Lawyers and Business Executives in the News™

Tax Law Final Exam Question: Barry Bonds’s Ball

Fred Hagans has been trying cases, for both plaintiffs and defendants, since 1972. He was also just selected for and interviewed on "America's Premier Laywers" (www.americaspremierlawyers.org) and The LawBusiness Insider www.lbishow.com, which is featured in Fortune Magazine and broadcast worldwide on American Airlines and Northwest Airlines. Fred was also just interviewed on The InsiderExclusive   TV Show with Steve Murphy. He has a lot of insight and expertise about how, as Barry Bonds closes in on Hank Aaron’s home-run record, a fun tax-law question looms: If you’re the lucky fan who catches the record-breaking home run ball, what are the tax consequences? There’s a host of related questions raised by scholars about the ball, which is expected to be worth in the half-million dollar range. Will the IRS require the fan to pay tax immediately, based upon the ball’s estimated fair-market value; or only after the fan sells the ball? Will the fan have to pay tax based on regular federal income-tax rates, or if the fan waits a year to sell the ball, would any profit qualify as a long-term capital gain? And if it qualifies as a long-term capital gain, what would the fan’s cost be for tax purposes? You can reach Mr. Hagans at 713-222-2700, or email fhagans@hagans-law.com

Big Blue's Under-the-Wire Tax Break

Brian E. Andreoli of DLA Piper focuses his practice on transfer pricing, international tax matters, and state tax matters. Mr. Andreoli has been a tax professional for more than 25 years, with experience in public, corporate tax law, and litigation. He has many opinions concerning this story about how it looks like IBM’s tax lawyers are earning their keep. On May 29, IBM said it had structured a $12.5 billion stock repurchase to take advantage of overseas earnings without making them subject to stiff U.S. corporate tax rates. Because they’re designed to make an end around IRS section 367(B) covering U.S. taxes on repatriated earnings, tax lawyers call these deals “Killer B” transactions. Two days later, the IRS announced plans to issue regulations making companies pay U.S. taxes when they buy back their stock, even if the shares are purchased by an international subsidiary. It said the planned ban on the practice would take effect that day. You can reach Mr. Andreoli directly at 212-335-4553, or email brian.andreoli@dlapiper.com

Fix the AMT (But Not Yet)

Brian E. Andreoli of DLA Piper focuses his practice on transfer pricing, international tax matters, and state tax matters. Mr. Andreoli has been a tax professional for more than 25 years, with experience in public, corporate tax law, and litigation. He has many opinions concerning this editorial in the New York Times (nytimes.com) about how fixing the AMT permanently provides all the drawbacks of responsible tax cutting with none of the benefits. The point of fixing the AMT is to shield millions of Americans from future tax increases. But Americans, who are instant-gratification addicts, would sooner vote for somebody who cuts taxes by $1,000 today than for someone who spares them a tax hike of $2,000 tomorrow. The last time Democrats with a narrow majority in Congress raised taxes on high earners to improve the nation's fiscal picture was 1993. The following year, they were unceremoniously booted into the wilderness, whence they wandered for a dozen years. The alternative is to let the long-dreaded AMT explosion take place next year. Sit back and wait for President Bush to propose a solution. (He won't.) Or propose a permanent fix but make it conditional on proposals that would be anathema to Bush—like restoring the estate tax.You can reach Mr. Andreoli directly at 212-335-4553, or email brian.andreoli@dlapiper.com

Tax Cuts and Consequences

Brian E. Andreoli of DLA Piper focuses his practice on transfer pricing, international tax matters, and state tax matters. Mr. Andreoli has been a tax professional for more than 25 years, with experience in public, corporate tax law, and litigation. He has many opinions concerning this editorial in the New York Times (nytimes.com) about how a recent report by Congress’s budget agency provides fresh evidence that Bush-era tax cuts have done more to reinforce inequality than to redress it. The agency found that in 2004, the latest year for which comprehensive data were available, the top 1 percent of households pocketed 14 percent of total after-tax income in the United States, up from 12.2 percent in 2003. That increase, the third largest in one year since the agency started keeping track in 1979, works out to an extra $128 billion. And yet despite that hefty gain, the effective federal tax rate of the top 1 percent decreased slightly. Given the controversy and complexity of these tax-related issues, I hope we can approach this matter with intelligence and a viable solution. You can reach Mr. Andreoli directly at 212-335-4553, or email brian.andreoli@dlapiper.com

