Tax Section Meeting February 8, 2016 6:00 p.m. – 8:30 p.m. Quinnipiack Club New Haven, CT CT Bar Institute, Inc. CLE Credit 1.0 Hours No representation or warranty is made as to the accuracy of these materials. Readers should check primary sources where appropriate and use the traditional legal research techniques to make sure that the information has not been affected or changed by recent developments. Lawyers’ Principles of Professionalism As a lawyer I must strive to make our system of justice work fairly and Where consistent with my client's interests, I will communicate with efficiently. In order to carry out that responsibility, not only will I comply opposing counsel in an effort to avoid litigation and to resolve litigation with the letter and spirit of the disciplinary standards applicable to all that has actually commenced; lawyers, but I will also conduct myself in accordance with the following Principles of Professionalism when dealing with my client, opposing I will withdraw voluntarily claims or defense when it becomes apparent parties, their counsel, the courts and the general public. that they do not have merit or are superfluous; Civility and courtesy are the hallmarks of professionalism and should not I will not file frivolous motions; be equated with weakness; I will endeavor to be courteous and civil, both in oral and in written I will make every effort to agree with other counsel, as early as possible, on communications; a voluntary exchange of information and on a plan for discovery; I will not knowingly make statements of fact or of law that are untrue; I will attempt to resolve, by agreement, my objections to matters contained in my opponent's pleadings and discovery requests; I will agree to reasonable requests for extensions of time or for waiver of procedural formalities when the legitimate interests of my client will not be In civil matters, I will stipulate to facts as to which there is no genuine adversely affected; dispute; I will refrain from causing unreasonable delays; I will endeavor to be punctual in attending court hearings, conferences, meetings and depositions; I will endeavor to consult with opposing counsel before scheduling depositions and meetings and before rescheduling hearings, and I will I will at all times be candid with the court and its personnel; cooperate with opposing counsel when scheduling changes are requested; I will remember that, in addition to commitment to my client's cause, my When scheduled hearings or depositions have to be canceled, I will notify responsibilities as a lawyer include a devotion to the public good; opposing counsel, and if appropriate, the court (or other tribunal) as early as possible; I will endeavor to keep myself current in the areas in which I practice and when necessary, will associate with, or refer my client to, counsel Before dates for hearings or trials are set, or if that is not feasible, knowledgeable in another field of practice; immediately after such dates have been set, I will attempt to verify the availability of key participants and witnesses so that I can promptly notify I will be mindful of the fact that, as a member of a self-regulating the court (or other tribunal) and opposing counsel of any likely problem in profession, it is incumbent on me to report violations by fellow lawyers as that regard; required by the Rules of Professional Conduct; I will refrain from utilizing litigation or any other course of conduct to I will be mindful of the need to protect the image of the legal profession in harass the opposing party; the eyes of the public and will be so guided when considering methods and content of advertising; I will refrain from engaging in excessive and abusive discovery, and I will comply with all reasonable discovery requests; I will be mindful that the law is a learned profession and that among its desirable goals are devotion to public service, improvement of In depositions and other proceedings, and in negotiations, I will conduct administration of justice, and the contribution of uncompensated time and myself with dignity, avoid making groundless objections and refrain from civic influence on behalf of those persons who cannot afford adequate legal engaging I acts of rudeness or disrespect; assistance; I will not serve motions and pleadings on the other party or counsel at such I will endeavor to ensure that all persons, regardless of race, age, gender, time or in such manner as will unfairly limit the other party’s opportunity disability, national origin, religion, sexual orientation, color, or creed to respond; receive fair and equal treatment under the law, and will always conduct myself in such a way as to promote equality and justice for all. In business transactions I will not quarrel over matters of form or style, but will concentrate on matters of substance and content; It is understood that nothing in these Principles shall be deemed to supersede, supplement or in any way amend the Rules of Professional