Author Archive for sarah-lawsky
The Sleepiest Tax Lawyer
posted by Sarah Lawsky
Being a tax lawyer can be quite creatively inspiring. For example, when I was working as a tax lawyer in New York City a number of years ago I wrote a (still unpublished, for some reason) children’s book. The text follows.
The Sleepiest Tax Lawyer in New York City
Once upon a time there was a very sleepy tax lawyer. She could not stay awake. She slept on her desk, under her desk, and next to her desk. One day she decided to find out if there was any tax lawyer in the city who was as sleepy as she was.
First she went to Cravath. She met a very tall tax lawyer.
“Are you a sleepy tax lawyer?” she asked the Cravath lawyer.
“If a U.S. shareholder acquires, directly or indirectly, stock of a foreign or domestic corporation, which, by reason of the acquisition, then becomes a related controlled foreign corporation or a member of the affiliated group, then in determining excess related group indebtedness or excess U.S. shareholder indebtedness, the indebtedness and assets of the acquired corporation shall be taken into account only at the end of the acquisition year and in following years,” the Cravath lawyer said.
The Cravath lawyer didn’t seem very sleepy, although he had made the sleepy tax lawyer feel even sleepier. So she took a nap. When she woke up, she went to midtown to visit Skadden. At Skadden she met a very fat tax lawyer.
“Are you a sleepy tax lawyer?” she asked the Skadden lawyer.
“In applying section 108(e)(8) to any case to which subparagraph (A) applies, there shall not be taken into account any indebtedness for interest described in subparagraph (C),” the Skadden lawyer said.
“You don’t sound very sleepy either,” said the sleepy tax lawyer. She took a short nap and then went to visit Sullivan and Cromwell, where she met a very bald tax lawyer.
“Are you a sleepy tax lawyer?” she asked the Sullivan and Cromwell lawyer.
“Any ownership interest that otherwise would be treated as stock under paragraph (f)(18)(i) of this section shall not be treated as stock if treating the interest as not stock would result in an ownership change,” said the Sullivan and Cromwell lawyer.
“You don’t sound sleepy at all,” said the sleepy tax lawyer. “I must be the sleepiest tax lawyer in New York City! I’d better go back to my office and take a nap.” And so she did.
The End
August 5, 2008 at 5:39 pm
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Put Your Hands Together
posted by Sarah Lawsky
In an episode of Friends, Joey, a notorious womanizer, is eating fresh-made jam directly from the jar. Chandler says, “Hey, Joe. I gotta ask. The girl from the Xerox place–buck naked [holding up one hand], or [holding up the other hand] a big tub of jam?” And Joey says, “Put your hands together.” That is how I feel about movies and tax. Put your hands together! Lucky for me, such a fantasy place does exist: movie tax credits.
August 4, 2008 at 9:32 am
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Pro Bono? Cui Bono?
posted by Sarah Lawsky
Some large law firms require all their attorneys to do a certain amount of pro bono work. But a better approach might be to require the attorneys either to do a certain number of pro bono hours or to donate a certain amount of money to public interest law firms. (The law firm and lawyer could together donate the value of the lawyer’s time and the amount the firm would have spent on support staff, copying, tech support, and so forth had they taken on the project.) And perhaps an even better approach would be for law firms to do away with pro bono work altogether and just donate money. So why doesn’t this happen? Why services instead of money?
After the jump, an explanation of why money might be better, and some speculation about why law firms donate services.
July 30, 2008 at 4:07 pm
Posted in: Uncategorized
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LILO (with apologies to the Kinks)
posted by Sarah Lawsky
Over on PrawfsBlawg they are talking about teachers who sing in class. I could never sing in class (I sang two lines of a song in the car the other day and my partner looked at me with a combination of horror and pity), but I will admit that I have been known to write a tax-related song or two. Unfortunately, the following song is funny only if you have a fairly good understanding of lease-in-lease-out transactions and you know the song Lola, and it’s probably not funny even then. That said…
LILO
(with apologies to the Kinks)
I heard about this thing from a guy I know
Where the cash goes around in a circular flow
He emailed me and outlined the plan
I asked for its name and he wrote right back, it’s called LILO
L-I-L-O LILO li-li-li-li LILO
I hadn’t yet seen at that particular time
Oh my LILO li-li-li-li LILO
Well I’m not dumb but I didn’t know
Why it looked like a lease, but we’d have no control
Oh my LILO li-li-li-li LILO li-li-li-li LILO
Well I drank black coffee and read all night
Under electric candlelight
I picked the Code up, sat it on my knee
I thought, “This thing’s just too good to be!”
