2L exam prep thread Forum

[snowpeach06]

Does anyone have a good issue spotting attack outline for conlaw (i.e. something like in the front of the book with the briefs keyed to Chemerinsky)?

My conlaw outline is huge, sprawling, and completely without focus. If you have one and are willing to share, you rule.

Regular con law or first Amendment? I have a con law checklist from last semester i'd be willing to share - but, I only got a b+ in con law, so, I don't know that it's the best.

--ImageRemoved--

[smokyroom26]

Someone help a dude understand a tax concept. Plz. Just one.

This is from my prof's exam from last year. Somehow I just can't really figure out exactly what he is asking or what the rule is.

Question:
Two has previously invested a significant amount in a new vessel which was designed to transport foreign sourced liquified natural gas (LNG) into the US Market. The vessel is actually owned through a 100 % owned entity, a Texas LLC, which is "disregarded" for US income tax purposes (Two LNG, LLC). Two LNG, LLC has purchased this vessel for the amount of 100x, financing the acquisition of this vessel with a nonrecourse loan in the amount of 90x. Two and Lender thought the interest expens and the principal of the 90x loan could be amortized with the charter revenue anticipated to be received for the vessel, but the worldwide market for LNG has become very depressed and the vessel is now idle. Accumulated tax depreciation for the vessel is 40x. The market value of the vessel has declined to 70x because of the market conditions. The principal balance on the loan remains at 90x. Two has indicated to Lender that it is abandoning its (indirect) ownership of the vessel (or its interest in Two LNG, LLC).

Provide appropriate advice to Two on the federal income tax effects.


Anybody?

I'll take a stab at it. Better than studying for BA, which I know NOTHING about!

Definitely have a Crane/Tufts problem in here. Abandoning the vessel is a realization event. Two's initial basis in the vessel would be 100x, reduced by the 40x of depreciation deductions, assuming they were properly taken, so Two's adjusted basis would be 60x. Two has negative equity now, since the FMV is below the outstanding loan balance, so we're in Tufts land. Unfortunately for Two, because the debt is nonrecourse, we don't bifurcate the transaction and the whole shebang (90x loan balance) goes into amount realized, so Two has a 30x gain (90-60 = 30. I'm bad at math). Because the vessel is depreciable personal property used in a trade/biz, it gets kicked out of 1221(a)(2) and heads to 1231. 1245 applies because the amount realized is a gain, not a loss, so the 30k gain is treated as conclusively ordinary, since all 1245 gains NOT IN EXCESS of the prior deductions taken are treated that way.

Should also note that including the 90x loan balance for purposes of amount realized is the majority rule. A minority rule is that instead the amount realized should be limited to the FMV of the property at the time of the realization event, so in that case Two would only have a 10x gain, but again, that is the minority rule.

We didn't cover special rules for taxation of corporations other than the carryback/carryforward of capital losses, so I can't comment on how else the LLC thing would affect this problem.

Hope this helps, and if anyone sees problems with this analysis, plz comment.

Also, srsly can someone teach me Business Associations?

(Edited to clarify.) (And to get 9-6=3 correct. Jesus)

[BeenDidThat]

Someone help a dude understand a tax concept. Plz. Just one.

This is from my prof's exam from last year. Somehow I just can't really figure out exactly what he is asking or what the rule is.

Question:
Two has previously invested a significant amount in a new vessel which was designed to transport foreign sourced liquified natural gas (LNG) into the US Market. The vessel is actually owned through a 100 % owned entity, a Texas LLC, which is "disregarded" for US income tax purposes (Two LNG, LLC). Two LNG, LLC has purchased this vessel for the amount of 100x, financing the acquisition of this vessel with a nonrecourse loan in the amount of 90x. Two and Lender thought the interest expens and the principal of the 90x loan could be amortized with the charter revenue anticipated to be received for the vessel, but the worldwide market for LNG has become very depressed and the vessel is now idle. Accumulated tax depreciation for the vessel is 40x. The market value of the vessel has declined to 70x because of the market conditions. The principal balance on the loan remains at 90x. Two has indicated to Lender that it is abandoning its (indirect) ownership of the vessel (or its interest in Two LNG, LLC).

