Please have your Membership ID number readywhen you call.

COMM-ONLINE—WHAT ARE YOUWAITING FOR?

Cosponsored by the Tax Section and its primary cor-porate sponsor, LexisNexis™, Comm-Online providesinstant access to meeting materials, including valuablelegislative analysis, discussions of new regulations,important developments, and more, collected from TaxSection programs from May 1999 to the present. Accessis free to Tax Section members. Click on Comm-Onlinefrom the lefthand menu on the Tax Section’s homepage.

E-MAIL v. SNAIL MAILHave you registered your e-mail address with the

ABA? The Tax Section is communicating with 70% of itsmembership by e-mail. Why wait for snail mail, whenyou can receive regular notification of teleconferencesand other CLE opportunities, Section meetings, Sectiondeadline reminders, and other important announcementsfrom the Tax Section delivered right to your desktop.

We know it is not perfect—managing your e-mailboxis quite a task—but these days, e-mail is faster, cheaper,and more effective than snail mail.We don’t spam, and wecommunicate with you only when we have information toconvey. Sign up today at www.abanet.org/members/join/coa1.html.

CONTACT USABA Section of Taxation, 740 15th Street, NW,

Washington, DC 20005, tel. 202/662-8670,fax 202/662-8682, e-mail [email protected].

URGENT NOTICE FOR NY-LICENSED ATTORNEYSThe NYSBA recently notified the ABA that it mustdistribute NY Certificate of Attendance forms to allNY-licensed attorneys who wish to receive CLEcredit for attending any of the 2001-2002 TaxSection Meetings. The Section is in the process ofsending the forms to everyone who registered forany 2001-2002 meeting using a New York mailingaddress. If you are a NY-licensed attorney whodoes not have a New York mailing address, ANDyou wish to receive credit for attending any 2001-2002 Tax Section meeting, please contact theSection Office at 202/662-8670 or by e-mail [email protected] with your name and address toreceive a form.


FR

OM

T

HE

E

DI

TO

R 4

“Summertime, an’ the livin’ iseasy . . .” The languid sensu-

ality of the world evoked by themusic and lyrics of GeorgeGershwin’s Porgy and Bess wereaspirational even within the contextof that opera, but they seem evenmore so as the summer of 2002 nearsits end. Summer marks the end of acycle even for the Section and offersan opportunity to reflect on chal-lenges met and new spheres left toconquer. This issue, a child of itstime, does likewise.

The issue itself marks the end ofan era, as it is the last issue that willcarry the name Newsletter. At itsMay meeting, Council approvedchanging the name of this publicationfrom the Tax Section Newsletter tothe Tax Section NewsQuarterly. Thechange in name reflects the changesin the content of the publication overthe last several years, in particularthose changes made by my predeces-sor, Ellen Aprill, to whom I continueto be grateful. While we still carrySection news, the publication is nowso much more. Points to Rememberprovide substantive practice pointers,Point/Counterpoint articles offerstimulating debates on important top-ics, Special Reports offer in-depthanalyses, and the Interviews give us aglimpse into the life and views ofpeople important to the developmentof the tax system or the work of theSection. The NewsQuarterly will beeven more informative, as it will havean expanded board of AssociateEditors who will be able to contributePoints to Remember and other fea-tures over a broader range of practiceareas. I’ll tell you more about them inthe Fall. In the meantime, if you havesuggestions for items you’d like tosee in the NewsQuarterly, or if youwould like to become involved withits work, please contact me [email protected].

This issue is not only the last ofthe Newsletter, but it is also the last

issue for which Dick Lipton has hadto write a Chair’s column. Dick’sleadership of the Section has beenexemplary despite the many chal-lenges events have posed; I haveespecially appreciated the dedicationthat has led him to submit hiscolumns before they are due. In thisissue Dick provides a thoughtfulassessment of the Section’s initiativesand its accomplishments during histenure at its helm. He discusses theSection’s efforts on various fronts,including tax system simplification,increasing member value, the impor-tance of pro bono service, the dedi-cated work of the 9/11 task force, aswell as numerous comments filed onproposed tax shelter legislation andrevisions to Circular 230. Reading hiscolumn should make you proud to bea member of the Section.

Of course, Dick’s tenure has beenunusually long, since he agreed toassume the leadership of the Sectionwhen his predecessor, Pam Olson,left private practice to enter govern-ment service. It is therefore fittingthat Pam, now in her role as theTreasury’s Acting Assistant Secretaryfor Tax Policy, is the subject of thisissue’s interview. As always, JackCummings and Alan Swirski haveposed a set of questions that begin byeliciting a detailed description of thework of the Office of Tax Policy andmove through Pam’s reflections onchanges in the relationship betweenthe Service and Treasury from thetime of her first government servicein 1981 to the present, as well as thechallenges of tax administration andthe prospects for a significant efforton tax simplification during the sec-ond half of the current administra-tion.

In the Tax Section, as often in life,the end of one era marks the begin-ning of another, so it is fitting thatthis issue also contains a column byHerb Beller, the incoming Chair.Herb not only describes the genesis

of his longstanding involvement withthe Section but also shares his aspira-tions for his term as Chair. We learn,for example, that Herb will continueto build on the successful initiativesof his predecessors and, will, in addition, strengthen the Section’srelationship with the Service’s operating divisions.

This issue marks another begin-ning, for it features the recipients of anew award, the Pro Bono ServiceAward, which was presented at theMay meeting. The first recipients ofthis award, Victoria Bjorklund andElizabeth Atkinson, are individualswhose accomplishments will inspireus and who have set a standard forpublic and professional service thatshould make us proud to claim themas members of the Section.

In light of the commitment to pub-lic and pro bono service which hasbeen one hallmark of Dick Lipton’stenure as Chair, and which is exem-plified by the inauguration of the ProBono award, it is fitting that thisissue’s Spotlight be on the LowIncome Taxpayers Committee. TheSpotlight reveals the breadth of issuesto which the Committee devotes itsattention, including many that shouldbe of interest to tax practitioners generally, regardless of whether they represent low income taxpayers.Reading it may even prompt you towant to get up in time to attend theCommittee meetings, typically heldat 7 a.m. on Saturday mornings during Section meetings.

On the substantive side, this issuecontains a Special Report and twoPoints to Remember, both of whichgive their subjects a more in-depthtreatment than is usual for this fea-ture. In the Special Report, BerniceKoplin discusses a recent but veryimportant Supreme Court case whichheld that property owned by a tax-payer as a tenant by the entirety

FROM THE EDITORby Alice G. Abreu, Philadelphia, PA

SEE EDITOR, PAGE 18


5

FR

OM

T

HE

C

HA

IR

In the Tax Section, as in life, allgood things must come to an end.

My term as Chair of the Section isnow ending. In this, my final Fromthe Chair column, I will highlight themost important activities of theSection during the past 18 months.

In my first column I set forth thethree primary goals for my term: pro-moting simplification of the tax laws,increasing the value of membershipfor our members, and encouragingpro bono activities. The unfoldingevents over the past 18 months haveadded a number of other importantgoals and actions, but these threegoals remained paramount through-out that time.

SIMPLIFICATIONAs David Richmond, who chaired

the Section in the early 1960s, recent-ly reminded me, simplification of thetax laws has been an (unachieved)goal of the Tax Section virtually fromthe time of its formation. Althougheveryone is in favor of tax law sim-plification (just like everyone favorsmotherhood and apple pie), no grouphas come forward to volunteer thattheir tax liability be increased inorder to make the tax laws simplerfor everyone else.

The Tax Section has joined overthe past several years with the othermajor national groups of tax practi-tioners—the American Institute ofCertified Public Accountants and theTax Executives Institute—in order toincrease the public focus on the needfor tax simplification. My predeces-sor, Pam Olson, placed considerableimportance on tax law simplificationbefore she assumed her current posi-tion in the Administration. During myterm, I was fortunate to have a groupof committed members, led by DavidGlickman of Dallas and HelenHubbard of Washington, DC, whodevoted substantial time and energyto the cause of tax simplification. We

were aided greatly in this endeavorby the significant work of the JointCommittee on Taxation (JCT) which,in response to the mandate fromCongress in the 1997 Tax Act, pub-lished a detailed analysis of the prob-lems caused by tax complexity andvarious alternatives for simplifyingthe Code.

Although simplification of the taxlaws will remain an uphill struggle,slow progress is being made. When Itestified before Congress in 2001, Iemphasized three primary simplifica-tion goals of the Section—repeal ofthe alternative minimum tax, repealof rules commonly referred to as PEP(personal exemption phase-out) andPease (limitation on itemized deduc-tions), and enactment of a uniformdefinition of a child. We can reportsome success in this regard. Congressapproved in the 2001 bill the repealof PEP and Pease (albeit with adelayed effective date), and theAdministration proposed a uniformdefinition of a child for tax law pur-poses in its “white paper” issued onApril 15, 2002. Moreover, leadingmembers of both political partiesappear to recognize the need torepeal the individual AMT, althoughthe high budgetary cost of this actionhas been an impediment.

Perhaps more importantly, simpli-fication is now part of the discussionin every tax bill that is proposed. TheJCT recently began to include a “sim-plification analysis” in its discussionof proposed legislation, and theAdministration has publicly calledfor simplification of the Code. Thecontinuing focus on tax simplificationwill, hopefully, eventually result inreal simplification of the tax laws.

MEMBER VALUEThe Tax Section is, first and fore-

most, a membership organization.The leadership of the Section mustnever forget that their primary obliga-tion is to our members, whose duessupport the Section and whose partic-ipation gives the Section its vitality.My “member value initiative” wasintended to focus on providingincreased value to members for theirmembership in the Section.

I asked Dick Shaw of San Diego,who will succeed Herb Beller asChair of the Section, to lead thiseffort. Dick prepared a lengthy reportwhich highlighted many ways for theSection to provide value to our mem-bers. But most importantly, the reportemphasized a fundamental fact—before we try to deliver value to ourmembers, we need to know what ourmembers want. In response, theSection has authorized a detailed sur-vey of our members in order to deter-mine what YOU want from the TaxSection. This survey should be dis-tributed soon, and I hope that, if youare selected randomly to receive asurvey, you will take the time torespond so that the Tax Section canstrive to deliver the benefits that youbelieve are important.

PRO BONOThe third of my goals was to

increase the pro bono activities of theSection and its members. To provideus guidance, I asked Terri Hyde of

FROM THE CHAIRby Richard M. Lipton, Chicago, IL

RICHARD M. LIPTON


FR

OM

T

HE

C

HA

IR 6

Washington, DC, to head a pro bonotask force, which reported to Councilin November. Terri’s efforts wereincredible, and Council unanimouslyadopted her proposals, which includ-ed the formation of a standing com-mittee on pro bono activities, theestablishment of a Pro Bono Awardto honor Section members involvedin pro bono activities, and an “out-reach” program through which theSection would assist low-income tax-payers through increased awarenessof their rights and responsibilities aswell as legal assistance.

We have begun to take steps inthis direction. At the Plenary Sessionof the May 2002 Meeting inWashington, I had the pleasure ofpresenting the first Tax Section ProBono Awards to Elizabeth Atkinsonof Norfolk, Virginia, and VictoriaBjorklund of New York, New York.These two members of the Sectionhave, through their long-standingcommitment to pro bono activities,set an example for all of us. ThePlenary Session also included a paneldiscussion of pro bono opportunitiesthat featured comments from B. JohnWilliams, the Chief Counsel of theIRS, Nina Olson, the NationalTaxpayer Advocate, Judge PeterPanuthos of the US Tax Court, andElizabeth Atkinson.

In addition to focusing internally, Iimplemented an outreach program forthe Section through the media. Weprepared video and audio newsreleases on the topics of charitablegiving and tax return preparation,which were aired on hundreds of tel-evision and radio stations in virtuallyevery major market. These releaseswere highly successful; more than 40million Americans heard or saw oneof these media releases. In addition,we launched a new platform on ourwebsite, Tax Tips 4 U.org, which fea-tures helpful hints for consumersconcerning their tax rights andresponsibilities.

There is still much to be accom-plished. I am very pleased that mysuccessor, Herb Beller, and Councilappear to be committed to increasingthe pro bono activities of the Section

and its members. Like tax law simpli-fication, this will not be an easy task,but unlike simplification, this is agoal that is within the control of ourmembers. I hope that all of you willjoin me in making pro bono activitiesa regular part of your legal career.

9/11 TASK FORCEIn addition to the planned activi-

ties during my term, there were threeadditional matters that arose andbecame a significant focus of theSection. The first was one that nonewould have wished to occur—theresponse to the events of September11, 2001. The tragedy on that daybrought forth, however, some of the best from many members of the Section.

Immediately after the terroristattacks, I appointed a special taskforce, which was headed by MichaelHirschfeld of New York. The taskforce served as an important resourcefor Congress, the Administration andthe media in addressing the tax con-sequences of the attacks. Most impor-tantly, the 9/11 Task Force was ableto focus on problems in the tax lawthat made it difficult for Americans tomake charitable contributions to ben-efit the individuals and businessesthat were most directly affected. Inresponse, Congress enacted legisla-tion and the IRS issued guidancespecifically addressing the concernsraised by our task force. The con-structive role of the task force, inresponse to the destructive attacksmade against our country, is some-thing that the Section can be veryproud of.

CIRCULAR 230 AND TAXSHELTERS

Another major development dur-ing my term as Chair was created bythe tax-shelter phenomenon of thelate 1990s. In response to inappropri-ate behavior by both taxpayers andpractitioners, Congress and theAdministration proposed legislationand regulations, respectively, intend-ed to clamp down on tax shelters.These proposals included a substan-

tial revision to Circular 230, whichsets forth the rules for practice beforethe IRS.

Although Congress’ and the IRS’goals were appropriate, their propos-als were not always on the mark. Anumber of members of the Sectiondevoted an unbelievable amount oftime and energy towards preparingcomments on the various legislativeand regulatory proposals. Four indi-viduals—Rick Ballard, Greg Jenner,Bill Wilkins and Herb Beller—spear-headed the preparation of three setsof comments concerning the pro-posed revisions to Circular 230 aswell as several responses to legisla-tive proposals from the Hill.

As I write this column, we areembarking on the preparation of yetanother set of comments, this time inresponse to the legislative proposalsintroduced in the Senate in May 2002and the regulatory proposals issuedby the Administration the precedingMarch, which are specifically focusedon tax shelters and tax shelter pro-moters. The Tax Section has longargued that the best way to addresstax shelters is to focus sunshine onthem, and the latest proposals appearto take this approach through theimposition of various disclosurerequirements. I anticipate that ourcomments will applaud these effortsaimed at increasing the disclosure ofpotentially-abusive transactions whilepointing out problems and issuesraised by the proposals.

ANNUAL MEETINGIn the last issue of the Newsletter,

I addressed the decision of Councilthat the Section would cease to holdcommittee meetings at the AnnualMeeting of the ABA. Although thisdecision was not an easy one, it hadbeen long in coming—the question ofthe Section’s role at the AnnualMeeting had been on the agendawhen I joined Council in 1990, and12 years later the issue has finallybeen resolved. When the ABAannounced last fall that the format forthe Annual Meeting was changing in

SEE CHAIR, PAGE 8


7

FR

OM

T

HE

C

HA

IR

-E

LE

CT

FROM THE CHAIR-ELECTby Herbert N. Beller, Washington, DC

Early in my career I had the goodfortune to work closely with Ed

Kahn, an outstanding Washington taxlawyer who was very active in theSection. One day Ed enlisted my helpin putting together the Section’s com-ments on the recently enacted TaxReform Act of 1969. The manySection committees that were affect-ed by this important new legislationhad been asked to prepare drafts ofseparate comments regarding priorityareas for administrative guidance onthe multitude of issues that werebeginning to surface. My task was toreview, edit, and coordinate thesedrafts into a single, well-organizedsubmission. For the next few days(and evenings too), client work wentby the wayside as I immersed myselfin the intricacies of some fairly hefty,and seemingly incomprehensible,changes to the Internal RevenueCode—the maximum tax on earnedincome, private foundation excisetaxes, revamped stock dividend rules,section 83 and the minimum tax onpreferences, to name but a few. Theresulting “cut and paste” job waspromptly reviewed and surelyimproved by Ed and others, and offit went to Treasury and the Service.For me, the experience was challeng-ing, educational, and ultimately very

useful in my practice. It also markedthe beginning of more than threedecades of involvement with anorganization that has helped me growboth professionally and personally incountless ways.

I remember well my early years inthe Section, including spring meet-ings at the Shoreham Hotel inWashington. All of the committeesmet at the same time in the ballroom,each at its own table. There usuallywere about 10 or 12 of us at theCorporate-Shareholder table, includ-ing Jim Holden, Jere McGaffey, andothers who would go on to becomeleaders of the Section. Saturdayswere devoted primarily to an endlessstream of committee reports present-ed to the entire group, a practice thattended to induce considerable drowsi-ness. Not infrequently, however, thesesessions became quite lively as aresult of heated floor debates on leg-islative recommendations or otherburning issues of the day.

Over the years the Section hasbecome a much larger organization,with a much broader plate of activi-ties. We provide to our almost 20,000members unparalleled CLE program-ming, valuable networking opportuni-ties, and more than 50 activecommittees and task forces throughwhich they can work to hone theirareas of specialization and to improveour nation’s tax system. My prede-cessor, Dick Lipton, has done a greatjob enhancing even further theSection’s premier reputation as atrusted and well-respected voice onthe national tax scene. When PamOlson answered the call to publicservice early last year, Dick steppedin without missing a beat. He hasgone full steam ever since and leavesbig shoes to fill. (My own size 13D’shopefully will give me a leg up onthe matter!)

The overriding theme for myupcoming term as Chair is quite sim-ple: to make a difference for our

members and for the tax system. Lastyear a special task force headed byDick Shaw produced a comprehen-sive report containing many goodsuggestions for increasing the valueof Section membership. Dick willcontinue to focus on this area duringhis upcoming term as Chair-Elect ofthe Section. In addition, I am delight-ed that Susan Serota, a formerSection Vice-Chair for ProfessionalServices, will chair our Membershipand Marketing Committee, and thatMelinda Merk, outgoing Chair of ourYoung Lawyers Forum, will serve asher Vice-Chair.

