Trump Swings His Wrecking Ball at Social Security

NEIL H. BUCHANAN

Neil H. Buchanan—UF law professor and economist—dispels some common misunderstandings about the future of Social Security but explains why President Trump’s recent comments are cause for concern. Buchanan explains why, contrary to claims by reporters and politicians, Social Security is not at the brink of insolvency, but points out that if Trump were to permanently eliminate payroll taxes, that would doom the program on which tens of millions of retirees depend.

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McKenney v. United States

Court: US Court of Appeals for the Eleventh Circuit

Docket: 18-10810

Opinion Date: September 1, 2020

Judge: Jordan

Areas of Law: Tax Law

After plaintiffs filed suit against their accounting firm for negligence, the firm settled the case by paying plaintiffs $800,000. The Eleventh Circuit affirmed the district court's grant of summary judgment to the government as to plaintiffs' deduction of litigation expenses as a business expense, because the litigation between plaintiffs and the firm was personal in its character and origin. The court also affirmed the district court's grant of summary judgment in favor of the government as to plaintiffs' $1.4 million deduction for a purported loss, because the settlement agreement bars plaintiffs from deducting any fraction of the settlement for the covered transactions. With respect to the $800,000 settlement payment exclusion, the court reversed the district court's grant of summary judgment in favor of plaintiffs and remanded for entry of judgment in favor of the government. Assuming that Clark v. Comm'r, 40 B.T.A. 333, 335 (1939), was correctly decided, and that its rationale applies in a case like this one where the accounting malpractice related not to the preparation of a tax return but to the structuring of an underlying transaction, the court held that plaintiffs failed to sustain their burden of demonstrating that the $800,000 settlement was excludable. In this case, plaintiffs failed to meet their burdens of showing their entitlement to the exclusion and the amount of that exclusion. The court explained that the IRS' tax deficiency notice was presumed correct, and plaintiffs did not overcome that presumption.

Ash Grove Cement Co. v. Nebraska Department of Revenue

Court: Nebraska Supreme Court

Citation: 306 Neb. 947

Opinion Date: August 28, 2020

Judge: Funke

Areas of Law: Construction Law, Tax Law

The Supreme Court affirmed the order of the district court finding that the production of aggregate by Ash Grove Cement Company qualified as "processing" under the Nebraska Advantage Act (NAA), Neb. Rev. Stat. 77-5701 to 77-5735, and finding that Ash Grove's aggregate production did not qualify as "manufacturing" under the NAA, holding that the appeals in this case were without merit. Because Lyman-Richey, which sold aggregate products used for things like manufacturing concrete, was wholly owned by Ash Grove, Ash Grove was eligible to include Lyman-Richey in its application for NAA tax incentives. At issue in this case was whether the district court erred in (1) finding that aggregate production locations were not engaged in "manufacturing" under the NAA; (2) denying Lyman-Richey's claims for overpayment of sales and use tax based on the manufacturing machinery or equipment exemption; and (3) finding the aggregate production locations were engaged in "processing" under the NAA. The Supreme Court affirmed, holding (1) although Ash Grove did not engage in "manufacturing" when it produced aggregate without crushing, it did engage in the qualified business of "processing" under the NAA; and (2) Lyman-Richey failed to prove entitlement to overpayment of sales and use tax based on the manufacturing machinery and equipment exemption.

Weaver v. Recreation District

Court: South Carolina Supreme Court

Docket: 27991

Opinion Date: September 2, 2020

Judge: Donald W. Beatty

Areas of Law: Civil Procedure, Constitutional Law, Real Estate & Property Law, Tax Law

Appellant Don Weaver brought a declaratory judgment action to challenge the constitutionality of S.C. Code Ann. section 6-11-271 (2004), which addressed the millage levied in certain special purpose districts. Appellant owned property and was a taxpayer in the Recreation District, a special purpose district created to fund the operation and maintenance of parks and other recreational facilities in the unincorporated areas of Richland County, South Carolina. Appellant first argued section 6-11-271 was unconstitutional because it violated the South Carolina Constitution's prohibition on taxation without representation. Appellant next contended section 6-11-271 did not affect all counties equally and was, therefore, special legislation that was prohibited by the South Carolina Constitution. Appellant lastly argued section 6-11-271 was void because it violated Home Rule as set forth in the state constitution and the Home Rule Act. The circuit court found Appellant failed to meet his burden of establishing any constitutional infirmity. To this, the South Carolina Supreme Court concurred and affirmed judgment.