Provide appropriate advice to Two on the federal income tax effects.


Anybody?

I'll take a stab at it. Better than studying for BA, which I know NOTHING about!

Definitely have a Crane/Tufts problem in here. Abandoning the vessel is a realization event. Two's initial basis in the vessel would be 100x, reduced by the 40x of depreciation deductions, assuming they were properly taken, so Two's adjusted basis would be 60x. Two has negative equity now, since the FMV is below the outstanding loan balance, so we're in Tufts land. Unfortunately for Two, because the debt is nonrecourse, we don't bifurcate the transaction and the whole shebang (90x loan balance) goes into amount realized, so Two has a 40x loss. Because the vessel is depreciable personal property used in a trade/biz, it gets kicked out of 1221(a)(2) and heads to 1231. 1245 is inapplicable because the amount realized is a loss, not a gain, so we stay in 1231. Ultimate determination of character of the loss will depend on whether Two has any capital gains, because if this is his only capital gain/loss, the netting process means that this will be categorized as an ordinary loss.

Should also note that including the 90x loan balance for purposes of amount realized is the majority rule. A minority rule is that instead the amount realized should be limited to the FMV of the property at the time of the realization event, so in that case Two would only have a 10x loss, but again, that is the minority rule.

We didn't cover special rules for taxation of corporations other than the carryback/carryforward of capital losses, so I can't comment on how else the LLC thing would affect this problem.

Hope this helps, and if anyone sees problems with this analysis, plz comment.

Also, srsly can someone teach me Business Associations?

(Edited to clarify.)

Holy fucking god.

[WilliamSmith]

.

[Ty Webb]

Wait, if Two (from the FIT question above) had an adjusted basis of 60x and there was a realization of 100x, wouldn't he have a gain of 40x to be included in gross income, subject to any exclusions on the basis of indebtedness discharge?

[smokyroom26]

Wait, if Two (from the FIT question above) had an adjusted basis of 60x and there was a realization of 100x, wouldn't he have a gain of 40x to be included in gross income, subject to any exclusions on the basis of indebtedness discharge?

Ah, balls, you're right in part. Serves me right, sorry - I had the math switched around. The realization is only 90k, not 100k, though, because it is the amount of the nonrecourse loan that goes into amount realized. 100k is just his initial unadjusted basis in the property. So let me amend: he has a GAIN, not a LOSS, of 30k. That WOULD go through 1245 then, and the 30k gain would be conclusively ordinary because he has taken 40k in depreciation deductions on the liner.

And no - when we are in Crane/Tufts land, the cancellation of indebtedness stuff does NOT apply. I'll edit above.

[smokyroom26]

To explain more: Under Crane, we treat the amount of nonrecourse debt used to purchase the property as part of the initial basis in the property. Lady in that case had (unusually) zero equity in that property - the FMV at the time of sale was the same as her unpaid nonrecourse debt. Tufts deals with the situation where, once the property is sold, the FMV of the property has become LESS than the outstanding balance of the nonrecourse debt (negative equity). Under Tufts, when the debt is nonrecourse, the entire amount of the debt then goes into the seller's amount realized on the sale of the property (majority rule), so to calculate gain or loss, you take amount realized - adjusted basis.

It is ONLY when the debt is RECOURSE debt that there is any COD income. When there is RECOURSE debt, we bifurcate the transaction. So in that situation, we treat the transaction as though the seller (1) sold the property for its FMV, and then (2) used the cash from that sale to pay off the debt.

[dudders]

Ahh taking my last real exam today ... got plenty of study time in for the real tests. Now I will spend the rest of the week hating myself for saving a 4-credit take-home exam and a 6k word paper for Tues-Friday. ... at least if I work from home for the rest of finals I can wear stretchy pants AND no shoes. little victories.