Perhaps the most important of ourmember-oriented goals is the need tocontinue recent successful efforts toattract as new members youngerlawyers and lawyers from diversebackgrounds. Our Young LawyersForum and Diversity Committee haveboth been very productive, and theircontinuing vitality is critical to theSection’s future. I also would like tosee us do more in the way of“between meetings” CLE and com-mittee activity, taking full advantageof our excellent online and otherremote communication capabilities.And finally, we need to make surethat Section activities and initiativesare compatible with the needs anddesires of our membership. We soonwill be sending a comprehensive sur-vey to a broad cross-section of ourmembership. This is a good way forSection management to learn abouthow we can better serve you. I urgeall who receive the survey to com-plete and return it as promptly as possible.

Among our priorities relating toimprovement of the tax system, Iview the following as especiallyimportant:• Government interface.

Strengthening Section relation-ships with all of the IRS operatingdivisions; encouraging and facili-tating opportunities for direct

HERBERT N. BELLER


8

interaction between more of ourcommittees and their governmentcounterparts; improving responsetime and increasing follow-upactivity on regulation commentsand other government submis-sions; and seeking opportunitiesfor earlier and more intensiveSection involvement in the devel-opment of published guidance.

• Simplification. Continuing to beatthe drum on the desperate need formajor simplification of the taxlaws. Tax simplification is one ofABA’s top legislative priorities,and the Section’s joint efforts withthe AICPA and Tax ExecutivesInstitute have been instrumental infocusing national attention on theissue. No matter how difficult theroad to achieving significant

progress may be, we cannot affordto relax our commitment to thisimportant cause.

• Pro bono. Building on the signifi-cant steps that were taken duringDick Lipton’s term to enhance theSection’s profile and participationin the pro bono arena. The excel-lent report of the special task forcechaired by Terri Hyde outlines sev-eral ways in which Section mem-bers might contribute their talentsand time to low-income taxpayerand other pro bono initiatives. Dickwill chair our newly formed ProBono Committee, and will nodoubt bring considerable energyand devotion to the job of imple-menting these recommendations.

• Tax shelters. Continuing our sub-stantial and longstanding support

for the development of workable,fair and effective mechanisms forshining the spotlight on (andappropriately sanctioning) notonly the taxpayers who engage inabusive tax shelters, but also thepromoters and advisers who prodand assist them. It is imperativethat the Section stand on the high-est ground possible in evaluatingand providing input on administra-tive and legislative proposals thatare designed to eradicate this seri-ous blight on the integrity of ourtax system.

As always, there is much to do. Ilook forward to the privilege of lead-ing the Section and am confident that,working together, we will continue to make a difference in many important ways. �F

RO

M

TH

E

CH

AI

R-

EL

EC

T

a manner that would make it moredifficult for the Tax Section to con-duct “business as usual,” the time hadfinally come to sever our links withthe Annual Meeting.

As I noted in my prior column, Iview this action not as a step awayfrom the ABA, but, rather, as a nec-essary response to the needs anddesires of our members. At the sametime, the Tax Section has begun toplay a larger role in the ABA throughthe Section Officers Conference, thepromotion of ABA goals in Congressand with the Administration, andthrough our efforts to increase theprofile of the ABA. I look forward toour stand-alone meetings in LosAngeles in October 2002 and inChicago in September of 2003, inwhich the Tax Section can focus onour members without the distractionsand difficulties caused by being partof the larger Annual Meeting.

CONCLUSIONA chair for the Tax Section is only asgood as the people who support him.I was fortunate to be supported by anable Council and a wonderful groupof officers, including Nick Freud,Karen Hawkins, George Howell, DonKorb, Pat Metzer, Bill Wilkins, SusanStone and Helen Hubbard. Each ofthem spent large amounts of time andenergy making the Section functionsmoothly. Space does not permit meto laud each of their efforts, but theyall contributed greatly to the successof the Section.

I will be succeeded by HerbBeller as Chair of the Section. Herbhas provided superb support andinput to me during my term, and I amconfident that he is fully prepared toassume leadership of the Section. Ilook forward to watching the Sectioncontinue to grow in importance underHerb’s leadership.

Last, but by no means least, Iwant to thank the entire staff of the

Section and particularly our Director,Christine Brunswick. Most membersare unaware of the incredible amountof staff effort that goes into every-thing the Section does, from publica-tion of the Newsletter to mediaoutreach to successful meetings.Christine and her staff make it alllook effortless, but that is onlybecause they are so good at whatthey do. Our staff is one of the finestin the ABA, and we are very proudof them. The Tax Section could not function without their efforts and support.

In summary, it has been an honorand a privilege to serve as the Chairof the Tax Section for the past 18months. I am confident that theSection is in a leadership position inthe tax arena, and I look forward towatching as the Section continues itsrole as the voice of the legal profes-sion in tax matters. �

CHAIRFROM PAGE 5

FR

OM

T

HE

C

HA

IR


9

CO

UN

CI

L

AC

TI

ON

S

COUNCIL ACTIONSBy N. Susan Stone, Secretary, Houston, Texas

The Council of the ABA Sectionof Taxation met on May 9, 2002,

at the Spring Meeting of the Sectionin Washington, DC. The Councilheard reports and took action on thefollowing topics.

MJP COMMISSIONRULE 5.5

Stef Tucker, one of the Section’sDelegates to the ABA House ofDelegates and former Chair of theSection, led Council in a review ofproposed Rule 5.5 and associatedcomments recently released by theABA Commission on Multijurisdic-tional Practice (“MJP Commission”).Proposed Rule 5.5, which addressesthe unauthorized practice of law in amultijurisdictional practice context,contains at least two provisions thatwould typically allow a tax lawyer topractice in a state other than thestate where he or she is licensedwithout being deemed to beengaged in the unauthorized prac-tice of law. Among other excep-tions to unauthorized practice,proposed Rule 5.5 provides that

a lawyer admitted in onestate may provide legal

services on a tempo-rary basis in another

state if those tempo-rary services rea-

sonably relate tothe lawyer’s

practice in thejurisdiction in

which thelawyer is

admitted. Furthermore, a lawyeradmitted in one state may providelegal services in another state,whether or not on a temporary basis,if the services are those that thelawyer is authorized by federal orother law to provide in another state.After discussion, Council unanimous-ly agreed to join other sections of theABA in supporting proposed Rule5.5. Proposed Rule 5.5 will be debat-ed by the ABA House of Delegatesduring the ABA Annual Meeting inWashington, DC, in August 2002.

DIVERSITYCOMMITTEE REPORT

Jessica Hough and WayneHamilton, both Co-Chairs of theCommittee on Diversity, delivered areport to Council on the goals andaccomplishments of the Committee.The Committee’s twin goals are: (1)to recruit minority attorneys to theSection, and (2) to encourage andenable minority attorneys to takeleadership positions within theSection. Recent Committee accom-plishments include completion of theCommittee’s web page, the cospon-sorship with tax practitioners of vari-ous career panels for minoritystudents at New York, Chicago andBoston universities, and participationof minority attorneys on panels spon-sored by Section substantive commit-tees. Council commended theCommittee for its hard work and con-tinued progress.

LAW STUDENTINVOLVEMENT

Council considered steps toencourage and increase the

involvement of law studentsin the activities of the Tax

Section. Dick Lipton,Section Chair, report-

ed that the ABA actively encourageslaw student memberships and that theABA dues for law students are low.Mr. Lipton further reported that mostsections provide free section mem-berships for law students. Councilconsidered the fact that younglawyers are more likely to join theTax Section if they become familiarwith the benefits of Section member-ship during their law school years.After discussion, Council unanimous-ly agreed to provide free Sectionmembership for law students.Council also agreed that the ViceChair-Administration has discretionto approve reimbursement for a lawstudent’s travel expenses if the stu-dent has worked on a project that willbe presented at a Section meeting.Council further agreed that a requestfor reimbursement must be submittedto and approved by the Vice-ChairAdministration before any commit-ment is made to a student regardingreimbursement.

SECOND READING OFSTANDARDS OF TAXPRACTICE STATEMENT2001-1

Charles Pulaski, Vice Chair-LawImprovement of the Committee onStandards of Tax Practice, led thesecond reading of proposedStandards of Tax Practice Statement2001-1 (the “Statement”). Mr.Pulaski reported that the proposedStatement articulates standards ofacceptable practice in the preparationand distribution of written tax opin-ions. After significant discussion byCouncil regarding the application ofthe proposed Statement’s definitionof a “tax opinion,” Council did notapprove a motion to return the pro-posed Statement to the Committeefor publication. �


PO

IN

TS

T

O

RE

ME

MB

ER 1 0

JUST THE FACTS,PLEASE: SUBSTANCECAN PREVAIL OVER FORM

by Edward Kessel and Kathleen A.Stephenson, Philadelphia, PA

In his “Practice Strategies”column, which appeared in the

March 2002 ABA Journal, ProfessorJames W. McElhaney’s alter ego,Angus, states that there are fourthings required of any brief—thelegal setting, the issues, the statementof facts, and the legal argument. Hethen persuasively argues that of thefour, the most important element isthe statement of facts. Those of uswho live in the arcane, esoteric worldof the tax code can be in danger ofgetting hung up on the legal argu-ment and giving short shrift to thefacts. Here are just a few examples ofthe dangers inherent in doing so.

In the days before charitableremainders were required to be in theform of a unitrust or annuity trust,Mary Cotton Wood established a tes-tamentary trust to pay the income toher brother-in-law for life and, uponhis death, to distribute one-sixth ofthe corpus to each of two charities.The trustee was also authorized topay to the brother-in-law so much ofthe principal as the trustee deemednecessary to provide for his “support,

maintenance, welfare and comfort.”The Service denied a charitablededuction, maintaining that the termsof the trustee’s powers of invasionwere subjective in character and wereso broad as to be incapable of beingconfined within any ascertainablestandard. In other words, the standardsfor invasion of principal were so looseas to be virtually nonexistent, or, atleast were incapable of being translat-ed in terms of money. The Tax Court ruled otherwise. Wood v.Commissioner, 39 T.C. 919 (1963).

Just three and a half years later, atax attorney, relying on the Woodcase, again asked the Tax Court todecide whether a trustee’s power toinvade principal for the “welfare andcomfort” of the income beneficiariesof a charitable remainder trust madethe value of the charitable remainderunascertainable. Judge Raum stoodwith his interpretation of the law, asset forth in the Wood decision, but,this time, ruled in favor of theService and denied the charitablededuction, reasoning that: “[T]hemere fact that the will fixes measura-ble limits to the power of invasion isnot sufficient to justify the claimeddeduction. It must appear further thatthe possibility of invasion, with itsconsequent diversion of corpus fromthe charitable donee, is so remote asto be negligible. . . . And it is at thispoint that petitioner has failed tocarry its burden of proof. . . .Thequestion is purely one of fact andmust be examined in the light of therecord made by the parties.”Buckwalter v. Commissioner, 46 T.C.805 (1966) (emphasis added).

The same legal concept of “ascer-tainable standard” arises in the con-text of treating gifts by one spouse ashaving been made one-half by eachspouse under section 2513 of theInternal Revenue Code. In this areathe case law again demonstrates thateven though the language of the doc-ument may meet the legal standard, itis still necessary to apply that stan-

dard to the facts of the case. InRobertson v. Commissioner, 26 T.C.246 (1956), Mr. Robertson created atrust to pay the income to his wife,along with so much of the principalas deemed necessary for her mainte-nance and support, “giving dueregard to her other sources of funds.”The remainder in the trust was givento third parties. Mrs. Robertson con-sented to treating the gift of theremainder as a split gift. This time itwas the Service that rested on a legalargument that the trustee’s power todistribute principal to the wife madethe gift to the remainder beneficiariesunascertainable and, therefore, thedonor was not permitted to split thegift. However, the Tax Court held thatthe trustee’s power to invade princi-pal was restricted by an ascertainablestandard and that the taxpayer’s evi-dence proved that, in applying thatstandard, there was no likelihood thatprincipal would be invaded. Thecourt therefore allowed the taxpayersto treat the transfer as having beenmade one half by each spouse.

Falk v. Commissioner, T.C. Memo1965-22, refined the result inRobertson. In Falk, the trustee’spower to distribute income and prin-cipal to the donor’s spouse were bothheld to be governed by ascertainablestandards. After examining the cou-ple’s finances, however, the TaxCourt found that in the event of thedonor husband’s death there wouldbe a possibility that the trustee wouldbe required to distribute income tothe wife, but that there would be noreason, under the standard, to distrib-ute principal. Since the facts, asdeveloped, showed that it was notpossible to quantify how much of theincome might be used for the benefitof the spouse, and how much wouldnecessarily benefit parties other thanthe spouse, the Court did not allowthe value of the income interest to betreated as having been made one-halfby each spouse. Nevertheless, sincethe facts showed that there would be

POINTS TO REMEMBEREditor’s Note: POINTS TOREMEMBER are individual sub-missions to the Newsletter fromAssociate Editors and Section ofTaxation members with insights toshare. Although these items aresubject to selection and editing, theSection conducts no systematicreview of them. Accordingly, eachitem states the view of the individ-ual contributor and does not neces-sarily represent the views of theABA or of the Section of Taxation.We welcome new submissions aswell as responses to previously pub-lished material found in this sec-tion.


1 1

PO

IN

TS

T

O

RE

ME

MB

ER

no invasion of principal, gift splittingwas allowed as to the remainder.

Buckwalter, Robertson and Falk alldemonstrate the importance of build-ing a strong factual record to supportour legal arguments. In each case, theresult did not turn on the legal issueof whether there was an ascertainablestandard but, rather, on whether thefacts established a likelihood thatincome or principal would be invadedunder that ascertainable standard.

This brings us to several morerecent cases dealing with family lim-ited partnerships. The Tax Court hasindicated quite clearly, in Strangi v.Commissioner, 115 T.C. 478 (2000),and in Knight v. Commissioner, 115T.C. 506 (2000), that family limitedpartnerships will be respected forestate and gift tax purposes, and thatto the extent that the partnershipagreements create impediments forpartners who wish to gain access tothe assets of the partnership, thevalue of the partnership units willreflect discounts to account for those impediments.

Given this legal analysis, considerthe following. Within a year of herdeath, Dorothy Schauerhamer createdthree limited partnerships, one witheach of her three children. In eachpartnership Dorothy held a 1% inter-est as general partner and a 95%interest as limited partner. Her chil-dren each paid for and held a 4%general partnership interest in thepartnerships. Dorothy then funded thepartnerships with substantial assetsand followed that with transfers toher children of some of her limitedpartnership units in the three partner-ships. Each transfer was not subjectto gift tax by virtue of annual exclu-sions. After her death, the Servicerevalued the partnership interestsremaining in the estate as if the threepartnerships did not exist and includ-ed in her gross estate all the assetsshe had used to fund the partnerships,as transfers with a retained life estateunder section 2036(a)(1).

Had the Tax Court simply appliedthe logic it later espoused in Strangiand Knight, the Schauerhamer part-nerships should have been valued at a

discount. However, the court lookedbehind the partnership agreementsthemselves. Dorothy, in contraventionof the partnership agreements, haddeposited the income earned by thepartnerships into her own personalchecking account, where it was com-mingled with income from othersources. Furthermore, Dorothy’s chil-dren testified that they knew Dorothywas depositing the funds into her per-sonal account and they also acknowl-edged that the assets and incomewere to be managed exactly as theyhad been before they were transferredto the partnership. The Tax Courtruled for the government, holdingthat the facts did not support the exis-tence of a partnership. Dorothy’sactions ignored the partnership andso did the court, finding an impliedagreement that Dorothy retained pos-session and enjoyment of the eco-nomic benefits of the underlyingassets. Schauerhamer v.Commissioner, T.C. Memo 1997-242.

Likewise, in Reichardt v.Commissioner, 114 T.C. 144 (2000),the decedent transferred, during hislifetime, virtually all of his propertyto a family limited partnership.However, after the transfer he contin-ued to control all of the notes receiv-able, investment accounts, and cashin the same manner as he had beforethe transfer. He commingled partner-ship assets with his own and contin-ued to live in the house that he hadalso transferred to the partnership.Although the estate argued that thedecedent’s fiduciary duties as a gen-eral partner (and as trustee of a trustwhich served as one of the limitedpartners) affected his ability to retainthe enjoyment of the transferredassets, the Tax Court saw otherwise.The fact that the other partners didnot limit his actions was taken asproof that there was an impliedagreement to allow the decedent tocontinue to enjoy the partnershipproperty. Again, the partnership formfailed to deliver the expected dis-count to taxable value.

Family limited partnerships havebecome a favored estate planningtool. If the partnership, in addition to

providing benefits such as simplifiedmanagement within a fractionalizedownership, is also to provide thebenefit of a discount to taxable valuefor estate and gift tax purposes, it iscritical that the partners respect thepartnership form and follow, to theletter, the terms of the partnershipagreement.

These cases are a telling reminderof the importance tax planners mustplace on building a firm factual base.We must not only provide an efficienttax structure but must also impressupon our clients the importance ofbehaving in a manner that is consis-tent with that structure. Actions willoften speak as loud, if not louder,than words. Arguments that preferform over substance are destined tobe rejected, and our clients’ actions,which will become the facts of anycase that subsequently arises, mustcreate that substance. These casesoffer a cautionary tale—one whichmany of us would be wise to pass onto our clients.

ALIMONY AND CHILDSUPPORT: PLANNINGOPPORTUNITIES

by David L. Silverman,Great Neck, NY

GENERAL PRINCIPLES

Tax planning in the context ofdivorce requires familiarity with

sections 71 and 1041, the first ofwhich governs the taxation of alimo-ny (support) payments and latter ofwhich sets forth the general rule ofnonrecognition with respect to prop-erty transfers incident to divorce. As Iwill discuss in this Point, some famil-iar tax principles cease to apply whensection 1041 is applicable. For exam-ple, a recent ruling, Rev. Rul. 2002-22, 2002-19 I.R.B. 849, examines theincome tax consequences of transfersof nonstatutory stock options orrights to deferred compensationbetween divorcing spouses and holdsthat the assignment of income doc-trine does not apply. In addition,


PO

IN

TS

T

O

RE

ME

MB

ER 1 2

certain rules operate to discourage“alimony” payments that tend to dis-appear upon the emancipation of achild. To a considerable extent, thisproblem can be diminished by carefultax planning. The structuring of alimo-ny payments presents an opportunityto utilize careful tax planning toachieve a fair and tax-favored resultfor both parties.