Well I’m not the world’s most rule-loving guy
But substance over form meant I couldn’t fall for that LILO
li-li-li-li LILO li-li-li-li LILO
LILO li-li-li-li LILO li-li-li-li LILO
I pushed it away
I walked to the door
I fell to the floor
I got down on my knees
Then I looked at it and it at me
Well that’s the way that I want it to stay
And I just wish it would go away, oh my LILO
A loan is a lease and a lease is a loan
It’s a mixed-up muddled-up shook-up Code thanks to LILO
li-li-li-li LILO
Well I’d left school just a week before
And I’d never even read a reg before
But LILO looked good, fit the Code to the letter
And I thought, this’ll make the client like me better!
Well I’m not the world’s most ethical man
But I know what I am and I’m know I’m no sham, unlike LILO
li-li-li-li LILO li-li-li-li LILO
LILO li-li-li-li LILO li-li-li-li LILO
(Concurring Opinions guys, I apologize! I apologize! Please don’t kick me off the blog!)
July 28, 2008 at 9:01 pm
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Injury, Probability, and Mamma Mia!
posted by Sarah Lawsky
In Mamma Mia!, Sophie invites three men she has never met to her wedding. She knows that one of these three men is her father, but she does not know which one. The movie is notable for a number of reasons. It is notable, first, because it is the second movie this summer (after Sex and the City) apparently made for, and featuring, women over 40. It is also notable for its relationship to tort law (I mean, aside from the obvious link related to Pierce Brosnan’s singing). The explanation is after the jump (to avoid revealing a key plot point, to the extent there is a plot). (Translation: there is a spoiler after the jump–though really, if you are going to Mamma Mia! for the gripping story line, you have much larger problems.)
July 28, 2008 at 8:20 am
Posted in: Movies & Television, Tort Law
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Purple!
posted by Sarah Lawsky
This was not a planned blog post, but I’m so excited I just have to share: I just got my 2008-2009 Federal Income Tax Code and Regulations Selected Sections. It’s purple!
It’s not that I love purple so much, but I absolutely love getting the new code and regs. I’m a CCH gal myself, though certainly opinions can differ about whether CCH is the best source for the code and regs, but seriously, opinions cannot differ about whether it’s awesome to get the new code and regs.
It’s awesome in part because it’s necessary; tax law changes all the time, and 2007′s version is actually out of date now. But it’s also awesome because this book and I are going to be very, very close over the next year. By next July, it’s going to be a mess. I will have crossed out the numbers in the sections with inflation adjustments and written in this year’s numbers. The cover will be torn. There will be tabs in odd places (2007′s Selected Sections features a tab by Section 62(a)(4), “Deductions Attributable to Rents and Royalties.” Why? I do not know). There will be once-useful and eventually mysterious notes on the empty pages in the back. (Examples from 2007: Useful: “Discuss 170(f)(8)? Procedural, not substantive.” Mysterious: “Discuss Pascal’s Wager?” Yes, “?” indeed.)
Also, this is the shorter tax law (a mere 2027 pages, as opposed to the far more massive eight-volume full set). While getting the full set is of course exciting, the one-volume version has its own special benefits. True conversation from a recent trip to NY to visit a friend of mine–let’s call him Jeff.
Jeff: “Jeez, why is your suitcase so heavy? You’re only here for three days.”
Me: “Because it has tax law in it.”
Jeff: “You brought the code? Why?” [Note: He may actually have said "Loser!" but I prefer to remember it as "Why?"]
Me: “You never know when you might need it. And of course I didn’t bring the code–only selected sections!”
Yeah, it’s true I didn’t need the code on that trip. But you never know! Really!
Finally, these books (either selected sections or full code and regs) can be useful even after other, more updated books have come to take their place. We’re talking about thick, sturdy volumes here. Sure, it might not be realistic to build a chair out of them (though it might be, actually…need to think about this more…), but I have used them to bring my home speakers to the correct height; to block open doors; to hold down boxes; to keep my cat away from things that could suffer cat damage; and on and on.
So, this is a great day for me. 2008-2009 Edition Federal Income Tax Code and Regulations Selected Sections, welcome!
July 24, 2008 at 9:46 am
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Present and Future Value
posted by Sarah Lawsky
I teach the concept of present and future value in my basic tax law class, to help students understand why timing is so important in tax law–that is, why it is better to take a deduction now than next year, and why it is better to recognize taxable income next year rather than this year.
The future value of money is the amount of money you will have some time in the future if you invest a certain amount today. For example, if you put money into your bank account now, how much will be there in ten years, including interest? Of course, you need to know how much you’re starting with, how long that amount grows, and the interest rate it grows at (also the compounding period). The present value of money is how much an amount of money to be received in the future is worth today; you need to know all the same information to figure out present value.
You need to know present and future value whenever you want to figure out how much a stream of payments is worth, and whenever you want to compare amounts that are received or paid at different times.
Here are some examples of present and future value, assuming a 10% rate of interest, if you allow the money to grow for five years and compound it annually:
FV($100) = $161
PV($100) = $62
Here are some additional examples of present and future value:
PV(Comedy) = Tragedy
FV(Ice Cream) = Dippin’ Dots
Please add more in the comments (preferably more along the lines of the latter two than the former two, though if doing present and future value calculations makes you happy, far be it from me to stop you!).