Judge Refuses to Split Trial in U.S. Case on Tax Shelters

Brian E. Andreoli is a seasoned tax professional, with experience in public, corporate tax law, and litigation. He has tried cases and administrative hearings in the states of New York, Connecticut, Ohio, California, Virginia, North Carolina, South Carolina, Pennsylvania and Washington. He is currently reviewing this story from the New York Times (nytimes.com) about how the ederal judge overseeing a mammoth tax shelter case said yesterday that the delayed trial would begin next fall, but he rejected a proposal by prosecutors to try the defendants separately in two groups. The judge, Lewis A. Kaplan of Federal District Court in Manhattan, ordered jury selection to begin on Sept. 17, 2007, in the criminal trial of the 18 defendants, 16 of whom are former employees of the accounting firm KPMG. The judge also said that he had tentatively decided not to have separate trials. “Essentially what I have been offered is the opportunity to have two unmanageable trials rather than one,” he said. Let's see if this case actually can produce a managed and reasonable form of justice. You can reach Mr. Andreoli directly at 212-335-4553, or email brian.andreoli@dlapiper.com

Dale Baringer: Business and Tax Expert

Dale R. Baringer is an attorney with extensive experience helping people start businesses. He has written several articles and spoken at several seminars on the topic. Dale was just interviewed on "America's Premier Laywers" (www.americaspremierlawyers.org) and The LawBusiness Insider www.lbishow.com, which is featured in Fortune Magazine and broadcast worldwide on American Airlines and Northwest Airlines. He also does work in securities law, bankruptcy law (with emphasis on representing creditors, creditor committees, trustees and Chapter 11 work), corporate law, commercial and business litigation, personal injury law, professional malpractice, mergers & acquisitions, employment law, ERISA litigation, life/accident and health insurance law. I salute his achievements. You can reach Mr. Baringer directly at 225-383-9953.

A Democratic Tax Cut

John Manly of Manly, McGuire & Stewart appreciated this commentary from The Wall Street Journal (wsj.com) about how Democratic Governor Joe Manchin of West Virginia called lawmakers into session for a quick round of tax cuts. He now expects to have moderate reductions in corporate, franchise, personal income and grocery taxes on his desk within a few days. Chalk one up for defying political stereotypes -- and achieving real success. You can listen to more of John Manly on "The Law Business Insider," at www.lbishow.com. You can also reach John directly at 949-252-9990, or email jmanly@manlymcguire.com

Tax Epiphany

Marvin Goodson is a sage about the tax code. He hasmany thoughts concerning this editorial from The Wall Street Journal (wsj.com) about how xax simplification also means trimming the tax regime itself. The World Bank found that corporate income taxes compose only 36%, on average, of businesses' annual tax burden. Property, dividend, capital gains, municipal, and social security taxes, among others, make up the rest -- not to mention the various loopholes carved out for certain industries. Countries such as Egypt, which unified its corporate tax rates and eliminated about 3,000 corporate exemptions and tax holidays last year, saw tax filings double. Russia implemented a flat tax in 2004 and saw tax revenues soar. You can listen to more of Marvin Goodson on "The Law Business Insider," at www.lbishow.com. You can also reach Marvin directly at 310-208-8282, or email mg@gwtaxlaw.com

RUBIN: MESSAGE TO AMERICANS - WE NEED TO RAISE TAXES

Former Treasury Secretary Robert Rubin has some advice for the Democrats who will soon control Congress: Raise taxes. According to The Wall Street Journal (wsj.com) Mr. Rubin, who helped engineer a budget surplus while serving under President Clinton, is advising Democrats that there's no way to deal with the "deep threat" posed by the nation's fiscal problems without a combination of spending control and higher taxes. That may be sound economic advice, but it's political suicide for Democrats. Secretary Rubin: your suggestion is just plain unrealistic.

Where’s Wesley? (Take Two!)

Brian E. Andreoli is a seasoned tax professional, with experience in public, corporate tax law, and litigation. He is also actively following this story about how Wesley Snipes was indicted by federal prosecutors in Florida last month on tax fraud and conspiracy charges. Now, the New York Times (nytimes.com) reports that Snipes remains a federal fugitive and no deal has been made to drop the criminal charges against him, said a spokesman for the feds. In the meantime, Snipes is filming a movie in Africa. His real life saga doesn't seem to have happy ending. You can reach Mr. Andreoli directly at 212-335-4553, or email brian.andreoli@dlapiper.com