On Taxation of Unrealized Gains

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Essay #: 068990
Total text length is 4,963 characters (approximately 3.4 pages).

Excerpts from the Paper

The beginning:
On Taxation of Unrealized Gains
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On Taxation of Unrealized Gains
This paper addresses the question of taxation on unrealized gains under Section 1256., even where the ultimate result is actually a loss, and in particular Murphy v. United States, 992 F 2d 929 (9th Cir. 1993). The ruling is looked at from a constitutional perspective, an accounting perspective, and an economic perspective. Despite some reservations about the effects of Section 1256, the ruling appears sound.
Constitutional Perspective
In Murphy v. United States, 992 F 2d 929 (9th Cir. 1993), the court ruled on the question whether in taxing...
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.....yet still be taxable.
Conclusion
Brief views through an economic and accounting lens have found some problems with taxation of unrealized gains, but further analysis may well uncover positive reasons that on balance provide compelling arguments in favor of continuing this tax. Moreover, it could be argued that even the “problems” that were raised might be considered as welcome side effects consistent with policy that favors cautious, well-funded organizations. In any case, as a matter of law none appears patently unreasonable or capricious in a way that could be considered constitutionally important.
References
Murphy v. U.S., 992 F.2d 929, 71 A.F.T.R.2d 93-1862, 93-1 USTC P 50,270 (9th Cir.(Cal.) May 04, 1993) (NO. 91-56507)
26 USCA § 1256