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30 NewsQuarterly 1 (2010-2011)

handle is hein.journals/newsqtrly30 and id is 1 raw text is: SPECIAL REPORT The Internal Revenue Code: Looking Ahead to 2020 Editor's Note: At the Southeastern Association of Law Schools 2010 Annual Conference, panelists focused on areas needing clarification or major revision. Two of their presentations are excerpted below.-Gail Levin Richmond, Nova Southeastern University, Davie, FL Three Once and Future Issues By Charlene Luke - T en years is a long time in the world of tax; after all, few (if any) would have predicted this year's estate tax conundrum ten years ago. In this short column, I will restrict myself to commenting about a handful of tax issues. Economic Substance Doctrine I will begin with the recent codification of the economic substance doctrine, which seems fitting since it has been about ten years since the first serious proposals for codification were made. The result, section 7701(o), is not as bad as it could have been. Codification has ended textualist arguments about whether courts could use the doctrine, has resolved the question of whether both purpose and objective economic change are required, and has adopted a qualitative approach to the problem of judging pre-tax profit potential. Above all, section 7701(o) has preserved the flexibility of the common law doctrine, which is of critical importance given the cat-and-mouse game of tax avoidance. Now that the doctrine has been codified, it is doubtful that it will be repealed anytime soon, particularly given the way revenue estimates play out. My hopes are that, over the next ten years, section 7701(o) will remain fairly skeletal and that any brighter line rules are worked out in regulations and litigation since such a course seems more likely to keep the doctrine agile. While section 7701(o) is itself fairly unobjectionable, the pairing of strict liability penalties with such an open-ended doctrine is problematic. Section, 6662(b)(6) imposes a strict 20% penalty if tax benefits are disallowed because a transaction lacks economic substance, and that penalty is raised to 40% for nondisclosed noneconomic substance transactions. I.R.C. § 6662(i). See also I.R.C. § 6664(c)(2) (no reasonable cause exception for economic substance violations); I.R.C. § 6676(c) (strict liability for excess refund claims). So long as the economic substance doctrine is raised only to attack fairly obvious abuse, the penalties seem likely to remain in place. But should the *Associate Professor of Law, University of Florida Levin College of Law, Gainesville, FL. CONTENTS Special Report The Internal Revenue Code: Looking Ahead to 2020 From the Chair Charles H. Egerton Interview Steven A. Musher 1 3 4 Points to Remember 6 (1) Temporary Regulations on NOL Carrybacks for Taxpayers Filing Consolidated Returns (2) Limitation by Regulation: Heads the Service Wins, Tails the Taxpayer Loses? Special Report 9 Retirement Planning: From the Last Day at Work Until the Last Day of Life Tax Bites 17 18 Book Review The Supreme Court's Federal Tax Jurisprudence CLE Calendar 19 22 Boxscore ci oM AT a oN m A Section of the American Bar Association Section of Taxation NEWSQUARTERLY continued on page 20

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