April 14, 2014; WBUR, “Cognoscenti”
Joseph Darby, tax lawyer cum sportswriter, thinks that the Internal Revenue Code is one of the most unintentionally hilarious books ever written. For those of you who from time to time struggle with its vagaries with regard to nonprofit corporations, this might not resonate, but it’s all in how you look at it.
For instance, he writes:
“We all value clarity in the written word. Code Section 509(a) provides the following definition of a ‘private charity’: For purposes of paragraph (3), an organization described in paragraph (2) shall be deemed to include an organization described in section 501(c)(4), (5), or (6) which would be described in paragraph (2) if it were an organization described in section 501(c)(3).”
He says there are also many useful definitions in the code you may be able to make use of in day-to-day life, as in the following found in Code Section 168(i)(2)(B):
(B) COMPUTER OR PERIPHERAL EQUIPMENT DEFINED. — For purposes of this paragraph–
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(i) IN GENERAL. — The term “computer or peripheral equipment” means–
(I) any computer, and
(II) any related peripheral equipment.”
He also observes, “The average Internal Revenue Code sentence is written in a style that places special emphasis on maximizing the ratio of words to periods. Maybe at one point in time the Government Printing Office charged extra for periods compared to other letters and symbols—I don’t know. In all events, nowhere are the sentences longer, the dependent clauses more dependent, the independent clauses more independent and tangled, the participles more dangling and the gerunds more wildly off the reservation than in the tax law of our land.”
And in illustration, he points to former Code Section 341(e)(1), dealing with so-called “collapsible corporations.” He says it was repealed in 2003 but “is just too impressive an example of Congress’s writing flair and verbal panache to be ignored.”
For purposes of subsection (a)(1), a corporation shall not be considered to be a collapsible corporation with respect to any sale or exchange of stock of the corporation by a shareholder, if, at the time of such sale or exchange, the sum of – (A) the net unrealized appreciation in subsection (e) assets of the corporation (as defined in paragraph (5)(A)), plus (B) if the shareholder owns more than 5 percent in value of the outstanding stock of the corporation the net unrealized appreciation in assets of the corporation (other than assets described in subparagraph (A)) which would be subsection (e) assets under clauses (i) and (iii) of paragraph (5)(A) if the shareholder owned more than 20 percent in value of such stock, plus (C) if the shareholder owns more than 20 percent in value of the outstanding stock of the corporation and owns, or at any time during the preceding 3-year period owned, more than 20 percent in value of the outstanding stock of any other corporation more than 70 percent in value of the assets of which are, or were at any time during which such shareholder owned during such 3-year period more than 20 percent in value of the outstanding stock, assets similar or related in service or use to assets comprising more than 70 percent in value of the assets of the corporation, the net unrealized appreciation in assets of the corporation (other than assets described in subparagraph (A)) which would be subsection (e) assets under clauses (i) and (iii) of paragraph (5)(A) if the determination whether the property, in the hands of such shareholder, would be property gain from the sale or exchange of which would under any provision of this chapter be considered in whole or in part as ordinary income, were made – (i) by treating any sale or exchange by such shareholder of stock in such other corporation within the preceding 3-year period (but only if at the time of such sale or exchange the shareholder owned more than 20 percent in value of the outstanding stock in such other corporation) as a sale or exchange by such shareholder of his proportionate share of the assets of such other corporation, and (ii) by treating any liquidating sale or exchange of property by such other corporation within such 3-year period (but only if at the time of such sale or exchange the shareholder owned more than 20 percent in value of the outstanding stock in such other corporation) as a sale or exchange by such shareholder of his proportionate share of the property sold or exchanged, does not exceed an amount equal to 15 percent of the net worth of the corporation.
In case you lost count, the previous passage contains 342 words and only one period. Impressive!—Ruth McCambridge