FLEXIBILITY IN TAX PLANNINGFOR ALIMONY PAYMENTS

A payment will be deductible asalimony under section 215 only if itfits the definition of alimony or sepa-rate maintenance payment providedby section 71(b). Section 71(b)defines alimony or separate mainte-nance payments as payments made toor on behalf of a spouse pursuant to awritten divorce or separation agree-ment. Among other requirements,such payments must terminate at the death of the payee spouse. I.R.C.§ 71(b)(1)(D). The Tax Reform Actof 1984 eliminated the requirementthat alimony payments be “periodic”and be made in discharge of a legalobligation of support. See Temp.Treas. Reg. § 1.71-1T(a), Q & A 3.

Parties may therefore structureagreements so that alimony paymentscontinue following what would other-wise have been a terminating event,such as the remarriage of the payeespouse (which would have terminatedthe support obligation). A provisionrequiring alimony payments evenafter the recipient spouse remarriesmight appeal to the payor spouse,since it would provide an incentivefor the recipient spouse to remarry.

The elimination of the supportrequirement also facilitates the struc-turing of an overall settlement whereilliquidity exists. To illustrate:Assume that spouse X’s business isworth $1 million and comprises thepredominant asset in the maritalestate. However, no portion of thatasset can be allocated to spouse Y ina settlement because the asset is indi-visible, as is, for example, a profes-sional license. Assume further thatthe parties agree that a court would

award spouse Y $15,000 per year forten years in spousal support, butspouse X lacks the cash with which topay such an award. One solution tothe illiquidity problem would be forspouse X to make payments supple-menting the assumed spousal supportaward as a proxy for an even alloca-tion of the illiquid net marital estate.These payments, being a substitute forproperty division, could be designedto survive otherwise terminatingevents, such as remarriage or death ofspouse Y. (Recall that payments con-tinuing after the death of the recipientspouse do not constitute alimony fortax purposes, and consequently are notdeductible by the payor spouse.Payments continuing after the remar-riage of the recipient spouse could,however, qualify as deductible alimo-ny payments.)

A frequent objective in structuringalimony payments is to time adiminution in payments with theemancipation of a child. The problemis that section 71(c) provides thatamounts paid for child support willnot qualify as alimony and the regu-lations make it clear that amountswill be treated as child support if theyare either reduced “(a) on the hap-pening of a contingency relating to achild or (b) at a time which can clear-ly be associated with such a contin-gency.” Temp. Reg. § 1.71-1T(c) A16. Nevertheless, the regulations cre-ate a presumption which has theeffect of creating a safe harbor. Thus,Temp. Treas. Reg. section 1.71-1T(c),Q & A 18, provides that a reductionwill be presumed to be “clearly asso-ciated” with a contingency relating tothe child if (i) the payments arereduced within 6 months before orafter the date when the child reachesthe age of 18, 21, or the local age ofmajority; or (ii) the payments arereduced on two occasions within oneyear, before or after another child ofthe payor attains the age of 18through 24. If the payments arereduced under either of these circum-stances an amount equal to the reduc-tion will not constitute alimony butwill instead be treated as non-

deductible child support unless thepresumption is rebutted.

Nevertheless, since the regulationsstate that if the terms of the presump-tion are not met, “reductions in pay-ments will not be treated as clearlyassociated with the happening of acontingency relating to a child of thepayor,” Temp. Reg. section 1.71-1T(c) A18, the presumption has theeffect of creating a safe harbor:reductions outside the presumptionwill not turn otherwise qualifyingalimony payments into non-deductible child support. Therefore, atermination seven months before achild reaches the age of 21 will notresult in recharacterization, but a ter-mination five months prior to theattainment of the same age will resultin recharacterization. Although multi-ple reductions will trigger recharac-terization under the second part oftest, circumstances may necessitatemultiple reductions. When multiplereductions would, but for tax conse-quences, be considered, the partiesmay be able to achieve a better over-all economic result by (i) schedulingonly a single reduction; (ii) foregoingthe second reduction; (iii) calculatingthe present after-tax value of the sec-ond foregone reduction; and (iv)reducing the payee’s share of the netmarital estate by the amount deter-mined under (iii). For example, if theparties would, but for tax considera-tions, schedule a second reduction of$5,000 effective for years six throughten, the reduction could be foregone,and the present after-tax value of$25,000 could instead be subtractedfrom the payee’s portion of the marital estate.

MAXIMIZING BENEFIT OF TAX-FREE TRANSFERS INCIDENTTO DIVORCE

Tax planning opportunities alsoarise in connection with the transferof property to a spouse incident todivorce. Under section 1041, no gainor loss is recognized on the transferof property from an individual to aspouse or former spouse incident todivorce, whether or not the transferor


1 3

PO

IN

TS

T

O

RE

ME

MB

ER

spouse receives consideration for thetransfer. Since no gain or loss is rec-ognized in such transfers, the trans-feree spouse takes a carryover basisin the property. If marital assets con-sist of properties with varyingdegrees of appreciation, equity wouldsuggest that each party receive a mixof property with the same relativedegree of built-in gain. If this is notpossible (e.g., one spouse retains thepersonal residence with a higherbasis), the parties may wish to com-pensate the spouse who takes thelower basis property since that spousewill be required to pay tax on all ofthe gain when the property is sold.

SALES OF PERSONALRESIDENCES

An important planning opportunityinvolving the sale of a residenceshould also not be overlooked: The$250,000 exclusion provided for bysection 121 is increased to $500,000for married couples filing a jointreturn. To preserve the full $500,000exclusion, the couple would berequired to file a joint return. There-fore, it may be prudent for the sale tooccur in a taxable year in which par-ties can still file a joint return.

REV. RUL. 2002-22 AND NOTICE2002-31 CLARIFY THE TAXTREATMENT OF TRANSFERSOF STOCK OPTIONS ANDDEFERRED COMPENSATIONRIGHTS INCIDENT TO DIVORCE

Under the laws of many states, stockoptions and deferred compensationrights earned by a spouse during mar-riage are subject to equitable distribu-tion. The question arises whethersection 1041 will operate to prevent arecognition event when stock optionsor deferred compensation rights aretransferred incident to divorce, andwhether the assignment of incomedoctrine will operate to provide thatthe transferor is taxed on the incomerecognized upon exercise of theoptions or receipt of the deferred com-pensation. In Rev. Rul. 2002-22, theService examined these issues.

In the factual situation presentedin Rev. Rul. 2002-22, Spouse A,employed by Corporation Y, received(i) nonstatutory stock options as partof A’s compensation, and (ii) rights tofuture income from two unfunded,nonqualified deferred compensationplans. With respect to the stockoptions, no amount had been includ-ed in A’s gross income because theoptions did not have a reasonablyascertainable fair market value upongrant within the meaning of Treas.Reg. section 1.83-7(b).

Rev. Rul. 2002-22 first stressedthe breadth of section 1041 and con-cluded that the transfer of the optionsand rights to retirement paymentswere not taxable events. The Servicereached this conclusion despite thefact that normally, under section 83,the exercise or arm’s length disposi-tion of a nonstatutory stock optionresults in income inclusion to theextent the fair market value of thestock subject to the option exceedsthe price paid. While recognizing thatthe transfer of stock options pursuantto divorce might well be consideredan “arm’s length disposition,” the rul-ing declined to hold that the transferof such options resulted in income tothe transferor.

That conclusion did not resolvethe question of who would be taxedupon exercise of the options orreceipt of the retirement payments.Although the assignment of incomedoctrine ordinarily imposes tax onthe person who earned the income,“the courts and the Service have longrecognized that [the doctrine] doesnot apply to every transfer of futureincome rights.” Applying the assign-ment of income doctrine in the con-text of divorce, the Serviceconcluded, would be “inappropriate”because it would be inconsistent withthe policy behind section 1041.Therefore, the Service concluded thatthe non-employee spouse would rec-ognize income at the time the optionswere exercised. The Service alsofound that the ownership rightsacquired by the non-employee spousewould yield income to the transferee

non-employee spouse under section83(a) of the same character and to thesame extent as if that non-employeespouse had been the person who pro-vided the services. Similarly, thetransferee spouse would be requiredto include in income amounts real-ized from deferred compensationrights in the taxable year in whichpayments were made (or made avail-able) to the transferee spouse.

Notice 2002-31, 2002-19 I.R.B.908, a companion announcement toRev. Rul. 2002-22, contains a propos-ed revenue ruling that discusses theFederal Insurance Act (FICA) andFederal Unemployment Tax Act(FUTA) consequences of the transfersdescribed in Rev. Rul. 2002-22.

First, the proposed ruling con-cludes that the transfer of nonstatutorystock options and nonqualifieddeferred compensation from anemployee to a non-employee spouseincident to divorce does not result in apayment of wages for FICA andFUTA tax purposes. This is the corol-lary of the result reached in Rev. Rul.2002-22, discussed above.

Second, the proposed ruling con-cludes that, for FICA purposes, whenthe non-employee spouse exercisesnonstatutory stock options, FICA tax will be imposed on that non-employee spouse to the extent thatthe fair market value of the stockreceived exceeds the exercise price ofthe option. According to the Service,this result is required because “noth-ing in section 1041 excludes pay-ments to a person other than anemployee from wages for purposes of FICA.” Moreover, the proposedruling holds that because the com-pensatory interests transferred undersection1041 to the non-employeespouse remain taxable for employ-ment tax purposes, the income recog-nized by the non-employee spouse isremuneration for employment andwages for purposes of income taxwithholding under 3402. The pro-posed ruling states that FUTA taxa-tion issues will be treated in amanner similar to that provided forFICA issues.


PO

IN

TS

T

O

RE

ME

MB

ER 1 4

Rev. Rul. 2002-22 is prospective.Until November 9, 2002, an impor-tant planning opportunity exists withrespect to both existing and newcourt orders and agreements. Withinthis narrow window of time, itappears that divorcing spouses mayelect whether the transferor or thetransferee will report income uponthe actual or constructive receipt ofdeferred compensation or the exerciseof nonstatutory stock options. Theruling effectively creates this electionby providing that the Service willapply assignment of income princi-ples to treat income attributable to aninterest in nonstatutory stock optionsand unfunded deferred compensationrights (or similar intangible rights) asgross income of the transferor pro-vided: (i) the options or rights weretransferred pursuant to a divorce; (ii)the transfer was required by a provi-sion of an agreement or court order;(iii) the agreement or court orderrequires that the transferor reportsuch income and that such income isshown to be reported; and (iv) theprovision or order precedes the dateof November 9, 2002.

To illustrate: Assume that divorc-ing spouses are structuring a divorceagreement to be executed prior toNovember 9, 2002. As part of theagreement, spouse X is to transfernonstatutory stock options to spouseY on December 31, 2002. The trans-fer of these options is not a taxableevent under prevailing law; nor doesRev. Rul. 2002-22 alter that result.However, Rev. Rul. 2002-22 affordsparties the opportunity to designate inthe agreement (or the court may des-ignate in its order) whether spouse Xor spouse Y shall be responsible forreporting income attributable to theexercise of the stock options. Recallthat as a result of companion Notice2002-31, the person responsible forreporting income will also berequired to pay applicable FICA and FUTA taxes as well.

Note that the application of theassignment of income doctrinerequires several affirmative steps: ifan existing or new agreement (or

court order) omits even one require-ment, e.g., that the provision be con-tained in the agreement or court orderbefore November 9, 2002, the resultwill be that the transferee will betaxed when the options are exercisedor the compensation is received.(Query what result would obtain ifthe agreement made all appropriatereferences to the required transfer,and to the transferor reporting theincome, but the document was notexecuted (or the Judge failed to signthe order) before November 9, 2002.In this case, although the transferormight be contractually required toreport income upon exercise of theoptions (or receipt of the income), thetransferee would be required to reportthe income as a federal tax matteraccording to the ruling.)

Note also that parties to an exist-ing agreement (or court order) mayalso be able to avail themselves ofthe “election” provided by Rev. Rul.2002-22 until November 9, 2002. Forexample, assume parties to an agree-ment (or court order) dated January1, 1990 provided for the transfer ofnonstatutory stock options onDecember 31, 1999. Although notcrystal clear, the ruling appears toprovide that parties even to thisagreement may amend the agreementto comply with requirements whichwould result in operation of theassignment of income doctrine uponexercise (or receipt) and the attendanttax liability to the transferor.

CONCLUSION

Careful tax planning between divorc-ing spouses can result in a loweroverall tax burden if a significant taxrate bracket differential exists.Section 71, which governs alimonypayments, now gives divorcingspouses considerable flexibility instructuring support obligations. Bystructuring agreements to continuebeyond a contingency which wouldnormally terminate support obliga-tions, divorcing spouses may resolvedifficulties associated with illiquidmarital estates. If parties contemplatethat payments should diminish as

children mature, the regulations pro-vide a safe harbor preventing theapplication of section 71(c), whichwould otherwise operate to precludethose amounts from being treated as alimony for federal income tax purposes.

The tax rule that no gain or loss isrecognized when property is trans-ferred between spouses incident todivorce also requires a careful plan-ning eye. For example, a party trans-ferring low-basis property might berequired to compensate the otherspouse for the built-in gain.

Finally, recently issued Rev. Rul.2002-22 and Notice 2002-31 providea blueprint for tax planning wheredivorcing spouses contemplate thetransfer of nonstatutory stock optionsor rights to nonqualified deferredcompensation. Henceforth, the recipi-ent spouse will be taxed when theoptions are exercised or the deferredcompensation is received. However,until November 9, 2002, parties to anew or an existing agreement mayelect to tax the transferor—evenmany years later—if certain technicalrequirements are met. This tax treat-ment is accomplished by virtue of the application of assignment ofincome principles.

After November 9, 2002, whenassignment of income principles willno longer apply, the transfer of non-statutory stock options and deferredcompensation will result in income tothe transferee when the options areexercised or the income is received.Moreover, but the transferee will alsobe treated as the employee for FICAand FUTA employment tax purposes.This result also illustrates the reachof section 1041, which provides fornonrecognition with respect to trans-fers between divorcing spouses.Since the transferee spouse may nothave expected to pay income oremployment taxes upon the exerciseof stock options or receipt of deferredcompensation, the tax implications ofthe transfer could affect the terms ofthe overall agreement. �


1 5

SP

EC

IA

L

RE

PO

RT

FEDERAL TAXCOLLECTION TRUMPSRIGHTS ACCORDEDBY STATE PROPERTYLAWS: FEDERAL TAXLIEN ATTACHES TOENTIRETIES PROPERTY

by Bernice J. Koplin,Philadelphia, PA

In United States v. Craft, 122 S. Ct.1414 (April 17, 2002), the

Supreme Court held that eachspouse’s interest in property held astenants by the entirety constitutes“property” or “rights to property” towhich a federal tax lien may attach.Craft thus stands for the propositionthat a federal tax lien for onespouse’s tax liability attaches toentireties property, and furthers atrend to subjugate state law fictions tofederal tax law in connection with thecollection of federal taxes. Althoughthe case left open the question of val-uation of such interests, Craft is sig-nificant both within and outsidefederal tax law.

First, Craft not only shows thatentireties property is not imperviousto attachment in satisfaction of thedebts of one of the owners, but alsocements a trend in this regard.Second, Craft suggests that partner-ships may be more desirable vehiclesfor holding property if asset protec-tion is a goal. In addition, theSupreme Court’s opinion in Craftraises significant issues which arebeyond the scope of this SpecialReport. Those include includewhether the principles enunciated bythe Court in Craft apply equally to allforms of property, real and personal,in states that have adopted some formof a multiple party account act;whether the Court’s shift away fromthe traditional protection of the fami-ly home for the stay-at-home spouse(Dissent, Scalia, Slip Opinion at 1)may have been addressed sufficiently

by the recent provisions in favor ofthe “innocent spouse,” and whetherthere is any potential impact on thedisclaimer of interests in entiretiesproperty as part of a married couple’sestate planning.

Craft is procedurally complicatedbecause it resulted from an appeal ofa case that went to the Court ofAppeals for the Sixth Circuit twicebefore reaching the Supreme Court,and because both Sixth Circuit deci-sions were divided. By contrast, thefacts of the case are simple. After aNotice of Lien was filed and in con-nection with their divorce, Don andSandra Craft jointly executed a quit-claim deed whereby Don purportedto transfer to Sandra his interest in apiece of Michigan real property thatthe two of them had owned as tenantsby the entirety. It was Don’s interestin that property that was at issuebecause Don failed to pay federalincome tax liabilities assessed againsthim and a federal tax lien attached tohis “rights to property” under section6321. Section 6321 is the general ruleof attachment, and provides that theunpaid amount of tax (after theService issues a notice and demandand the taxpayer fails to pay), includ-ing interest, penalties, and costs“shall be a lien in favor of the UnitedStates upon all property and rights toproperty, whether real or personal.”

Tenancy by the entirety is a formof ownership available only to mar-ried individuals, and pursuant to itownership is considered to be vestedin the marital unit “as if they were asingle personality.” See, e.g., Raffaelev. Granger, 196 F.2d 620, 622 (3rdCir. 1952). Accordingly, such proper-ty is not considered to be ownedexclusively by either spouse. In themajority of states that recognizeentireties ownership, neither spousehas a separate or severable interestthat can be reached by creditors, andbefore the Supreme Court’s decisionin Craft, it was the accepted wisdomthat federal tax liens could not gener-

ally attach in such states until theentireties form of ownership was bro-ken. See, e.g. Internal RevenueService v. Gaster, 42 F. 3d 787, 791(3d Cir. 1994)(despite propriety oflevy, Delaware law prohibited theService from using funds from anaccount held as tenants by the entire-ty to satisfy tax liability of onespouse); Raffaele, supra, (accountheld as tenants by the entirety underPennsylvania law renders ineffectivethe Service’s attempt to deal sepa-rately with or dispose of the interestof one spouse in derogation of theother spouse’s ownership of the entireproperty). Even under the minorityrule, the lien would attach, but theService had to wait to collect on thelien until the death of one of thespouses. See, e.g., United States v.Avila, 88 F.3d 229 (3d. Cir. 1996)(federal tax lien attaches to taxpayer-spouse’s life estate and right of sur-vivorship in the subject entiretiesproperty and if taxpayer-spouse predeceases nontaxpayer spouse,lien is extinguished), citing Freda v. Commercial Trust Co., 118 N.J. 36 (1990).

