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Suppose you are thinking about getting into the marijuana business--the legal marijuana business, that is--and your state has legalized that sort of activity. You assume, without legal advice, that you [...], This article considers several issues affecting Internal Revenue Code section 280E, which denies income-tax deductions and credits to businesses trafficking in controlled substances. Even though marijuana is legal in an increasing number of states, it remains a controlled substance under federal law and section 280E therefore applies to marijuana businesses. As a result, investing in a marijuana business is much less attractive than it would otherwise be. The article discusses issues of statutory interpretation but, more important, considers whether an almost complete denial of deductions and credits converts what is in form an income tax into something else. If the "income" tax as applied to a marijuana business is not on income, within the meaning of the Sixteenth Amendment, it may have to be apportioned among the states on the basis of population to be constitutional (the so-called direct tax apportionment rule). The article also argues, however, based on a 1911 Supreme Court decision, that the Sixteenth Amendment issues might go away if the business is conducted using a taxable corporation. Finally, the article includes a brief discussion about marijuana businesses conducted either directly by American Indian nations or through tribally created corporations. Those entities are not subject to the federal income tax; the limitations of section 2 HOE therefore are irrelevant; and tribal businesses have a competitive advantage in the marijuana market. Because of section 280E 's application to businesses that are legal under state law but illegal under federal law--an untenable situation--federalism issues underlie all of the discussion.

I INTRODUCTION 208 II AN OVERVIEW OF THE CURRENT VS CAPITAL ISSUE 209 III THE RIO TINTO CASE 212 A. The Facts 212 B. The Issue 212 C. The Conclusions [...], This paper seeks to establish a uniform approach to determining whether expenditures incurred to investigate the feasibility and merits of undertaking a capital transaction are, for Canadian income tax purposes, made on current or capital account. The jurisprudence is divided as to when, if ever, investigation fees are current expenditures. I argue that, to the extent it bases the tax classification of investigation fees on factors other than the nature of the expenditures, the existing jurisprudence should not be followed. I argue for the adoption of an approach that classifies investigation fees as current expenditures unless they directly provide the taxpayer with an enduring benefit. I analyze the tax issues applicable to investigation fees through the lens of the most recent decision on the topic: Rio Tinto Alcan Inc v R. I begin by identifying why Rio Tinto does not provide a satisfactory solution to the issue of investigation fee classification. I then reason from first principles to explain why investigation fees, other than those that directly provide an enduring benefit, are current expenditures. I conclude by discussing why the cases that have considered investigation fees to be capital expenditures should no longer be followed. Keywords investigation, oversight expense, current, capital, income tax, Rio Tinto

TABLE OF CONTENTS I. INTRODUCTION 454 II. THE TRADITIONAL NONDEDUCTABILITY OF COMMUTING 457 EXPENSES A. Mixed Motive Expenses 458 B. Commuting Expenses 460 C. The Force of Business 461 III. [...], Tax law reaches all parts of life, and societal expectations about life's activities often affect how the law is applied. As those expectations change, application of the law should be expected to change in turn. This essay highlights changing societal views about commuting, particularly as a result of the COVID-19 pandemic, to demonstrate how even long-standing positions under the tax law can be quickly uprooted. Specifically, as working from home becomes standard, taxpayers should be afforded tax relief when required to commute into the workplace, despite the fact that the tax law traditionally has rejected such relief.

"While the new law may appear to be a sword, taxpayers may be able to use it as a shield and push the government to engage meaningfully on the character [...]

I. INTRODUCTION Transportation to and from one's place of employment is an important cost that most workers consider when choosing where to work. This may be particularly true for workers [...]

Table of Contents I. Introduction 502 II. The Violation of Settled Law 503 III. Capital Gain is Gain from Capital 506 A. Capital Required under American Reception of "Capital Gain" [...], As a matter of principle, capital gain is the gain from invested capital or basis. If the taxpayer has no basis in something of value it sells, there is no capital gain. The principle that capital gain is gain from capital is embedded in the ordinary English language meaning of "capital gain," which reflects the long history of the English property system going back into feudal tenures. Property purchased by expenses charged to the income interest remains part of the income interest and does not become capital gain reserved for the next heir. Moreover, the combination of deduction of inputs into a transaction and preferential capital gain rates for the output is a mismatch that creates an inappropriate negative tax or subsidy The subsidy does not "clearly reflect income." Finally, preferential rates for capital gain provide relief from what Irving Fisher called a double tax on capital, but if there is no capital, there is no double tax and thus no capital gain. This means that, like compensation, the sale of a contract to perform future services, of body parts, of self-developed goodwill, or of an income interest are ordinary assets, not capital. While capital gain has a principled meaning, there are cases that do not conform to the principles. The recent Tax Court Memorandum Decision, Greenteam Materials Recovery Facility PN v. Commissioner, treated the sale of a contract in which the taxpayer had no basis as if it were a capital asset. Compensation for services and self-developed goodwill are also sometimes treated as capital assets, which is a violation of the principled meaning of capital gain.

I. INTRODUCTION II. BACKGROUND III. ATTRIBUTING LITIGATION-RELATED COSTS TO INCOME-PRODUCING ACTIVITY IV. LIABILITY INSURANCE PROCEEDS V. COORDINATION OF TAX CONSEQUENCES OF DAMAGES PAYMENTS A. The Equal-Amounts-Realized Rule B. The Social [...], Defendants often deduct for income tax purposes their litigation-related costs, such as attorney fees and payments to settle claims or satisfy judgments. The result is often a large gap between the sticker price of settlements or judgments and their after-tax cost--what defendants really pay out of pocket. The problem: For every dollar that a defendant avoids in tax liability by, for example, deducting the damage awards it pays, the civil justice system falls that much short of its corrective-justice or optimal-deterrence goals in that case. For this reason, the entire civil justice system should care about this question: How should income tax law treat litigation-related costs? This Article identifies the critical tax-design choices that must be faced but that prior commentary has largely ignored: How to attribute litigation-related costs to an income-producing activity; whether to treat liability insurer payments made on a defendant's behalf as income to that defendant; whether to coordinate the tax treatment of a payor's damages payments with the tax treatment of those receipts to the payee; and whether litigation-related costs should be treated as capital expenditures. Then, the Article offers a new default rule for settlement agreements: Unless a settlement agreement expressly indicates otherwise, a settling defendant promises not to seek an allowable tax deduction for litigation-related costs. In so doing, this Article reveals the issues that lawyers, judges, and scholars must no longer ignore when they argue over how an income tax system could or should treat litigation-related costs.