Victor Fleischer Profile picture
Tax prof, UC-Irvine.
Feb 22, 2023 6 tweets 1 min read
The longer that I teach partnership tax, which I think is the hardest class in law school to take (or teach), the more I believe that subchapter K is broken. We has 704(b) regs that people mostly don’t follow because it doesn’t work for them, opting for targeted allocations and the murky test of “partners interest in the partnership”.
Aug 7, 2022 7 tweets 1 min read
This is BS. The book minimum tax only hits companies with $1 billion plus in income. That’s not small business by anyone’s definition. 1/x The language that they are complaining about is a reversion to language in the House passed BBB. It’s a technical fix to ensure that billion dollar sponsors are subject to the minimum tax like other corporations. 2/x
Aug 4, 2022 12 tweets 2 min read
Whatever it takes to pass the bill.

The climate, drug pricing, and IRS funding pieces are 1000x more important than whatever we do on carried interest. 1/x I’ve spent 15 years working on carried interest. Whatever happens this weekend, I’m ready to go another 15 rounds. 2/x
Sep 7, 2021 21 tweets 3 min read
The Chamber of Commerce released a bogus study on carried interest that claims massive job losses if we tax carried interest allocations as ordinary income. Here's why it's a bogus study. 1/x

uschamber.com/press-release/… Big picture: The study claims massive (4.9 million!) job losses as fund managers scale back investment and avoid risk. But raising tax rates on fund managers will have virtually no impact on fund investors or risk preference. 2/x
Sep 28, 2020 15 tweets 3 min read
Trump Tax Thread, part 2. The big stuff.

I'll come back to @JesseDrucker's great work below in a minute.

Trump lost a lot of money, mostly other people's money, but claimed some of those losses as his own for tax purposes. 1/x