When Sandra wanted to sell theproperty the Service agreed to releasethe lien and allow her to sell theproperty, but required that half thenet proceeds be held in escrow pend-ing determination of the Govern-ment’s interest in the property. Dondied during the pendency of thesevarious proceedings, and Sandrabrought an action to quiet title to theescrowed proceeds. The DistrictCourt granted summary judgment for the government, holding that thefederal tax lien attached to Don’sinterest in the tenancy by the entiretyat the moment of transfer to Sandra,and that the transfer to the buyerswas invalid as a fraud on creditors.Craft v. United States, 94-2 U.S. TaxCas. (CCH) P50493 (W.D.Mich.1994). The parties cross-appealed, Sandra challenging the lienand the Service challenging the

SPECIAL REPORT


SP

EC

IA

L

RE

PO

RT 1 6

amount of the invalid transfer. Amajority of the Sixth Circuit panelreversed on the issue involving thefederal tax lien, holding that no lienattached because Don had no sepa-rate interest, or any severable futureinterest, in the entireties propertyunder Michigan law, and remandedthe case to the District Court on theissue of the fraudulent transfer. Craftv. United States, 140 F.3d 638, 644(6th Cir. 1998)(hereinafter “Craft I”).

On the fraudulent transfer issue,the court held that Don Craft’s actionof paying the mortgage while insol-vent had effectuated a type of fraudu-lent conveyance under Michigan lawbecause the payments had placednon-exempt funds beyond the reachof a creditor (the Service), thusenhancing the value of the entiretiesproperty by the amount of the pay-ments. 233 F.3d at 371-372.Nevertheless, both the District Courton remand, 65 F. Supp. 2d 651, 657-659 (W.D. Mich. 1999), and theSixth Circuit, 233 F.3d 358, 370 (6th

Cir. 2000)(hereinafter “Craft II”),later concluded that since the federaltax lien could not attach to the prop-erty under Michigan law, then payingthe mortgage on it could not consti-tute a fraudulent conveyance. Thisresult was described by the SupremeCourt as “somewhat anomalous” inlight of its holding, which empha-sized that in future cases this ques-tion would undoubtedly be answereddifferently. Slip Opinion at 14-15.

Although Michigan considersentireties property to be a form ofsingle ownership and characterizesits tenancy by the entirety as creatingno separate or severable individualrights except survivorship, theSupreme Court, validating theDistrict Court and the concurrencesin both Sixth Circuit decisions, deter-mined that each spouse had manyother kinds of rights under Michiganlaw in addition to survivorship. Ineffect, the Court found that the tenan-cy gave each spouse a bundle ofsticks, not just one stick. While theCraft court did not address directlythe question whether rights heldunder a state’s law which gives the

spouse only the right of survivorshipwould also qualify as “property” or“rights to property” under section6321, it would be consistent with theSupreme Court’s holding that if aspouse has at least one property“stick,” such spouse has “rights inproperty” within the meaning of sec-tion 6321, and that the bigger thebundle of “sticks,” the more valuablethe bundle of rights should be. Theemphasis by the Craft Court on aspouse’s “rights in property” utilizedand thus validated the analysis of theDistrict Court, which had initiallydetermined that the lien did not attachto the property per se, but insteadattached to the spouse’s “rights inproperty,” 65 F. Supp. 2d at 651.

The dissent in Craft I had correct-ly pointed out that the majority ofthat panel had erred by accepting atface value Michigan’s description ofthe property interests held by a tenantby the entirety, rather than looking atthe substance of those interests. Theconcurring judge in Craft I had chal-lenged the majority’s reversal of theDistrict Court by agreeing with theDistrict Court that the legal land-scape in Michigan had changed since1971 and that the case of Cole v.Cardoza, 441 F.2d 1337, 1343 (6thCir. 1971)(federal tax lien againstindividual taxpayer cannot attach toproperty held by that individual as atenant by the entirety), upon whichthe majority relied, was antiquatedbecause it did not assure the collec-tion of federal taxes. 140 F. 3d at645. In describing this change inlegal landscape, the District Courtand the concurring judge in Craft Irelied upon United States v. NationalBank of Commerce, 472 U.S. 713,105 S. Ct. 2919, 2924, 86 L.Ed.2d565 (1985)(Service can levy on thejoint accounts of a delinquent taxpay-er even though state law did notallow ordinary creditors to do so),and emphasized that this changedlegal landscape was intended to facil-itate the collection of federal taxesdespite state laws that might frustrateother types of creditors. When thecase returned to the Sixth Circuit onthe issue of the lien attachment, the

Government argued that the SupremeCourt’s intervening decision in Dryev. United States, 528 U.S. 49, 120 S.Ct. 474 (1999) should cause thepanel to reconsider the result in Craft I. See also, Brett A. Bluestein,Disclaimers and Federal Tax Liens’Effect on Inheritances, 36 REAL

PROPERTY, PROBATE AND TRUST

JOURNAL 391 (2001), ClaudioOrsorio, Disclaimer of Intestate’sEstate Under Arkansas Law CannotPrevent Attachment of Federal TaxLien: Drye v. United States, 53 TAX

LAWYER 951 (2000).Nevertheless, the determination

that no federal tax lien attached to theentireties property was, according tothe majority in Craft II, the law of thecase which it could not reverse.Because the majority of the SixthCircuit in Craft II believed that it wasboth constrained by the law of thecase and the law of the Circuit, andthat the government was wrong, it dis-missed the Government’s claim and,in Craft II affirmed its decision inCraft I. The concurring judge in CraftII correctly pointed out that Craft Ihad reached the wrong result becausethat result was inconsistent withSupreme Court precedent, includingDrye, and that the Sixth Circuitshould have reversed Craft I. The con-curring judge emphasized his positionby paraphrasing language from Dryeand stating that he “believed that themajority in Craft I was ‘struck blind’by Michigan’s ‘legal fictions.” 233F.3d at 376. The Supreme Court’sreversal of the Sixth Circuit’s decisionin Craft II shows that the SupremeCourt refused to be “struck blind” inconnection with federal tax liens. Asthe Court itself explained, by decidingas it did it eliminated a perceivedabuse detrimental to the collection offederal taxes.

The Supreme Court’s analysis inCraft was consistent with the two-step analysis it had described inDrye. That analysis requires an initialdetermination of the state-definedrights the taxpayer has in the proper-ty the government seeks to attach,followed by an application of federallaw to determine whether such state-


1 7

SP

EC

IA

L

RE

PO

RT

defined rights qualify as “property orrights to property” under section6321. (See 120 S. Ct. at 481, 528U.S. at 58). Accordingly, in Craft theCourt first looked to Michigan lawand found that Michigan law gives anindividual spouse, among otherrights, the right to use the entiretiesproperty, the right to exclude othersfrom it, the right of survivorship, theright to become a tenant in commonwith equal shares upon divorce, theright to sell the property with theother spouse’s consent and to receivehalf the proceeds from such a sale,the right to encumber the propertywith the consent of the other spouse,and the right to block the otherspouse from selling or encumberingthe property unilaterally. The Courtthen determined that the rights grant-ed to a spouse under Michigan lawqualify as “property” or “rights toproperty” under section 6321, SlipOpinion at 8, because the broad statu-tory language authorizing the tax lien“reveals on its face that Congressmeant to reach every interest in prop-erty that a taxpayer might have,” cit-ing United States v. National Bank ofCommerce, 472 U.S. at 719-720, thepurpose of which was to assure thecollection of taxes, id. at 8, citingGlass City Bank v. United States, 326U.S. 265, 267 (1945). The Court rea-soned that a Michigan spouse’s sub-stantial degree of control over theproperty was sufficient to justifyattaching a federal tax lien to it, citingDrye v. United States, 528 U.S. 49(1999), and that a spouse’s ability uni-laterally to alienate the property wasnot required for the attachment of afederal tax lien, citing United States v.Rodgers, 461 U.S. 677 (1983).

The Craft Court further reasonedthat excluding such property from thepossibility of lien attachment would“exempt a rather large amount ofwhat is commonly thought of asproperty,” Slip Opinion at 10, andwould be equivalent to concludingthat “the entireties property wouldbelong to no one for the purposes ofsection 6321,” Slip Opinion at 11.This, the majority stated, would bean absurd result and would “allow

spouses to shield their property fromfederal taxation by classifying it asentireties property, thus facilitatingabuse of the federal tax system.” Id.According to the Court, no legislativehistory evidenced any Congressionalintent to exempt entireties propertyfrom the attachment of federal taxliens and the common-law back-ground of the tax lien statute was notenough to overcome the broad lan-guage actually used by Congress(Slip Opinion at 13-14).

Although the lower courts wereaware of the husband’s state-definedrights, including at minimum a con-tingent future interest in the property(which the dissent in Craft II hadpointed out), those courts had foundthe entireties property not subject tothe attachment of liens underMichigan law because “it is well-established that one spouse does notpossess a separate interest in anentireties property,” Craft I, 140 F.3dat 643-44. Accord, Gaster (Delaware),supra; Raffaele (Pennsylvania),supra. Prior to Craft, Michigan lawfollowed the majority rule, wherebythe federal tax lien of one spouseresulting from a separate tax liabilitydid not attach to entireties the proper-ty, rather, only a joint tax liabilitywould subject such property to a lien.

In states following the minorityrule, such as Massachusetts, a federaltax lien for one spouse’s separate taxliability attached to that spouse’sinterest in the property, subject to theother spouse’s right of survivorship.Geiselman v. United States, 961 F.2d1 (1st Cir.1992). See also Avila,supra. In cases involving such minor-ity-rule states, the Service typicallyattached the lien and then waited tosee if events, such as divorce (whichwould generally cause the property tobe owned as tenants in common, sub-ject to partition) or death (which ifthe debtor spouse died would causethe lien to be extinguished thus leav-ing the surviving non-debtor spouseowing the property free and clear ofthe lien) or if the non-debtor spousedied, the whole property would besubject to the lien as a result of thesurvivorship rights of the debtor

spouse, Avila, supra. Alternatively,the Service could commence a judi-cial proceeding to sell the propertyand obtain the value of the debtor-spouse’s interest.

Because Michigan followed theso-called majority rule, the disputethat the Supreme Court was calledupon to resolve was whether the fed-eral tax lien could attach to theentireties property at all. The lowercourts in Craft had considered per-suasive the restraint upon alienationof entireties property under Michiganlaw, in that one spouse could notalienate the property without the con-sent of the other. This restraint onalienation proved a double-edgedsword when it bolstered the SupremeCourt’s rationale that, because of it, aspouse thus exercises sufficient con-trol over the disposition of entiretiesto justify the attachment of a federaltax lien.

Craft, clearly a departure fromprior law and policy, was correctlydecided and protects the public fiscby facilitating the collection of feder-al taxes. It creates national uniformi-ty in connection with the attachmentof federal tax liens to entireties prop-erty. It cements the trend initiated inUnited States v. National Bank ofCommerce, supra, of eliminatingstate law fictions which hinder thecollection of federal taxes. AfterCraft, a state law which protectsentireties property from creditors nolonger affects the federal tax lien. Seealso, United States v. Rodgers, 461U.S. 677 (1983) (state law exemptionapplicable to spouse’s homesteadinterest does not prevent attachmentof federal tax lien); United States v.Mitchell, 403 U.S. 190 (1971) (statelaw allowing wife to renounce hercommunity property rights and obli-gations is ineffective for federal taxpurposes); United States v. Heffron,158 F.2d 657 (9th Cir. 1947) (stateexemption not valid once refund isoffset by IRS to student loan balanceowed by taxpayer); Bosarge v.United States, 5 F.3d 1414 (11th Cir.1993) (state exemption does not pre-vent federal interception of federalincome tax refund); Cort. v. United


SP

EC

IA

L

RE

PO

RT 1 8

States, 816 F. Supp. 574 (N.D. Cal.1992) (state law exemption applica-ble to wife’s state retirement accountdoes not prevent levy by IRS for hus-band’s back taxes); United States v.Riggs National Bank, 636 F. Supp.172 (D.D.C. 1986) (spendthrift trustestablished under state law may pre-vent creditors’ liens from attaching totrust corpus but is not effectiveagainst federal tax lien).

Inadvertently, the Court in Craftaffirmed the value of placing assetsin partnership solution for asset pro-tection, because it compared theattachment of a lien to a partner’sinterest in a partnership with theattachment of a lien to entiretiesproperty. The Court explained thatthe lien does not attach either to theentire partnership or to its underlyingassets, but merely to the offendingpartner’s interest in the partnership,upon which the Service may fore-close but may not compel a sale. SlipOpinion at 11-12.

Three justices in Craft separatelydissented, but these dissents wereexplained away by the majority opin-ion as proceeding from differentviews of the legislative history ofsection 6321, and from their dis-agreement on the question whetherinterests in property held by a part-nership and in a tenancy by theentirety ought to be treated similarly.As the majority explained: “This dis-parity in treatment between the twoforms of ownership, however, arisesfrom our decision in United States v.Rodgers, 461 U.S. 677 (1983) (holding that the Government may

foreclose on property even where theco-owners lack the right of unilateralalienation), and not our holdingtoday.” Slip Opinion at 12.

It is notable that in Craft the Courtdid not suggest that the value of theattached interest is equal to 50 percentof the value of the entire property(thus the entire amount of theescrowed proceeds), Slip Opinion at14, but remanded the case to the SixthCircuit to determine the proper valua-tion of the attached entireties interest.The valuation of such entireties inter-ests will probably become an impor-tant aspect of this body of law, andmight be as potentially burdensome tothe Service as the dispute overwhether such interests were subject toattachment. As one commentator hasalready suggested:

[T]he value of the tenancyowned by either spouse may besubject to significant discount-ing related to the limited rightspossessed by either tenant. Byanalogy, in the context of giftand estate taxes, significant dis-counts have been allowed forfractional interests related tosuch factors as lack of mar-ketability, lack of control andother similar factors, which aresimilar to the attributes of anindividual who owns propertyas a tenant by the entirety.

Mark L. Silow, Extending Creditor’sReach: United States v. Craft Allows Federal Tax Lien on Entireties, P3137 LEGAL

INTELLIGENCER 5 (Philadelphia,

May 14, 2002). It may be that thevalue of interests in entireties proper-ty will be so minimal or speculative,and their valuation so difficult andcontentious, that such lien attach-ments will be impractical in mostinstances. Accord, Freda v.Commercial Trust, Co., 118 N.J. 36,8 (1990), citing King v. Greene, 30N.J. 413-415, 153 A, 2d 49 (dissent).

I expect that in states where the law is similar to the law ofMichigan (such as Pennsylvania and Delaware), the Supreme Court’sfinding of separate, attachable prop-erty rights owned by each spousewill cause creditors to argue that theanalysis enunciated in Craft regard-ing entireties ownership permitsattachment of state law judgments aswell, even as they recognize that fed-eral tax liens maintain favored status,see, e.g. United States v. Irvine,supra, National Bank of Commerce,supra. Although Craft addressed onlythe federal tax law, it opened aPandora’s Box for other creditors.The legal landscape has changed, asreflected by the increasing number ofwomen in the workforce and theincreased protection of the innocentspouse provisions of section 6015 ofthe Code. I predict that the traditionalprotection of tenancy by theentireties ownership outside the fed-eral tax law will also be eliminatedfor state law judgments. Craft evi-dences a dramatic shift away fromthe social policy that sanctifiedentireties ownership and protectedthe antiquated values it embodied. �

could be subject to a tax lien. Bernice traces the development of the case and analyzes some of theits implications, both within the taxlaw and beyond it. I am sure we willhear much more about Craft in themonths and years to come, butBernice has provided us with anaccessible primer.

In the first Point to Remember,Ed Kessel and Kathleen Stephensonremind us of the importance of hav-ing the facts—what our clients actu-ally do—match the theory on whichour tax planning is based. We woulddo well to take their advice to heart.

In the second Point, DavidSilverman gives us a refresher courseon tax planning for divorce and dis-cusses the impact of recent guidanceon the income and employment taxconsequences of transfers of non-

qualified stock options and rights to receive nonqualified deferred compensation.

It has been an eventful year forthe Section. This issue brings the cur-tain down on one era, but I look for-ward to greeting you at the dawn ofanother, which will begin with thepublication of the Fall issue of theNewsQuarterly and the Section’smeeting in Los Angeles in October.Until then, enjoy whatever easy livin’you can find. �

EDITORFROM PAGE 4

ED

IT

OR


1 9

IN

TE

RV

IE

W

WI

TH

P

AM

EL

A

F.

O

LS

ON

Q Please describe the range ofmatters for which you are

responsible.

AThe Office of Tax Policy coverseverything tax-related, from leg-

islation to the content of Federal taxforms, to our international taxtreaties. We have responsibility fordeveloping the Treasury Department’sposition on legislation and for partic-ipating in hearings and mark-ups onlegislation before the Senate FinanceCommittee and the House Ways andMeans Committee. We are alsoresponsible for reviewing all the reg-ulations, revenue rulings, and rev-enue procedures that becomepublished guidance. We also reviewIRS forms and instructions, eventables that go on the IRS website.

The Office is composed of around110 people, about half lawyers andhalf economists. The lawyers and theeconomists work together on mostprojects very closely, but the econo-

mists tend to focus more on the leg-islative side—that is, the content oflegislative proposals—and thelawyers tend to focus more on theregulations and rulings and the tech-nicalities of drafting. Because thelawyers generally have significantprivate sector experience, their adviceon the real world impact of legisla-tive proposals and regulatory optionsis invaluable to the development andimplementation of sound tax policy.The economists tend to have moregovernment experience and serve asthe institutional memory for theOffice. They, too, are invaluable inthe development of sound tax policy.

QYou previously worked in thegovernment with the Office of

Chief Counsel from 1981 through1986, and in that capacity workedwith Treasury. What changes haveyou observed in IRS/Treasury opera-tions between then and now?

AWhen I joined the ChiefCounsel’s Office in 1981, I

started out in the field and thenmoved to the National Office andjoined the Legislation andRegulations Division. At that point intime, there was little coordinationbetween the Office of Chief Counseland the Treasury Department interms of the projects to which timewas devoted. The IRS would developand draft a regulation project, to thepoint in some cases of finalizing itwith the Chief Counsel and theCommissioner before anyone atTreasury reviewed it becauseTreasury’s resources were devotedelsewhere. But over the past 20 years,the Office of Tax Policy and theOffice of Chief Counsel have devel-oped a much closer working relation-ship to ensure that their priorities arealigned and that they are devotingresources to the same projects.