July 22, 2008 at 5:24 pm
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The Dark (Frank) Knight
posted by Sarah Lawsky
Frank Knight wrote the great book Risk, Uncertainty and Profit, in which he described the distinction between risk and uncertainty. (The book won second prize in a 1917 competition, sponsored by Hart, Schaffner and Marx, intended to “draw the attention of American youth to the study of economic and commercial subjects.” First prize was awarded to E.E. Lincoln, The Results of Municipal Electric Lighting in Massachusetts.) We are operating under risk if an event may or may not happen in the future, and we know the chances that it will happen. For example, flipping a fair coin is a game of risk. We do not know whether the coin will come up heads, but we know that the probability of this event is 1 out of 2, or 50%. An event is uncertain if it may or may not happen in the future, and we do not know the chances that it will happen. (Knight would require that we “cannot” know this chances that it will happen, though this is perhaps too strong; I have an excellent discussion of the do not know/cannot know issue, but this blog post is too small to contain it.) For example, I do not know whether McCain will win the next presidential election, and, unlike the situation with the coin, I also do not, and cannot, know the probability that he will win, because this election is a one-off event.
So what does this have to do with the new Batman movie, The Dark Knight? I have put the explanation after the jump, because it contains minor spoilers. (Or major spoilers, if you are totally unfamiliar with the Batman story.) Repeat: there are spoilers after the jump. Do not read the rest of this post if you do not want a few Dark Knight spoilers. Don’t! Seriously!
July 21, 2008 at 9:21 am
Posted in: Movies & Television
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The Hippo and the Panda Talk Teaching
posted by Sarah Lawsky
Hippo: Hey, Panda, did you see this study that says that students consistently give lower teaching evaluations to hippos than to pandas?
Panda: How do we know that’s true? I’m very sophisticated statistically, not to mention ridiculously cute due to the fact that I am a panda, and I can tell you that that study has a lot of flaws.
Hippo: But there are a lot of other studies like this, so can we just assume for the purposes of our conversation that it’s true?
Panda: Ok, let’s make that assumption. So maybe hippos get worse evaluations because hippos are just lousy teachers—maybe you all need to learn how to teach.
July 18, 2008 at 9:01 am
Posted in: Teaching
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Wait, What? Oh. Never Mind.
posted by Sarah Lawsky
Helpful law school tip! If you have a class that is taught using the Socratic method, you’re in luck! No need to prepare! You should be able to handle class using only the following phrases (all from Jowett’s translations of The Republic and Meno):
You are quite right.
Certainly not.
To be sure.
That is true.
Precisely.
Clearly.
Certainly.
That is the inference.
Assuredly not.
I think that what you say is quite true.
It cannot be otherwise.
And, my personal favorite–
I agree, as far as I am able to understand you.
July 17, 2008 at 10:07 am
Posted in: Humor, Teaching
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Teaching Evaluations
posted by Sarah Lawsky
I have been wondering lately about teaching evaluations: how they are best structured and analyzed, disseminated, and used to make decisions, and, in the larger scheme, how differing interests should be weighed as we address these issues. I have no answers, but I have a lot of questions (they follow after the jump).
I would love to hear people’s thoughts on the answers to these questions, or suggestions for more questions to add to the list. Also, I’m sure there has been a tremendous amount of research on all of these subjects, but unfortunately I’m entirely ignorant of it, so among other comments, I’d be very curious if anyone had particular reading they would recommend on these subjects. It would also be great to hear how other law schools approach these issues now, and how other law schools arrived at their decisions about to address these issues.
July 16, 2008 at 9:14 am
Posted in: Teaching
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Overpaid? Underpaid?
posted by Sarah Lawsky
When I was about twelve years old, I told my father that it was amazing that people actually got paid for playing the flute (my main activity at the time).
“Why?” he said.
“Because she’s amazed that someone could get paid for doing something she likes so much,” my mom said.
“No,” I said, “it’s because I’m amazed that someone could get paid for doing something so useless.”
My understanding of economics has improved a little since then, and I now think people get paid for playing the flute because there is a demand for people who play the flute. But I also know that the idea of a market for people who play the flute is complicated by the fact that many of the places that pay people for playing the flute are nonprofits, supported by donations.
I’m intrigued, then, by two related topics that recur on and off blogs (most recently yesterday, in the Chicago Tribune and on the ELS blog): (1) are judges underpaid and (2) are law professors overpaid? And I’m intrigued by the recurrence of two sorts of arguments (both of which can be seen in either the comments or main posts of the last set of links):
July 14, 2008 at 10:18 am
Posted in: Economic Analysis of Law, Law Practice
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Question of the Day
posted by Sarah Lawsky
If you could tattoo only one section of the Internal Revenue Code on your body, which section would it be?
Comments are open!
July 14, 2008 at 9:39 am
Posted in: Tax
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