nytimes.com/2020/04/24/bus… This gets confusing, so at the risk of oversimplifying I'll try to keep it somewhat general. Also, to be honest, a lot of the details are still unclear. 2/x
Sep 28, 2020 7 tweets 2 min read
Trump tax thread. I'll start with the smaller stuff. What's with the consulting fees to the kids? 1/x First, by structuring as a consulting fee instead of a gift, it avoids gift tax (and eventually estate tax). This only works if the fee is legit and market rate, which it certainly wasn't. 2/x
Jul 9, 2020 7 tweets 1 min read
One possible response to the SCOTUS subpoena decision below. 1/x Section 6103 of the tax code governs the limited circumstances when the Treasury can turn over tax returns to various parties, including Congressional Committees. Congress may want to amend 6103 as it relates to presidential and candidate tax returns, not just Trump. 2/x
Mar 7, 2020 4 tweets 1 min read
via @nytimes. I was team Warren, and now I guess I’m team Biden, but I have to say that Sanders is genuine. My one interaction w/ him was at the Senate Credit Union, where you have to sign in to see a teller to deposit a check or whatever. /1 nytimes.com/2020/03/06/us/… Sanders walked in, signed in, and sat down just like any other schmoe. When they called my name I offered to let him go first. He shrugged and said okay, but hardly expected it, didn’t try to elbow his way to the front of the line.
Aug 22, 2018 7 tweets 2 min read
Love seeing all the earnest #1Ladvice and comparing it to the #3Ladvice from a friend of mine: only take classes that end in “and the law” (Movies and the Law, Literature and the Law...) Yes, come to law school to become a lawyer for Greenpeace, leave with a BigLaw job writing motions for Dow/DuPont opposing class certification (YMMV)
Jul 13, 2018 7 tweets 2 min read
Also, didn’t they JUST fight to include fringe benefit on-site gyms as income, targeting Silicon Valley employees? So nothing changes except the hassle factor of doing it through a TSA or whatever? It is extremely difficult to argue that fitness classes aren’t consumption (and thus shouldn’t be deducted), more essential somehow as the cost of earning income than food, clothing, or shelter.
Dec 4, 2017 9 tweets 2 min read
Here's a brief update on the PTP issue. The main Cornyn amendment (1715) is in the bill. It treats PTP income as eligible for the special 23% passthrough deduction, w/o restrictions (investment advice, law, accounting, consulting, etc.). Sneaky dirty win for oil and gas PTPs. 1/x The other Cornyn amendment (1712) didn't make it. So no big win for financial PTPs (Blackstone, Carlyle). I misread the cross-reference (951A, not 199A). My bad. & I believe Cornyn's office when they said yesterday they didn't intend to give a tax break to financial PTPs. 2/x
Dec 2, 2017 4 tweets 1 min read
UPDATE: Only one of Cornyn's amendments (1715) seems to have made it into the Manager's Substitute. Without the other amendment, financial PTP fee income isn't qualifying income and doesn't benefit from the special passthrough deduction. Guess what is qualifying: OIL AND GAS. 1/x Under current law, oil and gas, natural resources, real property rents are all "qualifying income" under 7704(d) and don't need special relief. The failed Cornyn amendment would have extended this to financial PTPs. 2/x
Dec 2, 2017 4 tweets 1 min read
Cornyn amendment WORSE than I thought. As drafted, pg 38, Substitute includes ALL PTP income as income that qualifies for the 23% deduction. This means (1) new loophole for management fees for PTPs, and (2) LOWER effective rate for carried interest (20% * (1-0.23)) = 15.4% 1/x Not only does carried interest loophole survive, PTPs get to pay 15.4%. And on management fees, effective rate of 29.6%. Meanwhile regular working professionals pay top rates of 32-35-38%. 2/x
Dec 1, 2017 4 tweets 1 min read
There’s a lot of oil and gas PTPs. (Cornyn is from TX.) Yes, they all now benefit from the new passthrough rate. 1/x Real estate too. Thanks to Cornyn amendment 1712, (in addition to 1715) rental income and any other passthrough income is “qualifying income” for the PTP rules. 2/x
Dec 1, 2017 5 tweets 1 min read
It's even worse than I thought. Under current law Blackstone, Carlyle, Apollo and other PE PTPs have to use a "blocker" structure to qualify as PTPs and avoid corporate tax. (Usually § 7704 taxes publicly traded entities as a corporation.) 1/x The blocker structure transforms fee income into dividend "qualifying income," but at the expense of paying a little bit of corporate tax in the blocker. 2/x
Nov 28, 2017 17 tweets 5 min read
GILTI: The international provisions of the Senate tax bill are worse than I thought--a very nice gift to multinationals. Bottom line for US Corp w IP held abroad: 10% tax rate on US sales, 2.5% (!) tax rate on foreign sales. 1/x Remember that the theory of the case for int'l tax reform was that a 20% tax rate would induce companies to invest in R&D and manufacturing in the US and bring IP back home. Lots of countries have experimented with patent boxes, and the Senate bill is a variation of that. 2/x
Nov 14, 2017 5 tweets 1 min read
The House tax reform bill is a mess. Ridiculous that they're going to try to jam a floor vote while we're still figuring it out. Here's an example. 1/x Proposed 163(n) aims to cut down on earnings stripping from US subsidiaries of multinationals. Deduction for net interest expense is limited to 110% of the subsidiary's allocable share of net interest expense, calculated based on EBITDA. 2/x
Nov 7, 2017 4 tweets 1 min read
Here's another example of gaming the passthrough rate of 25%. Individuals A and B contribute $1m each to Mgmt LLC. A and B also form GP. 1/x Mgmt LLC and C together form MgmtSub LLC, which provides serves to Fund in exchange for 2% mgmt fee. A and B provide some investment advice to Fund. 2/x
Nov 7, 2017 12 tweets 1 min read
I'm getting lots of questions about the GOP amendment on carried interest, which would change the holding period from 1 to 3 years. 1/x If you asked staff to design an amendment to "address" carried interest without actually doing a damn thing, this would be it. 2/x
Nov 3, 2017 8 tweets 3 min read
1. So here are a couple of ways people will abuse the new passthrough rules. The guardrails are shaky, as @DanielShaviro has pointed out. @DanielShaviro 2. Step one. Assume you are a law firm partner.
Oct 5, 2017 6 tweets 1 min read
Nerdy tax thought of the day: Treasury decision to withdraw 2704 regs prob reduces cost of estate tax repeal by 1/3 #JCT #valuationBS Under current law you can play valuation games to reduce value of the estate for tax purposes. Proposed regs would make that harder to do.