That effort was not well synchro-nized, however, until the business

INTERVIEW WITH PAMELA F. OLSON, ACTINGASSISTANT SECRETARY – TAXPOLICY, DEPARTMENT OF THE TREASURYby Jasper L. Cummings, Jr., Raleigh, NC, and Alan J.J. Swirski, Washington, DC

INTRODUCTION: Pamela F. Olson is the Acting AssistantSecretary (Tax Policy) for the U.S. Department of the Treasury,and was its Deputy Assistant Secretary (Tax Policy) until late April,2002. Prior to joining the Treasury in February 2001, Pam was apartner in the Washington, D.C. office of Skadden, Arps, Slate,Meagher & Flom, LLP, but she is no stranger to the public sector.She has had substantial experience with the Service, havingserved as a Special Assistant to the Chief Counsel, as well as anAttorney-Advisor in the Legislation and Regulations Division, anda trial attorney in District Counsel’s office in San Diego. Pam wasthe Chair of the American Bar Association Section of Taxationimmediately prior to her Treasury appointment, the first woman tohold the position. She received a B.A. magna cum laude (1976),J.D. (1980), and M.B.A. (1984) from the University of Minnesota.

PAMELA F. OLSON


IN

TE

RV

IE

W

WI

TH

P

AM

EL

A

F.

O

LS

ON 2 0

plan idea was first developed, whichwas several years after I left govern-ment. Preparation of the businessplan resulted in a clear effort to iden-tify the issues that both offices agreedrequired published guidance.Consequently, if the Chief Counsel’sOffice drafted guidance for a particu-lar issue, there was an understandingthat Treasury would review that proj-ect and would commit resources tomake sure that project got cleared forpublication. So, the bottom line isthere is much more coordination nowbetween IRS and Treasury than therewas 20 years ago.

There is also a greater focus inTreasury today on the administerabili-ty of the tax law and of guidance proj-ects being developed. We are notgoing to publish a guidance project assound tax policy if it can’t be adminis-tered. In fact, we would say that if itcan’t be administered, it is not soundtax policy. Determining what isadministerable requires a close work-ing relationship between Treasury andthe IRS. We have to take into accountthe views of the people in ChiefCounsel’s Office and the people in thefield at the IRS. The closeness of ourworking relationship has had a signifi-cant impact on the guidance publishedin the past year.

QYou were involved with thedefense of at least one fairly

high profile “tax advantaged transac-tion” in private practice. How has thatexperience affected your involvementwith government initiatives against“tax advantaged transactions”?

ANumber one, I know, based onmy experience in the private sec-

tor, that the IRS’s audit program isalive and well! I have no doubt theIRS has the ability both to identifyproblematic transactions and toaddress those transactions in appropri-ate fashion in the case of taxpayerswhose returns are routinely audited.So, I come to the job with a healthyrespect for the IRS examination teamsand what they are capable of doing.

That said, I also believe that thejob is more difficult for the IRS thanit should be. The tax law is much too

complicated. The complexity affordsopportunities for those who wish toavoid tax inappropriately. It makes itmore difficult for the IRS to detectand distinguish the inappropriate taxavoidance and easier for taxpayers toconceal inappropriate tax avoidance.The complexity and the belief thatinappropriate tax avoidance won’t bediscovered have corrosive effects.They lead to a frustration with therules, and they lend support to thoseinclined to noncompliance. The anec-dotal evidence suggests there hasbeen a growing tendency for taxpay-ers to take positions that may not rep-resent realistic assessments of thelaw—positions that probably won’tbe sustained on the merits. The com-plexity of the rules means the auditof taxpayers is more time-consumingand more difficult. More time-con-suming audits means fewer audits areundertaken. The result is that toomany taxpayers aren’t audited rou-tinely—or perhaps aren’t audited atall. Anecdotes, again, suggest manytaxpayers believe the IRS isn’t goingto audit them or won’t find the inap-propriate tax avoidance if the IRSdoes audit.

But we are working to change thatin several ways. One way is by issu-ing guidance that resolves ques-tions—like capitalization—that haveconsumed considerable auditresources with very little gain to theTreasury. Another is by issuingnotices identifying problematic trans-actions and setting out what webelieve to be the proper tax analysis.The audit process is resource inten-sive in the best of circumstances. It iseven more so if the rules are unclearor if their application is uncertain. Inthe long run, we can make the taxsystem function better by making therules as simple, clear, and straightforward as possible. So the secondthing we are doing is asking in all ofour guidance projects, how can wesimplify things? How do we writebright lines and clear rules to elimi-nate disputes and make crystal clearto taxpayers what their responsibilitiesare and to IRS examiners what isexpected of taxpayers? The third thingwe are doing is increasing transparen-

cy by encouraging disclosure.Increased transparency, of course, isthe foundation for the proposals thatwe put out in March. We can improvethe process significantly by encourag-ing taxpayers to disclose transactionson their returns to end the cat andmouse game.

Q Some practitioners believe weare seeing a gulf between what

the Tax Court thinks is the squishynature of the law with respect to ana-lyzing transactions, on the one hand,and what practitioners think the rulesare, on the other hand. What are yourthoughts on this issue?

AThere does seem to be a consid-erable gulf between some prac-

titioners’ view of the common lawdoctrines employed by the courts andthe Tax Court’s view of those doc-trines. There also appears to be somedistance among the courts in theirview of the meaning and applicabilityof the common law doctrines.

I think the courts’ view of thecommon law doctrines has changedconsiderably over the many decadesin which the doctrines have beenapplied. At one point, the doctrineswere clearly recognized as an aid instatutory interpretation and, in myview, limited to that. As interpretedand applied in a number of recentcases, however, the doctrines functionas something other than an interpre-tive aid. Now in many cases, theyseem to stand as sentinels, denyingentry to the tax code to taxpayerswhose facts don’t pass muster. I viewthat as a potentially troublesomedevelopment. When the doctrinesserve as an interpretive aid, they aretied to a particular statutory provisionand give us some certainty in howthey should be applied. If they arenot tied to particular statutory provi-sions, however, it is difficult, if notimpossible, to know when the doc-trines will be invoked. That is trou-blesome for taxpayers because itdenies them certainty and trouble-some for the government because ofthe loss of certainty and an attendantloss of deterrent effect.


2 1

IN

TE

RV

IE

W

WI

TH

P

AM

EL

A

F.

O

LS

ON

The common law doctrines arevital to the administration andenforcement of the tax law. I haveconcerns, however, about the extentto which we rely on anti-abuse andanti-avoidance concepts, many ofwhich are founded on those commonlaw doctrines, to avoid inappropriateresults. To go back to ConstitutionalLaw 101—or maybe this is Civics101—we are a nation of laws and notof men. To the extent Congress doesnot prescribe the rules in the statutesand the executive branch doesn’t pre-scribe the rules in regulations and werely on the courts to provide therules, I think we deviate from thatfundamental constitutional principle.By leaving it to the courts, which areafter all responsible only for inter-preting the law, we significantlyreduce the certainty that the resultsare going to be the same for every taxpayer.

Over the course of the last 15years or more, we have focused a loton anti-abuse rules as opposed to theprinciples that would more or lessachieve the right answer. That makesit hazardous for practitioners advisingclients, for taxpayers completing theirreturns or structuring transactions,and for the government, quite frankly. To the extent the anti-abuserules lead to results that are “heads Iwin—tails you lose,” we undercutrespect for the law and the tax sys-tem. And that, in the final analysis, isbound to have a deleterious effect on compliance.

I gave a speech about a year agoat the Tax Court Judicial Conferenceand expressed some of those con-cerns. In particular, I focused on thefact that over the course of the lastten years or so we have allowed anincreasing number of difficult issuesto be decided by the courts ratherthan by the Treasury Department andthe IRS prescribing regulations orrulings. The risk of relying on thecourts to decide what the rules are isthat courts aren’t designed to do that.To state the obvious, they are not leg-islatures. They are not rule-makingbodies. The role of the courts is todecide a case based on the facts pre-sented to them. A court’s decision

may be something that can be broad-ly applied. On the other hand, itmight not. A decision may be found-ed on a principle that makes sense inthe particular factual situation beforethe court but not in many others. Ithink that we have gone down a haz-ardous path with the extent to whichwe have relied on courts to establishthe rules. Not everyone in the audi-ence agreed with me, but I think Iprovoked a healthy discussion.

I believe the role of the courts isto interpret the law, not to make thelaw. I don’t believe we should putcourts in the position of making law,but that is what we have too often inrecent years turned to judges to do.

QWe are about two years outfrom the creation of the IRS

operating divisions and the reorgani-zation of Chief Counsel. How arethose reorganizations working out inpractice in your view?

A I think the reorganization of theIRS operating divisions was a

brilliant move, and I think it is goingto facilitate tax administrationtremendously in the future. The reor-ganization gives the IRS a muchgreater ability to know what is goingon—from the top all the way down tothe bottom. It provides an opportuni-ty for executives at the top, armedwith better information about what isgoing on in the market place, to senddirections down the chain on whereresources should be spent and howprograms should be focused. Thereorganization’s focus on customersegments will result in increasedinformation gathering and increasedinformation flow that will be atremendous aid in tax administrationgoing forward.

We are only beginning to see thefruits of the reorganization. Eventhough it has been some time nowsince the new customer segment divi-sions “stood up”—to use the manage-ment lingo—there is more work to dobefore everyone in the divisions has areally good understanding of exactlyhow they are supposed to change theway they do business. That is stillrolling out.

I think that the reorganization ofthe Chief Counsel’s side was muchless significant than the reorganizationon the Commissioner’s side of thehouse. If I had been responsible forthe Chief Counsel reorganization, Iwould have wanted a more fundamen-tal reorganization, probably furtherflattening the organization and puttingthe subject matter experts closer to thetop. There is still a need for more out-siders to join various parts of theorganization. I firmly believe that theonly way for government, includingthe Office of Chief Counsel, to staycompletely current in today’s marketis for experts to join the organizationwith the expertise they’ve gained inthe private sector.

There is still a disconnect betweenthe IRS National Office and the fieldoffices. The field needs to know whoto talk to in the IRS National Office.They need to be able to get responsesmore rapidly. There is still room forimprovement there.

Another problem is that it justtakes too long for Chief Counsel’sOffice to produce guidance, so B.John Williams and his team are work-ing to make that process more effi-cient and more effective. We reallywant to publish more guidance. I thinkthat once people understand that lead-ership in Chief Counsel’s Office andthe Treasury Department really intendto publish more guidance, then therewill be a greater interest in workingon published guidance projects andseeing them through to completion.The corporate area, in particular, hasbeen prodigious in turning out guid-ance. Other subject matter areas arebeginning to respond to the fact thatwe want to publish more guidance.B. John Williams is committed tomaking the office a more responsiveorganization. He has brought in anincredibly talented team to assist him,all of whom share his commitment. Iexpect very positive changes in thenear future.

QThere continues to be a viewstrongly held by many knowl-

edgeable tax professionals that thedrastic decline of the audit rate, par-ticularly as it relates to the “cash


IN

TE

RV

IE

W

WI

TH

P

AM

EL

A

F.

O

LS

ON 2 2

economy” (that is, small businesses),is a significant cause of both tax non-compliance and collection difficul-ties. Do you concur, and if so, whatis being done about it?

AMy perception is that the IRShas never had a really strong

audit program for the undergroundeconomy, that is for non-filers whoare completely outside of the compli-ance net. Treasury economists tellus—to my surprise—that the non-fil-ing underground economy may notbe the largest part of our complianceproblem. The largest part of our com-pliance problem is returns withexcessive deductions or some amountof unreported income. So the econo-mists think the larger tax gap isattributable to filed returns and not topeople completely in the under-ground economy.

The decline in the audit rate clear-ly is something that has to beaddressed and, I’m pleased to say, isbeing addressed. One way of lookingat the audit decline is to compare therestructuring of the IRS that precipi-tated the audit decline to an examplefrom history. In particular, to whenwe instituted wage withholding backin the Second World War. Inexchange for putting current wagewithholding on the books, we forgavean entire year of tax liability. I seethe restructuring of the IRS as some-what akin to that. We let a year ortwo go by while the IRS reorganizedand we changed procedures. Part ofthe drop off in the audit rate and incollection was inevitable. Particularlyon the collection side, it wasn’t possi-ble to change all of the procedureswithout it resulting in a drop off inthe number of seizures, liens, levies,and so forth.

I think the IRS has turned the cor-ner, however, and that the numberswill begin going back up. I expectthat there will be some rethinking ofthe procedural changes that weremade in the ‘98 Act as the IRS gainsexperience with them. Congress mayreconsider or adjust provisions thatmade auditing and collecting taxmore difficult than necessary to safe-guard taxpayers’ rights.

Perhaps the most important thingthat can be done to increase the auditrate, however, is for the IRS to re-engineer the audit process across theboard. The IRS has already begun there-engineering of some of its auditprocesses. We should begin to seemeaningful changes in this area soon.

One example of the re-engineeringcan be seen in the National ResearchProgram, which is underway. Thatproject is a replacement for the oldTCMP research program—a line-by-line, item-by-item, bring in everyreceipt, every cancelled check, everydocument for everything on thereturn kind of audit—that producedanalysis to allow the selection ofreturns for audit most likely to pro-duce adjustments. (The taxpayerswho were the subject of the TCMPaudits understandably objected to theprocess.) Under the NationalResearch Program, the IRS beginswith a pre-screen of the returns toidentify the soft spots deserving ofreview. Then, based on that pre-screen, the IRS will review the softspots identified. The auditors whowill conduct the National ResearchProgram will experience first handaudits focused on issues identified ashigh risk issues rather than a reviewof every single item on a return.

The same kind of re-engineering isgoing on in LMSB (Large andMidsize Businesses) right now asLMSB rolls out its partnership auditprogram. Rather than reviewingreturns line-by-line and verifyingevery item on the return, LMSB willfocus on particular issues identifiedon the return, from analysis of finan-cial statements, and from othersources of information that are avail-able to identify the issues that shouldbe reviewed on the return. Armedwith that information, auditors willselect the returns to audit and theissues to review, audit those issues,and then get out and move on to thenext taxpayer. This retooling of theaudit process is essential. It should,in the near term, result in a ramp upin the number of audits that are done.

QTreasury and the IRS recentlyannounced a group of initiatives

aimed at increasing disclosure ofquestionable transactions, plusincreased penalties for failure to doso. Is this in lieu of increased audits?Will the IRS have the personnel toevaluate the disclosures?

ANo, it is definitely not in lieu ofincreased audits. And, yes, we

do believe the IRS will have the per-sonnel to evaluate the disclosures. We want to increase disclosure be-cause we think disclosure is healthy.As Mark Weinberger said at the timethat we announced the initiatives, “Ifa taxpayer is comfortable enteringinto a transaction, a promoter is com-fortable selling it and an advisor iscomfortable blessing it, they shouldall be comfortable disclosing it to theIRS.” That is what the disclosure ini-tiative is all about. If it producessomething that reduces your income,or gives you a tax benefit, then wewant you to tell the IRS about it.

The disclosure initiative isbroad—broader than the scope ofthings likely to be questionable trans-actions. We were intentionally broadbecause we do not believe we cansatisfactorily define a universe ofquestionable transactions and limitdisclosure to that. So, we are requir-ing disclosure of some things that arenot questionable transactions. We willsee disclosures of some things thatclearly work under current law. Weexpect to see disclosures of somethings that work under current lawthat perhaps shouldn’t work undercurrent law. The disclosure of trans-actions that work under current lawbut that shouldn’t as a matter ofsound tax policy will give us an opportunity to consider legislative orregulatory changes to fix the problemon a going forward basis. Of greatestimport, however, is that disclosureshould give us information abouttransactions that really are problemat-ic, that really are questionable, andthat probably don’t work under cur-rent law so that we can address themby notices and by enforcement as appropriate.

SEE INTERVIEW, PAGE 31


2 3

SP

OT

LI

GH

T

ON

C

OM

MI

TT

EE

S

SPOTLIGHT ON COMMITTEESLOW INCOME TAXPAYERSThe Committee on Low Income

Taxpayers focuses on substantiveand procedural issues that affect low-income individual taxpayers, but itswork addresses many fundamental pol-icy and practical issues of interest totax professionals generally. Its activi-ties range from proposing legislation toproducing treatises and its work shouldbe of interest to anyone who caresabout how the tax system operates andhow it might operate more effectively.The Committee also provides a forumfor the concerns of those who mightotherwise not be heard.

Over the past year the Commit-tee’s programs have covered a broadrange of issues, many of which havepractical significance even for mem-bers whose practices do not involvelow-income taxpayers. Thus, in May,2002, the Committee presented apanel on Tax Court jurisdictionalissues, featuring Chief Special TrialJudge Peter Panuthos, IRS attorneyCarol Nachman, and leading academ-ics. The panel addressed the chal-lenging and important jurisdictionalissues raised by RRA 98’s changes tothe standards and procedure for seek-ing relief from joint and several lia-bility and its addition of “collectiondue process” procedures. A priorpanel had considered the confiden-tiality issues that tax representativesconfront in innocent spouse and othertax controversy cases. Another recentsession focused on the filing burdensthat low-income taxpayers face. Thatpanel included provocative presenta-tions by a government relations exec-utive from H & R Block, a consumerlaw advocate who addressed the chal-lenges of refund anticipation loans,

and representatives from SenatorBingaman’s office and from theCommissioner’s office, whoaddressed legislative and administra-tive approaches to the problem. Afuture panel will include a discussionof the substantive, procedural, andprofessional responsibility issuesraised by offers in compromise andshould be instructive even for mem-bers who do not usually representlow income taxpayers.

With the support of the TaxSection, the Committee has beeninstrumental in the growth of taxclinics nationwide. Not only was thefederal funding of tax clinics largelythe idea of two past CommitteeChairs, Nina Olson and JanetSpragens, but the enactment of legis-lation to provide such funding wasone of the most important develop-ments of RRA ‘98. In the past year,under the direction of Chair LeslieBook, the Committee has taken thelead in drafting a proposed resolu-tion, which, if adopted by the Sectionand enacted by Congress, wouldensure adequate funding for tax clin-ics and would also make it clear thatclinics should focus on controversyassistance and educational outreach.