Conduct, alter existing standards of conduct against which lawyer conduct I will be a vigorous and zealous advocate on behalf of my client, while might be judged or become a basis for the imposition of civil liability of recognizing, as an officer of the court, that excessive zeal may be any kind. detrimental to my client’s interests as well as to the proper functioning of our system of justice; --Adopted by the Connecticut Bar Association House of Delegates on June 6, 1994 While I must consider my client’s decision concerning the objectives of the representation, I nevertheless will counsel my client that a willingness to initiate or engage in settlement discussions is consistent with zealous and effective representation; Faculty Biographies Louis Schatz is a member of Shipman & Goodwin LLP’s seven-person Management Committee and also serves as Chair of the firm's Tax and Employee Benefits Practice Group. He is the past Chair of the Tax Section of the Connecticut Bar Association. Lou practices in the areas of federal and State of Connecticut tax with attention to the representation of closely held businesses organized as limited liability companies, partnerships and S corporations; real estate joint ventures; and the representation of taxpayers involved in Connecticut tax controversies (at the audit, appellate and court levels). He is a frequent lecturer on federal and State of Connecticut tax, partnership and limited liability company issues. For many years he has been providing annual updates on Connecticut tax developments to out-of-state accountants. His recent lectures include presentations to the Connecticut Bar Association, the Connecticut Society of CPA's, the Connecticut Business and Industry Association, the National Conference of CPA Practitioners, the New York State Society of CPA's, the Long Island Tax Practitioner Symposium, the National Business Institute, the University of Connecticut Income Tax School, and the Foundation for Accounting Education in New York City. Louis is widely published, including his co-authorship of "Connecticut Limited Liability Act: Forms and Practice Manual," the leading treatise in Connecticut on limited liability companies. Michael Spiro is a partner in the Tax group where his practice focuses on providing federal and state tax advice in connection with domestic and international transactions, including hedge and private equity fund formations, mergers and acquisitions, and debt and equity financings and restructurings. Mr. Spiro holds a J.D. from the University of Pennsylvania Law School, where he was a Senior Editor of the Journal of International Economic Law; an LL.M. in Taxation from Temple University Beasley School of Law, where he was the recipient of the Faculty Award in Taxation; and a B.A., magna cum laude from Brandeis University. Mr. Spiro is admitted to practice in the States of Connecticut and New Jersey and in the Commonwealth of Pennsylvania. He is a member of the American Bar Association and the Connecticut Bar Association, and is a member of the Executive Committee of the Tax Section of the Connecticut Bar Association. Mr. Spiro also serves as an Adjunct Professor of Taxation at the Fairfield University Dolan School of Business. FINN DIXON & HERLING LLP CBA Comments to Proposed IRS Regulations on Disguised Payments for Services Management Fee Waivers (the “Problem”) Technique used by private equity/venture capital fund managers to obtain deferral and character benefits. Became subject of media scrutiny starting during 2012 presidential election. Dickinson, Tim “Mitt Romney’s Tax Dodge” Rolling Stone, October 12, 2012. Otter, Jack “Bain Capital's tax breaks: Are they legal?” CBS Moneywatch, September 11, 2012. 2 How do Management Fee Waivers Work? Rely on partnership “profits interests.” Rev. Proc. 93-27: If a person receives a profits interest for the provision of services to or for the benefit of a partnership in a partner capacity or in anticipation of being a partner, the Internal Revenue Service will not treat the receipt of such an interest as a taxable event for the partner or the partnership. 3 Profits Interest Defined A capital interest is an interest that would give the holder a share of the proceeds if the partnership's assets were sold at fair market value and then the proceeds were distributed in a complete liquidation of the partnership. This determination generally is made at the time of receipt of the partnership interest. A profits interest is a partnership interest other than a capital interest. 4 Exceptions to Safe Harbor If the profits interest relates to a substantially certain and predictable stream of income from partnership assets, such as income from high- quality debt securities or a high-quality net lease; If within two years of receipt, the partner disposes of the profits interest; or If the profits interest is a limited partnership interest in a “publicly traded partnership” within the meaning of section 7704(b) of the Internal Revenue Code.