Goodwill Hunting Gone Bad: Tax Law’s Outmoded Treatment of Goodwill

Authors

Mitchell L. Engler, Yeshiva University, Benjamin N. Cardozo School of LawFollow

Abstract

I. Introduction

II. Governmental Goodwill Hunting Before 1993 ... A. General Description of Pre-1993 Dynamic and § 197 ... B. Two Illustrative Examples ... 1. Example 1: Former Baseball Commissioner Bud Selig’s Tax Case ... 2. Example 2: Sale of Bud’s Bar & Grill ... C. Summary

III. Goodwill Hunting Gone Bad: Taxpayers Now Hunt ... A. Goodwill Hunting on Transfers to Foreign Subsidiaries ... B. Goodwill Hunting for Foreign Tax Credits ... 1. Example 1A: Bud Selig’s Tax Case ... 2. Example 2A: Bud’s London Bar & Grill ... C. Seller’s Goodwill Incentives for Capital Gains ... 1. Contingent “Earn Outs” ... a. Example 1B: Bud Selig’s Tax Case ... b. Example 2B: Sale of Bud’s Bar & Grill ... 2. Fixed-Consideration Incentives

IV. Responses to Goodwill Hunting Gone Bad ... A. Replace Goodwill Sourcing Exception with Foreign Taxation ... 1. Underlying Goals of § 865(d)(2) and (d)(3) ... 2. Goodwill as a Poor Proxy for Real Goal … 3. Substitute Actual Taxation and Link to Treaty Rules ... B. Franchise Attack Gone Bad: Drop Trademarks from § 1253 ... 1. Congressional Motivation: Split-Interest Franchises ... 2. Inconsistency and Practical Allocation Issues ... 3. Subsequent Changes Leave One-Sided Punitive Regime ... 4. Discontinuities in Trademark Litigation ... 5. Summary ... C. Business Sale Override of §§ 1221(a)(3) and 1235

V. Conclusion

Recommended Citation

Mitchell L. Engler, Goodwill Hunting Gone Bad: Tax Law’s Outmoded Treatment of Goodwill, 96 Neb. L. Rev. 883 (2017)
Available at: https://digitalcommons.unl.edu/nlr/vol96/iss4/4