The Committee has other ongoingprojects, as well. For example, theCommittee is currently working onan administrative guidance projectthat considers the Service’s possibleimposition of user fees in offer incompromise agreements. In addition,under the direction of ProfessorLeandra Lederman, the Committeehas created a useful website. TheCommittee has long been engaged ineasing access to Tax Court Summary

Opinions in small tax (“S”) cases,and searchable summaries of thoseopinions have now been added to theCommittee’s website. Since S casesdo not necessarily involve only low-income taxpayers, this service will bebeneficial to many members of theTax Section as a whole.

The Committee is especiallyproud of a project that resulted in thepublication of a treatise entitledEffectively Representing Your ClientBefore the New IRS. The treatiseresulted from the efforts of editorJerome Borison and other volunteers,and is now in its second edition. TheSection generously contributed acopy of the treatise to every federallyfunded tax clinic, and it has become avaluable resource for advocatesworking in tax clinics throughout thecountry. The treatise is also a valu-able resource for Section memberswho lack familiarity with the issuesthat low-income taxpayers confrontbut who wish to perform pro bonoservices or volunteer to work witharea tax clinics in representing low-income taxpayers.

Anyone interested in joining theCommittee or who has questionsabout it or about becoming involvedin doing pro bono work with a localtaxpayer clinic, should contact theChair, Leslie Book, [email protected], or visit the Committee’swebsite at www.abanet.org/tax/-lowinc. Current Committee membersmay register to join the Committee’slistserve by contacting ProfessorCharlotte Crane at [email protected]. �

REMINDER: Section members may apply to join committees with the online Committee Preference Format www.abanet.org/tax/groups/comember.html. You will need your eight-digit ABA member ID number and yourpassword (usually your last name) to access the form. If you do not know your ID number, contact the ABA Service Center at [email protected]. One Committee Rule: As of July 1, 2001, the Section hasrescinded its One Committee Rule. Section Members now may join as many committees as they like.


PR

O

BO

NO

AW

AR

D 2 4

THE TAX SECTION HONORS PRO BONOAWARD RECIPIENTS LIZ ATKINSONAND VICTORIA BJORKLUNDby Anita Soucy, Washington, DC*

* Anita Soucy is a member of the Tax Section’s Pro Bono Task Force.

ELIZABETH (LIZ) J.ATKINSON, NORFOLK, VA

Liz Atkinson of Kaufman &Canoles in Norfolk, Virginia

received the Pro Bono Award inrecognition of her outstanding com-mitment to delivery of pro bono legalservices. During 2001, Liz served asInterim Executive Director of TheCommunity Tax Law Project (CTLP)in Richmond, Virginia, a non-profitorganization that assists low-incometaxpayers in tax controversies and afederal grantee of the Internal

Revenue Service’s Low IncomeTaxpayer Clinic (LITC) program.Liz often volunteers to assist pro setaxpayers involved in litigation in theUnited States Tax Court. She alsorepresents low-income taxpayers inboth litigation and non-litigation pro-ceedings, including the submissionof offers in compromise and duringCollection Due Process (CDP) mat-ters. Liz’s firm, Kaufman & Canoles,is very supportive of her pro bonoactivities, and her commitment topro bono has inspired other attorneysat the firm to undertake pro bonorepresentation.

Liz’s commitment to pro bono rep-resentation began while she wasemployed by the Service. She workedwith the Volunteer Income TaxAssistance (VITA) program and later,upon receiving her law degree, volun-teered with Wayne County LegalServices in Detroit, Michigan. Liz for-merly served as a board member andan officer of Samaritan House, a shel-ter for victims of domestic violencelocated in Virginia Beach, Virginia.She continues to dedicate her time toCTLP by serving as a board memberof the organization.

Leslie Book, Assistant Professorat Villanova University School ofLaw and Chair of the Tax Section’sLow Income Taxpayers (LITP)Committee, nominated Liz for theaward because of her extraordinarydedication to pro bono representationof low-income taxpayers. ProfessorLeandra Lederman of George MasonUniversity School of Law, whoserves with Liz on the CTLP boardof directors and is Vice Chair-LawDevelopment of the LITP Commit-tee, commented, “Liz is a skilled anddedicated lawyer with a genuinecommitment to low-income taxpay-ers. Despite her busy practice, sheselflessly stepped in to lead CTLPwhen it needed an Interim ExecutiveDirector. Liz demonstrates by exam-ple the importance of pro bono work; she is an inspiration for othertax lawyers.”

Liz graduated from the Universityof Virginia in 1981 and received herlaw degree from Michigan StateUniversity Detroit College of Law in1993. She served in various positionswith the Internal Revenue Servicefrom 1982 to 1997, including as arevenue officer, a special proceduresadvisor and chief of the AdvisorySpecial Procedures unit. She laterserved as a field attorney withDistrict Counsel, Internal RevenueService, in Detroit, Michigan.

Liz is an active member of theSection’s Closely-Held BusinessesCommittee as well as the Co-Chairof the Collections Subcommittee of the Low Income TaxpayersCommittee. She also serves as anofficer of the Hampton Roads TaxForum, a non-profit group of tax pro-fessionals who conduct educational

INTRODUCTION: At the Plenary Session of the May 2002Meeting in Washington, DC, the Tax Section presented the firstPro Bono Award to Elizabeth (Liz) J. Atkinson of Norfolk, Virginia,and Victoria B. Bjorklund of New York, New York. The institution ofthe award reflects the Section’s commitment to the delivery of probono services and will remain a legacy of its Chair, Richard M.Lipton. The Section will present the Pro Bono Award each year toindividual attorneys or law firms that have demonstrated outstand-ing and sustained commitment to pro bono legal services, particu-larly with respect to federal and state tax law.

ELIZABETH J. ATKINSON


2 5

PR

O

BO

NO

AW

AR

D

seminars and liaison meetings withofficials from the Service as well asfrom state taxing authorities. Liz is amember of the Virginia State Bar’sTax Section Board of Governors aswell as the Virginia Bar Association’sTax Council.

VICTORIA BJORKLUND,NEW YORK, NY

Victoria Bjorklund, a partner withSimpson, Thacher & Bartlett in

New York City, received the ProBono Award for her extensive probono work both nationally and inter-nationally. Victoria serves as a direc-tor and pro bono counsel of theRobin Hood Foundation, providingfinancial and other assistance to grassroots organizations serving impover-ished residents of the New York Cityarea. She currently serves as probono legal counsel and previouslyserved as a director and officer forDoctors Without Borders, a non-prof-it organization offering emergencymedical relief which received theNobel Peace Prize in 1999.

Victoria has been especially activein pro bono matters since the terroristattacks in New York City. OnSeptember 11, 2001, Victoriawatched the destruction of the WorldTrade Center from her office window.After 9/11, she began to compiledocuments and various legal memo-randa concerning charitable disasterrelief and to post this information onthe Simpson, Thacher & Bartlettwebsite. On a pro bono basis,Victoria frequently advised exemptorganizations and other corporateentities regarding disaster reliefmethods, such as how to set up disas-ter relief funds consisting of employ-ee contributions. She performed probono legal work for the Tribeca FilmFestival, designed in part to encour-age travel and tourism to New York

City after the terrorist attacks.Victoria also assisted in the organiza-tion of the Concert for New YorkCity held on October 20, 2001,which raised $30 million for theRobin Hood Relief Fund. In addition,Victoria implemented an e-mail list-serve that reached over 500 people aday, consisting of daily e-mailupdates regarding legal developmentspertaining to corporate foundationsand charitable payouts as well as theidentification of populations andgroups requiring disasterrelief. Victoria recentlyspoke on “DisasterRelief after 9/11”at the plenary session of theSection’s mid-year meeting inNew Orleans thispast January.

David Saltzman,Executive Directorof the Robin HoodFoundation, describes thetremendous efforts that Victoriaexpended on the Foundation’s behalf after 9/11, including identify-ing victims of the terrorist attacks sothat the Foundation could providemonetary and other disaster relief forvictims’ families. David commented,

“Victoria Bjorklund is extraordinarilybrilliant, extraordinarily committed tohelping people and extraordinarilypatient with her pro bono clients.Without Victoria’s pro bono assis-tance, there is a very good chancethat the Robin Hood Foundationwould not exist today. Certainly wewould not be as successful in ourmission without Victoria and herteam at Simpson, Thacher &Bartlett.”

Victoria’s interest in pro bonoactivities began very early in herlegal career. Her first pro bono proj-ect as a summer associate atSimpson, Thacher & Bartlettinvolved the reorganization of a nurs-ery school for a pro bono client.Simpson, Thacher & Bartlett sup-ports Victoria’s pro bono work withexempt organizations as well as probono work in general. Victoria spentmany hours supervising and coordi-nating the firm’s pro bono work ondisaster relief.

Victoria currently chairs theSection’s Exempt OrganizationsCommittee and is a member of the

Section’s 9/11 Task Force. Sheserves as Vice Chair for

Exempt Organizationson the Service’s Tax

Exempt/Govern-ment EntitiesAdvisoryCommittee.Victoria wasnamed a DavidRockefeller

Fellow as a risingcivic leader in New

York City during1997-1998. She graduated

from Princeton University in1973 and received her Ph.D inMedieval Studies from YaleUniversity in 1977. Victoria receivedher law degree from ColumbiaUniversity in 1983. �

VICTORIA BJORKLUND


NE

WS

B

RI

EF

S 2 6

NEWS BRIEFS9/11 REMEMBRANCE

In its ongoing effort publish inthis Newsletter and on the websitethe names of members and friendslost as a result of the 9/11 tragedy,the Tax Section wishes to rememberthe employees of the New York StateDepartment of Taxation and Finance,including: Jeremiah Ahern, ErnestAlikakos, Yvette Anderson, JaphetAryee, Steven Berger, Eli Chalouh,Florence Cohen, James Domanico,Sareve Dukat, Clyde Frazier, Jr.,Dianne Gladstone, Harry Goody,Yan Z. (Cindy) Guan, MarianHrycak, Neil Lai, Chow Lam,Hyunjoon (Paul) Lee, Myoung Lee,Stephen Lefkowitz, Tyrone May,Robert Miller, Charles Mills, RichardMiuccio, Richard Moore, OscarNesbitt, Michael Ou, SalvatorePapasso, Diane Parsons, DennisPierce, William Pohlmann, GerardRauzi, Rose Riso, Jon Schlissel,Barry Simowitz, Yesh Tembe,Dorothy Temple, Diane Urban,William Valcarcel, Sankara Velamuri,Yuk Ping Wong.

Our deepest sympathies go out to their families.

SECTION DIRECTORYUPDATE

The Section of Taxation is in theprocess of preparing its annualDirectory of members. The Sectionwill generate the Directory frommember information in the ABAdatabase. Please note that onlySection members who register asmembers of a Section Committeewill be listed in the Directory. To verify that the ABA has your current information, please contactthe Member Service Center at800/285-2221, or complete theABA’s Online Change of AddressForm (www.abanet.org/members/join/coa1.html).

SECTION OF TAXATION “LASTWEDNESDAY” CLE SERIES AUDIOTAPES

The ABA Section of Taxation and the ABA Center for ContinuingLegal Education present audiotapes from the “Last Wednesday”

TeleConference Series. The panelists in each program offer uniqueand comprehensive perspectives on a wide range of tax law topics.

• Counselor or Conspirator? The Perilous Path of the BusinessLawyer Representing Clients in International Business Transactions(Ref. #T02COCA) • Making Something Out of Nothing: An Introductionto the Fundamental Principles and Uses of Disregarded Entitie (Ref.

#T02MSOA) • Tax Issues Pertaining to the Cancellation of Indebtednessand the Consequences of Bankruptcy (Ref. # T02TIPA) • Understanding

Civil, Criminal and Administrative Sanctions Against ReturnPreparers (Ref. #T02UCCA) • Off-Balance Sheet Financing: Uses of

Partnerships and Other Financial Instruments (Ref. #T02OBSA)

AUDIOTAPED SESSIONS FROM THE 2002 SECTION OF TAXATION MAY MEETING

• Estate Tax Phaseout and Repeal: What It Means for Real Estate TaxLawyers (Ref. #T02ETPA) • The Committee on Court Procedure &

Practice Speaks on the Latest News from the Courts, IRS, and DOJ(Ref. #T02CIDA ) • After Enron: Employer Securities in Qualified Plans

(Ref. #T02AEEA)

ORDER ANY AUDIOTAPE IN THE SERIES FOR $150

ORDER BY PHONE: 800.285.2221 M-F FROM 8:30 A.M. TO 6:30 P.M.EASTERN OR ONLINE: WWW.ABANET.ORG/CLE/CATALOG

COMING THIS FALL—TAX LINK LIVE

WHAT ENGAGEMENT LETTER?This fall, the Section will offer its second annual member benefit

“Tax Link Live” teleconference. The program—“What EngagementLetter?”, organized by members of the Tax Practice ManagementCommittee—will discuss the practical and ethical issues involved inopening, terminating, and managing client representations, with particu-lar attention to engaging and disengaging from representation. The panelwill cover the benefits and risks of detailing descriptions of the engage-ment, retainers and fee agreements, the growing trend to accept paymentby credit card, advance waivers of conflicts, use of clients’ names in firmmarketing materials, FTC privacy notice requirements, and recordsretention policies. The program materials will include an article, whichwill appear in the Fall NewsQuarterly, and sample letters and othermaterials, which will be available on the Section’s website. Check thewebsite for details. �


2 7

20

02

F

AL

L

ME

ET

IN

G

GENERAL INFORMATIONLos Angeles welcomes the Section

of Taxation to the 2002 Fall Meeting,October 17-19. Join us and takeadvantage of the opportunity to meetwith the country’s leading tax attor-neys and government officials to dis-cuss the latest federal tax policyinitiatives, regulations, legislativeforecasts, and planning ideas. Weinvite you to stay at the CenturyPlaza Hotel, which will serve as theSection of Taxation Headquarters, orthe newly renovated St. Regis Hotel,which is located next door. TheSection has also reserved rooms atthe Park Hyatt Hotel, which is justtwo blocks from the Century Plazaand St. Regis Hotels.

FREE AIRLINE TICKETSAt the Fall Meeting, the Section

will raffle two airline tickets for travelwithin the continental United States.All registrations postmarked or faxedby September 12, 2002, will be eligi-ble. The drawing will take place at theFall Meeting Section Luncheon.

REGISTRATIONFEE WAIVED

The Tax Section is pleased to beable to waive the 2002 Fall Meetingregistration fee for Tax Section mem-bers who have never attended a TaxSection meeting and for law studentsand LL.M. candidates. Meeting bene-fits include continuing legal educationprograms, legal publications, profes-sional development, networking, andaccess to up-to-date information. Toregister, use the Meeting Registrationform available in this Newsletter.

REGISTRATIONINFORMATION ANDADVANCE REGISTRATIONDISCOUNT

The Section is pleased to offer a15% discount to advance registrants.

To register for the 2002 Fall Meeting,please use the Meeting RegistrationForm in this Newsletter or on ourwebsite www.abanet.org/tax. Thefinal deadline to receive the advanceregistration discount is Thursday,September 12, 2002.

Your Meeting Registration Form,along with a full payment, must bepostmarked or faxed by Thursday,September 12, 2002, in order for yourname to appear on the Attendee Listand to be eligible for the discount andfree airline ticket raffle. Registrationswill be accepted after the September12th deadline (until October 10,2002); however they will be processedwith the “on-site” fee. Please note,once on-site, those who registerbetween September 13, 2002, andOctober 10, 2002, should pick up theirbadge and meeting materials at theadvance registration area.

REFUND POLICYAll cancellations and refund

requests must be made in writing andpostmarked or faxed by September12th to receive a refund. All refundrequests will incur a $50 cancellationfee. Absolutely no refunds will begranted at the Meeting. Direct allrefund requests to the MeetingRegistrar at the Section office.

HOTEL RESERVATIONSTo make reservations for any

one of the hotels, please use theHotel Reservation Form available inthis Newsletter. The deadline formaking reservations is Thursday,September 12, 2002. Please note thatthe Hotel Reservation Form shouldbe sent directly to the hotels, not tothe Section Office.

AIR TRAVELINFORMATION

American, Delta and US Airwaysare the preferred airlines for the 2002

Fall Meeting. To make airline reser-vations or to compare rate informa-tion, attendees should contact theairlines directly using the ABA refer-ence numbers provided below.

American Airlines 800/433-1790(Code: 14642)

Delta Airlines 800/241-6760(Code: 170348A)

US Airways 877/874-7687 (toll free) (Code: 21900057)

Attendees are encouraged to com-pare all options available, includingrates and restrictions between an air-line’s own zone fares and ABA rates.The ABA rates are available throughyour travel agent, directly from theairline, or from the ABA travelagency, Tower Travel Management at 800/921-9190.

CAR RENTALABA Members can receive special

rates through Hertz. Call 1-800/654-2230 and mention the ABA/HertzCDP #13000; TDD users dial 1-800/654-2280.

CLE AND ETHICS*CREDIT

Please note that you must be regis-tered for the meeting in order to beeligible to receive CLE or Ethicscredit. Accreditation will be request-ed for this meeting from every statewith mandatory continuing legal edu-cation (MCLE) requirements forlawyers. Please be aware that eachstate has its own rules and regula-tions, including its definition of“CLE.” The Uniform Certificate ofAttendance will be available at themeeting for both attendees andspeakers and will be included withthe Tax Section Meeting Materials.All eligible programs will belisted on the Uniform Certificate of Attendance.

2002 FALL MEETINGOCTOBER 17-19, 2002, LOS ANGELES, CA


20

02

F

AL

L

ME

ET

IN

G 2 8

Call the ABA Division forProfessional Education at 312/988-6217 for any questions pertaining toCLE credit.

SECTION LUNCHEONAND RECEPTION

As is customary, the SectionReception is scheduled on Fridayevening, and the Section Luncheonon Saturday followed by the PlenarySession. The Section of Taxationthanks LexisNexis™ for its generouscontribution and sponsorship of theFall Meeting.

SECTION EXHIBIT The Section of Taxation Exhibit

will take place on Friday andSaturday. Representatives from avariety of tax publishers and serviceproviders will demonstrate the latesttax law research methods and excit-ing new products to aid you in yourdaily practice.

