Emily Cauble (Wisconsin; Google Scholar) presents Taxpayers’ Use of Hindsight at Florida in the present day as a part of its Tax Coverage Colloquium hosted by Charlene Luke:
After enterprise a transaction, a taxpayer would possibly later uncover that it was ill-advised. Maybe the taxpayer engages within the transaction with out contemplating its tax penalties. Later, in the midst of acquiring tax submitting steerage, the taxpayer learns that another transactional type would have produced extra favorable tax outcomes. Alternatively, the taxpayer might undertake a transactional type that produces favorable tax penalties if the transaction’s non-tax consequence is what the taxpayer predicts. When the taxpayer discovers that the transaction’s non-tax consequence isn’t what the taxpayer predicted, the taxpayer needs that they had used another transactional type. Alongside related strains and for related causes, a taxpayer who recordsdata (or fails to file) an election that dictates their tax remedy would possibly later really feel remorse.
A taxpayer who learns that an earlier resolution was, on reflection, ill-advised would possibly try to profit from their newly acquired information by retroactively revising their transaction or submitting a brand new election. Tax regulation’s limitations on using hindsight decide whether or not the taxpayer will succeed.
The goals of this Article are, first, to undertake an intensive examination of restrictions on and allowed makes use of of hindsight in tax regulation. Second, by suggesting and analyzing underlying coverage objectives that encourage restrictions on using hindsight, this Article identifies some options of present regulation which might be helpful and others that advantage revision.