[traehekat]

jesus, thought the above problem was for a BA/corporations class. i dont know if i should be relieved that it isn't, or worried that i can't even tell if im looking at a BA question in the first place. fuck.

[itsirtou]

i have my first exam this afternoon because i wussed out and didn't take it Saturday morning

woof

[traehekat]

maaaaaaan i just hope everyone else is on board with this whole "don't try very hard because it no longer matters" attitude for 2L exams. if there are a significant number of people in my BA class who are actually gunning im going to be pissed.

[dailygrind]

There are still gunners in every class I have. But the lowest levels of effort that people are putting into class is astoundingly low. So while I know for sure I'm not walking out with an A, I'm hopeful that I'll be above a B-. I hope.

[geekrocker37]

Anybody have or know of a link for a helpful chart regarding when character evidence can be used? Evidence exam in 2 days, and I'm feeling pretty good on everything except that topic. Trying to separate when available for direct and cross examination.

[traehekat]

anyone have any exam tips for BA/Corporations?

[Grizz]

anyone have any exam tips for BA/Corporations?

Pray.

[Holly Golightly]

I should probably get out of bed at some point...

[PirateCap'n]

Can some please explain the steps of a Commerce Clause (regular -- not Dormant) analysis to me? I can't find a decent chart anywhere.

[goosey]

1 down, 3 to go

had bankruptcy today...it was ridiculous. 4 different questions broken up into a gazillion sub questions...super long hypos...I don't know how this professor thought it was a 3 hour exam, it was more like a 6 hour exam. The last question was worth 30 points...the hypo was almost two pages long--with 5 minutes to spare, I had just started on it. So I skipped the fact pattern and just answered the question straight up using BLL and saying nothing about the facts but what I could gather from a quick glance up. That question was worth 8 points...I may have squeed 4-5 out of it. But am starting out -25...

good thing Im not taking it for a grade. hopefully i did well enough to get a pass out of it.

t&e next...will shower, nap, and get to work.

[BeenDidThat]

Can some please explain the steps of a Commerce Clause (regular -- not Dormant) analysis to me? I can't find a decent chart anywhere.

Just look up the Raich decision. It explains Lopez then differentiates it (on a stupid basis, imo), but it at least sets out the test plainly.

[kaiser]

I'm torn between this thread and the no motivation one. I've had my moments of inspiration where I suddenly have an urge to get stuff done. In fact, I think my first final today in emloyment law went relatively well. But then I look at grade distributions here and realize that 95% of the class gets B or above, and it makes me think what the hell the point is. Not gonna no-offer someone for B's.

[Ty Webb]

With the fedinctax question above, thanks for the help. Prof asked essentially the same question today as one of the SIXTEEN SHORT ESSAYS that we had 4 hours to answer. I know I at least nailed that one.

But seriously, FUCK INCOME TAX.

[dibs]

finished my time-pressured tax exam today. i am so burned out that i doubt i'll be able to cram CCC (UCC 2,3,4,9) in 3 days. i hate tax so much.

[itsirtou]

gdi

on the exam i just took, there was one point where I said "Okay, so the plaintiff has to fulfill these three prongs of the test" and then forgot to talk about the third prong. ffffffff i hate doing that

[BeenDidThat]

What's the best practice for informing a summer firm about straight D's 2L Fall? Thx.

[burtonrideclub]

Can some please explain the steps of a Commerce Clause (regular -- not Dormant) analysis to me? I can't find a decent chart anywhere.

Not sure if this will be helpful, but this law review articledoes a pretty good job of explaining where things are after Raiche. Disclaimer: Unless your professor actually is Graglia or incredibly conservative, cite to him at your own peril.

Lopez, Morrison, and Raich: Federalism in the Rehnquist Court, 31 Harvard Journal of Law and Public Policy 761 (2008).