MEETING MATERIALS &“COMM-ONLINE”

The Section Program MeetingMaterials will be available at the FallMeeting in print form and on CD-ROM in PDF and MS Word formats.You will receive the format based onwhat was indicated on your MeetingRegistration and Ticket PurchaseForm. The Meeting Materials containonly the material for the SaturdayPlenary and Section programs.Committee program materials will beavailable at Committee meetings, andwill be published following the meet-ing in the Selected CommitteeHandouts. Both the MeetingMaterials and Selected CommitteeHandouts print publications are avail-

able by subscription and for purchase separately.

In addition, materials will beavailable following the meeting onComm-Online—an innovative TaxSection and LexisNexis™ projectwhich gives members no-cost onlineaccess to hundreds of pages ofSection Program and CommitteeMeeting Materials. This service isavailable on the Section’s website atwww.abanet.org/tax/commonline/.

AUDIO TAPESAudiocassette tapes of committee

programs and the Section programswill be available for purchase on-siteas well as following the meeting.Produced by Teach’em, each programtypically consists of two cassettes andcosts only $20. To order, contactTeach’em at 800/776-5454, [email protected], or www.Teachem.net-/ABA.

COMPANION ACTIVITIESCompanion Activity tickets may

be ordered using the Registration andTicket Order Form found in thisNewsletter. Tickets are sold on a first-come, first-served basis.

FRIDAY, OCTOBER 188:15a.m.-9:30a. m.COMPANIONS’ BREAKFAST

This complimentary breakfast willbe held at the Century Plaza.

9:30a.m.-3:00p. m.NORTON SIMON MUSEUMAND LUNCHEON(Ticketed event: $75)

This companion tour will featureone of the world’s most remarkableart collections ever assembled. Sevencenturies of European art from theRenaissance to the 20th century areon view, including works by such

famous artists as Raphael, Botticelli,Rubens, Rembrandt, Zurbaran,Watteau, Fragonard, and Goya. TheMuseum boasts a particularly cele-brated Impressionist and Post-Impressionist collection withpaintings by Manet, Renoir, Monet,Degas, van Gogh, Toulouse-Lautrec,and Cezanne. In addition, there are20th century works by Picasso,Matisse, and the German Expres-sionists. Complementing the Westernart is an outstanding exhibit of Asiansculpture from India and SoutheastAsia spanning a period of 2000 years.

Lunch will be held at Bistro 45also located in Pasadena. Voted oneof the top 30 restaurants in SouthernCalifornia by a Zagat Survey, thiswell-loved art deco Cal-French bistrois an oasis of classy elegance withoutstanding cooking and a divinewine list.

SATURDAY, OCTOBER 199:00a.m.-1:00p. m.GETTY MUSEUM(Ticketed Event: $25)

The J. Paul Getty Museum col-lects and exhibits Greek and Romanantiquities, European paintings,drawings, manuscripts, sculpture,decorative arts, and European andAmerican photographs. Perhaps themost important element of the GettyCenter is its hilltop site in the SantaMonica Mountains. From there, visi-tors can take in prominent features ofthe Los Angeles landscape—thePacific Ocean, the San GabrielMountains, the vast street-grid of thecity. Inspired by this interplay, archi-tect Richard Meier sought to designthe complex so that it highlights bothnature and culture, creating a synchro-nistic, organic whole. The campus,clad largely in cleft-cut, Italian traver-tine, is organized around a central

WWW.ABANET.ORG/TAX/YOUR SOURCE FOR IMPORTANT TAX SECTION INFORMATION, INCLUDING:

• Section Newsletter and The Tax Lawyer Online • Upcoming Section Meetings• Comm-Online (online, searchable database of committee program materials)

• Recent Government Submissions and Testimony • Membership Directory • IRS Notifications • Careers • E-mail Discussion Groups • Consumer Information—TAXTIPS 4 U

• Extensive links to other helpful tax sites

QUESTIONS? Contact the Section’s Technology Specialist at [email protected].


2 9

20

02

F

AL

L

ME

ET

IN

G

arrival plaza, and offers framedpanoramic views of the city.

The 134,000 square-foot CentralGarden at the Getty Center is the work of artist Robert Irwin. A naturalravine between the Museum and theResearch Institute traverses a stream,which gradually descends to a plaza ofbougainvillea arbors, and ends in acascade of water over a stone waterfallinto a pool of azaleas floats. Aroundthe pool is a series of specialty gar-dens. More than 500 varieties ofplants are used in the landscaping ofthe Central Garden, making this tour aunique experience.

PRELIMINARY PROGRAM TOPICSA detailed description of the follow-ing programs and program scheduleare available on the Tax Section’swebsite at www.abanet.org/tax/.

COMMITTEE PROGRAMS

Administrative Practice:• National Research Program Debate• Tax Shelter UpdateCivil and Criminal Tax Penalties:• Gatekeeper Initiative: Will

Accountants and AttorneysBecome Enforcers?

• Abusive Tax Shelters and Pro-moter Penalties: A New Regime

• IRS Criminal Enforcement: WhenCivil Becomes Criminal

Closely Held Business:• Compensation Packages and

Issues for Executives of CloselyHeld Businesses

• Conflicts and Ethical IssuesInvolved in Representing theClosely Held Business: Avoidingthe Frying Pan and the Fire

• New Developments in BusinessSuccession Planning for theClosely Held Business

Corporate Tax:

• Earn-outs and Other ContingentPayment Arrangements in TaxableTransactions

Court Procedure and Practice:• Remarks on behalf of the United

States Tax Court• Spotlights on Ethics, Procedures,

and Privileges

• Remarks on behalf of the Office ofChief Counsel, Internal RevenueService

Employee Benefits Committee:• Securities Law for the Benefits

Lawyer• Distribution Planning for

Humongous Plan Assets• Sophisticated QDRO Problems

and Solutions• Roundtable Discussion with

William Sweetnam, Benefits TaxCounsel, Department of Treasury,Washington, DC

• Current Trends in ExecutiveCompensation

• Investment Education and Advice• Oldies but Goodies Resolved?:

Guidance on 10 or MoreEmployer and Experience RatedWelfare Plans, Using 401(k) Plansto Pay Retiree Health Premiums,and the Tax Implications of DCHealth Plans

• To Be or Not To Be a FiduciaryDiversity:

Tax Exempt ToolkitThis program will provide directors,executives, volunteers and othersassociated with small exempt organi-zations, a basic overview of the various laws and financial responsi-bilities faced by the average smallexempt organization. The “TaxExempt Toolkit” program is a contin-uation of a program that was cospon-sored by the ABA Tax Section’sDiversity Committee, ABA Commis-sion on Racial and Ethnic Diversityon the Profession, ABA BusinessLaw Section Nonprofit Committee,and the Asian and Asian AmericanStudies Department of LoyolaUniversity, Chicago, IL, which waspresented at the Tax Section’s 2001Annual Meeting in Chicago and atthe 2002 May Meeting inWashington, DC. Employment Taxes:• Significant Developments

Affecting Employment Taxes• Fior d’Italia – The Final Word by

the U.S. Supreme Court on the“Aggregate Method” for AssessingFICA Taxes on Tips

• The Secrets for SuccessfulTaxpayer Representation in

Federal and State EmploymentTax Audits in California

• Offensive and Defensive Strategiesfor Dealing with EmergingEmployment Tax Developments

• Harmonization of StateEmployment Tax Laws

• Employment Tax PractitionersWorkshop

Energy and Environmental Taxes:

• Climate Change and Tax PolicyEstate and Gift Taxes:• The Inheritance Trust—Planning

from the Bottom Up• Annual Checklist for Planning

Post-EGTRRA• Current/Recent Developments• Selected Ethical Issues for Estate

PlannersExempt Organizations:• IRS Form 1023 and the

Determination Process Today• Shaping the IRS Determination

Process of the Future• Report from the Task Force on

Updating the Private FoundationRegulations

• St. David’s, IHC HMOs and Sta-Home Health Agency: NewDevelopments in Health Care

• Corporate Philanthropy in thePost-9/11 World

• Developments in Low-IncomeHousing: StreamlinedDeterminations and the NewMarket Tax Credit

Fiduciary Income Tax:• Recent Developments• The Uniform Trust Act: Coming

to a Jurisdiction Near You?• Comparison of Charitable

Contributions by S Corporationsand Partnerships

• The Final ESBT Regulations• Qualified Settlement TrustsFormation of Tax Policy:

• The Role of Transfer Taxes in OurFederal Tax System

Individual Income Tax:• Tax Problems of Students and

Their Parents• Recent Supreme Court Bankruptcy

Decisions, Part IIInsurance Companies:

• Developments in Insurance andAnnuity Products

SEE PRELIMINARY, PAGE 31


20

02

F

AL

L

ME

ET

IN

G

HO

TE

L

FO

RM 3 0

2002 FALL MEETING HOTEL RESERVATION FORM

Please mail or fax entire form directly to the appropriate hotel

RETURN TO THE HOTEL BY SEPTEMBER 12

The Century Plaza SECTION HEADQUARTERS

Park Hyatt Los Angeles (Two blocks from the Century Plaza—Transportation will NOT be provided.)

2151 Avenue of the StarsLos Angeles, CA 90067Tel: (310) 277-1234 or (800) 233-1234Fax: (310) 785-9240

Group: ABA Section of TaxationGroup Dates: 10/17/02—10/20/02

Name __________________________________________

Co-Affiliation ___________________________________

Address ________________________________________

City ___________________________________________

State________________ Zip ______________________

Phone__________________________________________

Cancellations must be made by 4:00 p.m. on the day of arrivalto avoid one night’s room and tax.

Check-in time is after 4:00 p.m. Check-out time is 12:00 noon.

*Note: The State and Local Taxes Committee Meetings will beheld at the Park Hyatt.

Room Requests□ Non-Smoking Room□ Handicapped Accessible Room□ Confirmation Requested via Facsimile□ King bed or □ 2 Double bedsArrival Date__________ Departure Date _____________Arrival Time _____ a.m. _____ p.m.

Requested Room Type□ Single Occupancy/Double Occupancy $234/$259□ Park Suite $269□ Executive Park Suite $309

We urge you to make your reservations early; the hotelfrequently sells out prior to the deadline.

Payment Information

Credit Card Type_________________________________

Card No________________________________________

Exp. Date_______________________________________

Signature _______________________________________

Check enclosed $ _______________________________

Please make checks payable to the Park Hyatt Los Angeles.

2025 Avenue of the StarsCentury City - Los Angeles, CA 90067Tel: (310) 551-3300 or (800) 228-3000Fax: (310) 551-3355

The St. Regis (Connected to the Century Plaza)

2025 Avenue of the StarsCentury City - Los Angeles, CA 90067Tel: (310) 277-6111 or (877) 787-3452Fax: (310) 277-6311

Group: ABA Section of TaxationGroup Dates: 10/17/02—10/20/02

Name __________________________________________

Co-Affiliation ___________________________________

Address ________________________________________

City ___________________________________________

State________________ Zip ______________________

Phone__________________________________________

A 7-day cancellation notice is required prior to arrival in orderto avoid first night’s room and tax charge.

Check-in time is after 3:00 p.m. Check-out time is 1:00 p.m.

Confirmations will be sent within 5 days of reservation.

Room Requests□ Non-Smoking Room□ Handicapped Accessible Room□ Confirmation Requested via Facsimile□ King bed or □ 2 Double bedsArrival Date__________ Departure Date _____________Arrival Time _____ a.m. _____ p.m.

Please indicate hotel selection and room type.□ Century Plaza □ St. Regis

□ Single Occupancy $213 $268□ Double Occupancy $213 $268

We urge you to make your reservations early; the hotelsfrequently sell out prior to the deadline.

Payment Information

Credit Card Type_________________________________

Card No________________________________________

Exp. Date_______________________________________

Signature _______________________________________

Check enclosed $ _______________________________

Please make checks payable to the Century Plaza orSt. Regis based upon hotel selection.


3 1

Even though we see disclosure asa vital aid in identifying returnsrequiring review, and as a vital aid inidentifying problem areas in the law,the IRS can’t drop the audit tech-niques it has used to uncover problemreturns in the past. To give you anexample, in one IRS district a coupleof years ago, the IRS ran screens forlarge capital losses—just ran thenumbers off the returns through andpulled out capital losses in excess of$10 million. When they did so, five orsix returns popped out. The IRSpulled those returns and discoveredcommon characteristics. Eventuallythe legwork led to a promoter whichled to another promoter which led toanother promoter which led to a lotmore taxpayers. Through that oneeffort, the IRS ended up with 300 tax-payers. They recently discovered athread to another promotion of thesame transaction that led them toanother promoter with another 300taxpayers. So through that effort—ascreen for capital losses in one dis-trict—the IRS has uncovered 600returns with the same problematictransaction.

The IRS unquestionably has tocontinue that kind of work. It cannotlimit audits to disclosures on theassumption that all taxpayers will dis-close everything the IRS ought toknow about. They must continue to

use audit techniques that will checkfor problems in other ways. But, ifthe disclosure regime works right, itwill make it a lot easier for the IRS toidentify what it should be auditingand to focus its resources there.

QThe Treasury Secretary has hint-ed from time to time that a

major revision of the tax code couldbe in the works for the second half ofthe current administration. Is anywork being done on that, by whom,and what might the revisions entail?

AThere is a two-part effort, andthe Office of Tax Policy has the

lead in both parts. The first part,which we described in the President’sBudget published in February, is tosimplify the Code. We began recentlywith the first piece of a series ofpapers on tax simplification. We areworking on simplifying the Code forboth individual reporting issues andalso for business reporting issues. Weexpect that effort to continue for sev-eral months to come.

Most of the heavy lifting on thesimplification effort is done here atthe Treasury Department with inputfrom the Office of Chief Counsel andthe IRS operating divisions. We haveworked closely with Nina Olson, theNational Taxpayer Advocate, as well,in developing an agenda for simplifi-cation for individuals. Nina put out avery thoughtful set of simplificationproposals earlier this year in the

National Taxpayer Advocate’s Reportto Congress. Her proposals haveinformed many of the proposals weexpect to put forward.

In addition to simplification, we arelooking at the possibility of significanttax reform. Some are skeptical anytime tax reform is mentioned becausethey believe those who advance ithave ulterior motives—that it serves asan opportunity for the advancement ofobjectives that couldn’t otherwise beadvanced. Others are skepticalbecause they believe the obstacles totax reform are insurmountable. I wasonce a skeptic. The more I considerthe difficulties with our current Code,however, particularly on the businessside in defining and properly measur-ing income, the more I believe thatsignificant changes deserve seriousconsideration. We have reached thepoint where we must ask ourselveswhether the effort to properly defineand measure income is more workthan it is worth, whether a differentbase would result in a simpler andmore efficient tax system. The currentsystem generates consequences econ-omists regard as inefficient and harm-ful to economic growth. For example,we overtax savings, and the conse-quence is a negative effect on savingsand capital formation and other thingsthat are positive for the economy. It istime to step back, take a look at thesystem, consider whether it should bereformed and if so, how. �

INTERVIEWFROM PAGE 22

• International Tax Issues Affectingthe Insurance Industries

• How the “Reorganized” IRSPursues Audit and LitigationIssues for Insurance Companies

Low Income Taxpayers:• Offers in Compromise—An

Oxymoron?Partnerships:• Drafting Partnership and LLC

Agreements• Partnership Options• Tenancies in Common versus

Partnership Classification—

The Law Outside the “SafeHarbor”

• Creative Uses of DisregardedEntities

Real Estate:• Real Estate Tax Shelters• Hot REIT Topics• Leasing By Tax Exempts and

REITs: Current Issues andDevelopments

• Real Estate Committee CommentProjects

Regulated InvestmentCompanies:The program will include discussionof current issues and initiatives by apanel from the Investment Company

Institute including Keith Lawson andDeanna Flores.S Corporations:• Final ESBT Regulations• Multistate Taxation of S

Corporations and TheirShareholders

• S Corporation Modernization• Act of 2001Standards of Tax Practice:• Where are We on Muti-

jurisdictional Practice?• Handling a Matter Before the

Director of Practice• So Your Client is an Entity

SEE PRELIMINARY, PAGE 36

FA

LL

M

EE

TI

NG

PRELIMINARYFROM PAGE 29

IN

TE

RV

IE

W


3 2

(Please type or print clearly.)

Attendee Name:

ABA ID No.:

States Licensed In:

Companion Name:

Firm or Agency:

Business Address:

City/State/Zip:

Daytime Telephone:

Fax:

E-mail:

Home Address:

City/State/Zip:

❑ Please check here if, under the Americans with Disabilities Act, you require specific aids or services during your visit to the Tax Section Meeting.❑ Audio ❑ Visual ❑ Mobile Call 202-662-8672

❑ Do not send me promotional information from sponsors and other vendors.

If Postmarked or Faxed by 9/12/02 after 9/12/02Check one:Regular Member/Associate ❑ $325 ❑ $375Foreign Lawyer ❑ $325 ❑ $375Young Lawyer ❑ $250 ❑ $295(admitted to the bar less than 3 years)Full-Time Law Professor ❑ $85 ❑ $95Government Official ❑ $85 ❑ $95Non-Section Member* ❑ $375 ❑ $425Full-Time J.D./LL. m. candidate ❑ waived ❑ waivedFirst Time Tax Section Attendee ❑ waived ❑ waived*ABA members registering will become Tax Section members for 2002-2003.Registrants will receive one version of the meeting materials.Check one.❑ Traditional book version only: included in registration fee❑ On CD-ROM only (Windows version). included in registration fee❑ Traditional book version with CD-ROM: additional $60 Charge

Mail the following materials after the Meeting:❑ Meeting Materials CD-ROM $60.00 + $5.95 S/H❑ Meeting Materials traditional book version $65.00 + $5.95 S/H❑ Selected Committee Handouts $75.00 + $5.95 S/HNOTE: Meeting Materials contain only the materials for the SaturdayPlenary and Section programs.

TOTAL: $ _________________RETURN TO:Meeting RegistrarABA Section of Taxation740 15th Street, NW, 10th FloorWashington, DC 20005-1022FAX: (202) 662-8682

BY:

September 12, 2002

For Tax Section Use Only

Check # _____________Amount Rec’d $ ______Initials_______________

ADVANCE REGISTRATION WITH FULL PAYMENTMust be Postmarked or Faxed by September 12, 2002. CANCELLATIONS: $50, NO REFUNDS after September 12.

SECTION OF TAXATION FALL MEETING2002 REGISTRATION AND TICKET PURCHASE FORM

REGISTRATION

TICKETED FUNCTIONS

FRIDAY, OCTOBER 18

TOUR/ACTIVITY

1 Norton Simon Tour & Lunch ___ at $75 each =$____

COMMITTEE LUNCHEONS

2 Administrative Practice and Court Procedure ___ at $46 each =$_____

3 Agriculture ___ at $46 each =$_____

4 Banking and Savings Institutions,Financial Transactions, RegulatedInvestment Companies, InsuranceCompanies & Tax Exempt Financing ___ at $46 each =$_____

5 Civil and Criminal Tax Penalties ___ at $46 each =$_____

6 Corporate and Affiliated & Related Corporations ___ at $46 each =$_____

7 Estate and Gift Taxes & Fiduciary Income Tax ___ at $46 each =$_____

8 Exempt Organizations ___ at $46 each =$_____9 Foreign Activities of U.S. Taxpayers,

Foreign Lawyers Forum, Transfer Pricing & US Activities of Foreignersand Tax Treaties, ___ at $46 each =$_____

10 Partnerships, Real Estate and S Corporations ___ at $46 each =$_____

12 State and Local Taxes ___ at $46 each =$_____

RECEPTIONS

13 Employee Benefits ___ at $60 each =$_____

14 Section Reception ___ at $65 each =$_____

SATURDAY, OCTOBER 19

COMMITTEE BREAKFAST

15 Partnerships, Real Estateand S Corporations ___ at $32 each =$_____

TOUR/ACTIVITY

16 Getty Museum ___ at $25 each =$_____

SECTION LUNCHEON

17 Section Luncheon ___ at $40 each =$_____

TOTALS:Registration Fee . . . . . . . . . . . . . . . . . . . . . .$ ___________Additional CD ROM . . . . . . . . . . . . . . . . . .$ ___________Ticket Total . . . . . . . . . . . . . . . . . . . . . . . .$ ___________TOTAL PAYMENT . . . . . . . . . . . . . . . . . . .$ ___________

Make checks payable to ABA SECTION OF TAXATION or fill in the credit card information below. MUST PRINT CLEARLY AND LEGIBLY.

Check One: ❑ Master Card ❑ VISA ❑ AmEx

CARD NO:

EXP. DATE:

SIGNATURE:

UNABLE TO ATTEND THE MEETING?

(NL)

20

02

S

UM

ME

R

ME

ET

IN

G

RE

GI

ST

RA

TI

ON

T

IC

KE

TS

INFORMATION

PAYMENT INFORMATION


3 3

GOVERNMENT SUBMISSIONSBOXSCORESince the last issue of the Newsletter, the Tax Section has coordinated the following Government Submissions, which canbe viewed and downloaded free of charge from the Section’s website at www.abanet.org/tax/pubpolicy.html. If you haveany questions or need assistance in locating these documents please contact the Tax Section office at (202) 662-1783.

I.R.C. § DATE TITLE COMMITTEE CONTACT

various 3/18/02 Comments Noting Potential Issues Sales, Exchanges & Basis Annette NellenArising from Destruction of Property and Receipt of Funds Due to the 9/11 Terrorist Attacks

n/a 3/28/02 Comments Concerning Multistate State and Local Taxation David FruchtmanTax Commission’s Proposed Statutory (Subcommittee on Income Language on Reporting Options and Franchise Taxes)for Non-Resident Members of Pass-Through Entities

368 4/11/02 Comments Concerning Regulations Corporate Tax Benjamin G. WellsUnder Section 368 of the Internal Revenue Code Regarding Mergers Involving Disregarded Entities

n/a 4/24/02 Comments Concerning Proposed Tax Section Section OfficeRevisions to Circular 230

n/a 4/24/02 Letter to Treasury Dept.’s Deputy Tax Section Section OfficeAssistant Secretary for Tax – Regulatory Affairs Supplementing Section Comments Concerning Proposed Revisions to Circular 230

n/a 4/30/02 Recommendations for the Treasury- Tax Section William J. WilkinsIRS Guidance Priority List 2002–2003

7526 5/02 Report to the ABA House of Delegates: Tax Section Paul J. Sax andResolution Regarding Low Income Stefan F. TuckerTaxpayer Clinics (approval pending)

1402 5/29/02 Recommendation Regarding Tax Tax SectionRules Governing Self-Employment Income of Limited Liability Companies and Partnership

various 6/4/02 Comments to Senate Finance Tax Section William J. WilkinsCommittee Regarding Tax Shelter Transparency Act

THE SECTION WANTS YOUR E-MAILDo you want to be alerted to important ABA and Section information by e-mail? If you have

not registered your e-mail address with the ABA, or if you have an e-mail address change,please submit this information using the Change of Address form on the ABA website atwww.abanet.org/members/join/coa1.html, or contact the ABA Service Center at 800/285-2221. Using the Change of Address form on the website, you can also request to be removedfrom ABA e-mail distribution lists. Please note that your e-mail address will be used only with-in the ABA—the ABA does not sell or rent e-mail addresses to anyone outside of the ABA (seethe ABA privacy statement on our website). If you have any questions, please feel free to con-tact the ABA Service Center at the number above or the Tax Section office at 202/662-8670.

GO

VE

RN

ME

NT

S

UB

MI

SS

IO

NS

B

OX

SC

OR

E


PR

EM

IE

R

PU

BL

IC

AT

IO

NS 3 4

□ EFFECTIVELY REPRESENTING YOUR CLIENT BEFORE THE “NEW” IRS:A PRACTICAL MANUAL FOR THE TAX PRACTITIONER WITH SAMPLECORRESPONDENCE AND FORMS (2001-2002 EDITION). This comprehensive, easy-to-usehandbook was designed as a roadmap for the general tax practitioner in all stages of representation before the IRS in controversymatters. It includes a full discussion of the relevant law, the types of information you’ll need to gather from your client, from theIRS, and from third parties, the types of questions to ask, and a host of practice tips. It also includes completed forms and samplecorrespondence, so you do not need to “reinvent the wheel.”Size: 8.5 x 11, Softcover, 1780 pages, including CD-ROM / Price: $240 Members, $290 Nonmembers, $145 Nonprofit orAcademic / Product Code: 5470527

□ PROPERTY TAX DESKBOOK, 2001 EDITION. A key resource for tax managers, attorneys and account-ants who specialize in state and local tax matters. Updated each year, the ABA Property Tax Deskbook contains a thorough discus-sion of state property tax issues in all jurisdictions. Each chapter sets out the most important principles in that state, with citations topertinent statutes, rules, regulations, case law, bulletins, and local practices—information often impossible for practitioners fromother states to find. Size: 8.5 x 11, Softcover, 900 pages / Price: $195 Tax Section Members, $240 Nonmembers / Product Code: 5470518

□ SALES & USE TAX DESKBOOK, 2001-2002 EDITION. Year after year, the ABA Sales & Use TaxDeskbook provides tax managers, attorneys, and accountants—in one, reliable source—all of the information they are most likelyto need about sales and use taxes. Broken down by state, each chapter is written and updated annually by one or more lawyers expe-rienced in the sales and use tax practice of that state. The chapters are organized in a uniform format to aid the reader in findinginformation and to facilitate multistate research. Size: 8.5 x 11, Softcover, 1000 pages / Price: $195 Tax Section Members, $240 Nonmembers / Product Code: 5470519

□ THE STATE AND LOCAL TAX LAWYER, 2002 EDITION. Beginning with its inaugural issue in1996, the Section of Taxation’s special peer-reviewed journal—The State and Local Tax Lawyer—has consistently providedimportant scholarly and topical articles and case notes for attorneys, tax managers and accountants with a specific interest in stateand local taxation. Published each spring, The State and Local Tax Lawyer also presents a compendium of the important state andlocal tax developments in each state for the immediately preceding year. The State and Local Tax Lawyer is the one source foryou to explore current issues and forecast trends in the evolving area of state and local taxation. Size: 6 x 9, Softcover, 595 pages / Price: $95 Tax Section Members, $120 Nonmembers / Product Code: 5470534

ABA SECTION OF TAXATION PREMIER PUBLICATIONS ORDER FORM

The Section of Taxation provides the highest quality tax publications available. Please check the box of each publication that you wish to order and complete the form below, or call the ABA Service Center at 800/285-2221.

ORDERING INFORMATIONTo request any of the above, please check the box in front of each publication that you wish to order. Complete and return the entire form to: ABA Section of Taxation,10th Floor, 740 15th Street, NW, Washington, DC 20005, fax 202/662-8682. To place a phone order, call the ABA Service Center toll-free at 800/285-2221. Please makechecks payable to the American Bar Association Section of Taxation or supply the necessary credit card information. Residents of Illinois, Maryland and DC mustinclude the following sales tax: IL 8.75%, MD 5%, or DC 6%.

Name _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Sub-Total $ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Firm _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Tax $ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Address _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Handling $6.95

City/State/ZIP _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ TOTAL $ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

ABA I.D.# _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ □ MasterCard □ VISA □ American Express

Card No. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Exp. Date. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Signature _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

New for2001-2002!


3 5

MA

TE

RI

AL

S

OR

DE

R

FO

RM

ABA SECTION OF TAXATIONMATERIALS ORDER FORM

� Audiocassettes are available for this program. Please contact Teach’em at (800) 776-5454 or on the web at www.teachem.net/aba for more information.

Made possible through a partnership with LexisNexisTM, the Sectionof Taxation is pleased to present Comm-Online—a searchable data-base of committee meeting materials on the web. This service is a no-cost benefit to Section of Taxation members. For more information,visit our website www.abanet.org/tax.

Please check off all desired materials and complete the following order form.Please note that these materials, as well as all other Section publications, canbe ordered directly from the ABA Service Center, tel. 800/285-2221.

FROM RECENT SECTION SPONSORED PROGRAMS� ABA/IPT 2002 ADVANCED PROPERTY TAX SEMINAR

Course materials from the Advanced Property Tax Seminar, March 7-8, 2002,sponsored by the Section of Taxation and the Institute for Professionals in Taxation.(PC 5470532) $40

� ABA/IPT 2002—ADVANCED SALES/USE TAX SEMINARCourse Material from the Advanced Sales/Use Tax Seminar, March 5-6, 2002,sponsored by the Section of Taxation and the Institute for Professionals in Taxation.(PC 5470533) $40

2002 MAY MEETING SECTION PROGRAMS� ENTIRE VOLUME OF 2002 MAY MEETING SECTION

PROGRAMS (PC 5470517A0130) $65

� SPLIT DOLLAR FINANCING UNDER A NEW REGIME: A DISCUSSION OF NOTICE 2002-8 � (PC 547051750200) $20 ∫

2002 MAY MEETING SELECTED COMMITTEE HANDOUTS� ENTIRE VOLUME OF 2001 MAY MEETING SELECTED

COMMITTEE HANDOUTS (PC 547051750201) $75

� ADMINISTRATIVE PRACTICE �The Meaning of Declining Enforcement Statistics; Selected Recent Developments in Administrative Practice (PC 547051750220) $30

� AFFILIATED AND RELATED CORPORATIONS �Loss Disallowance: The IRS Response to Rite Aid (PC 547051750202) $30

� CAPITAL RECOVERY AND LEASING �Recent Developments Regarding Leasing Transactions (PC 547051750203) $25

� CLOSELY HELD BUSINESSES �Nexus—Federal Constitutional and Statutory Constraints on State and LocalTaxation; Pre-Bankruptcy Planning/Alternatives to Bankruptcy; Tax Issues in aDown Economy: Cancellation of Indebtedness Income (PC 547051750204) $30

� CORPORATE TAX �Recent Developments; Earn Outs and Other Purchase Price Contingencies in Tax-Free Transactions (PC 547051750205) $25

� COURT PROCEDURE AND PRACTICE �Settling Complex Tax Cases; Summary of Current Developments:January 17 - May 8, 2002 (PC 547051750206) $12

� EMPLOYEE BENEFITS �401(k) Plan Investments in Company Stock; After Enron: Employer Securities inQualified Plans; Responding to Enron; Summary of Harley v. Minnesota Miningand Manufacturing Company (PC 547051750207) $25

� EMPLOYMENT TAXES �Important Developments January 12, 2002 through May 6, 2002(PC 547051750208) $12

� ESTATE AND GIFT TAXES �The Effectiveness of Formula Defined Value Clauses in Estate Planning; SelectedDevelopments in Income, Estate, Gift & Generation-Skipping Transfer Tax January1, 2002-April 15, 2002; State Death Taxes in Light of EGTRRA; Survey of StateEstate Tax Statutes; Summary of Status of Soak-Up Statutes (PC 547051750209) $30

� EXEMPT ORGANIZATIONS �Planning for Distributions from Retirement Accounts (PC 547051750210) $20

� FIDUCIARY INCOME TAX �Actuarial Valuation Potpourri; Deductibility of Investment Advisory Fees:Above or Below the 2% Floor—O’Neill, Mellon Bank, What’s Next; FinalMinimum Distribution Rules; Grantors Serving as Fiduciary: Knowing andAvoiding the Tax Traps (PC 547051750211) $30

� FOREIGN LAWYERS FORUM �Irish Tax Incentives; New Rules for “Exempt” Distributions of Securities inOntario—Beware of the Pitfalls (PC 547051750212) $25

� INDIVIDUAL INCOME TAX �Current Developments: 2002; Recent Supreme Court Tax Collection Decisions—Young and Craft (PC 547051750213) $20

� PARTNERSHIPS �Report on Partnership Options Project; Unified Reporting, Audit, and LitigationProcedures for Partnerships, LLC’s and Joint Ventures (PC 547051750214) $30

� REAL ESTATE �Dealer vs. Investor: Techniques to Protect Capital Gains; Real Estate OpportunityFunds—Structure, Economics and Key Tax and Business Issues(PC 547051750215) $25

� S CORPORATIONS �Financially Distressed S Corporations: Ace Distribution Company Example—Income Tax Issues; Financially Distressed S Corporations: Fact Pattern/Debtor-Creditor Issues; Recent Developments Relating to the Taxation of S CorporationsJanuary 12 through May 8, 2002 (PC 547051750216) $25

� SALES, EXCHANGES AND BASIS �Current Developments (Other Than for Like-Kind Exchanges)(PC 547051750217) $12

� STANDARDS OF TAX PRACTICE �Important Developments During the Year (PC 547051750218) $8

� U.S. ACTIVITIES OF FOREIGNERS AND TAX TREATIES �Investment Funds Holding Debt and Equity Securities of US Issuers:When Do They Realize ECI?; Funds: When Do Their Activities Rise to the Level of Engaging in a U.S. Business? (PC 547051750219) $35

To request any of the material on this page, please check the box in front of each publication that you wish to purchase and complete the followinginformation. Return the this page to: ABA Section of Taxation, 10th Floor, 740 15th Street, NW, Washington, DC 20005, fax 202/662-8682. Pleasemake checks payable to the American Bar Association Section of Taxation or supply the necessary credit card information. Residents of Illinois,Maryland and Washington, DC must include the following sales tax: IL 8.75%, MD 5%, or DC 6%.

Name _______________________________________________________________________________________________________________________________________________________________________________________________

Firm _________________________________________________________________________________________________________________________________________________________________________________________________

Address ____________________________________________________________________________________________________________________________________________________________________________________________

City/State/ZIP ____________________________________________________________________________________________________________________________________________________________________________________

ABA I.D.#____________________________________________________________________ Sub-Total $ ________________

Tax $ __________________________

Handling $ 5.95 per order

TOTAL $ __________________________

MATERIALS ORDERING INFORMATION

□ MasterCard □ VISA □ American Express □ Check Enclosed

Card No. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Exp. Date____________________________

Signature _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _______________________________________


3 62

00

2

FA

LL

ME

ET

IN

G

DEFENDING LIBERTYPURSUING JUSTICE

Non-Profit Org.U.S. Postage

PAIDPermit #8118

Washington, DCAmerican BarAssociationABA SECTION OF TAXATION

www.abanet.org/tax/

10th Floor740 15th Street, NWWashington, DC 20005

Tax Exempt Financing:• Status of Internal Revenue Service

and Department of the TreasuryProjects

• Current Enforcement Issues—Administrative and/or LegislativeProposals and Impacts

• Regulatory Tax Simplification—Report on Yield Restriction/Rebate Integration Project

Teaching Tax:

• Tax Accounting Systems:Conformity? If so, with what?

U.S. Activities of Foreignersand Tax Treaties (USAFTT);Foreign Activities of U.S.Taxpayers; and Foreign LawyersForum:

• Update on InternationalDevelopments

USAFTT:• An Evaluation of LOBs• So Now That You’ve Inverted…

Young Lawyers Forum:• How Young Lawyers Can Improve

Client Service Skills

SECTION PROGRAMSHIPAA Privacy Primer forGroup Health Plans

The HIPAA Privacy regulations willapply to group health plans begin-ning on April 14, 2003. The regula-tions require changes in group healthplan contracts and operations andimpact the entire organization spon-soring the group health plan. Thisprogram will review how privacy reg-ulations apply to group health plansand their sponsors, and discussimplementation steps for a privacycompliance program. The programwill also look at how the new finalHIPAA security regulations willimpact group health plans. Sponsored by: Employee BenefitsCommittee.

A New Road to Successful CaseResolution: Using Mediation andArbitration in Tax Matters

Mediation and arbitration are nolonger the sole province of largecases and million dollar adjustments.Section 7123 and the AlternativeDispute Resolution Act of 1998require that the Service and the fed-eral judiciary make these tools moreavailable to all. Focusing on newlyavailable methods to achieve casesettlement, this program will empha-size the practical. Experienced medi-ators and arbitrators will discuss howto identify appropriate cases andapply these techniques with both theService and the judicial branch.Threshold issues such as choice ofprocess, selection of an appropriateneutral, and optimal timing will bediscussed. Issues of impartiality, con-fidentiality, and cost sharing will alsobe addressed. Sponsored by: Indivi-dual Income Tax Committee. �

PRELIMINARY TOPICSFROM PAGE 31


Documents

newsletter - American Bar Association