February 2010 – Illinois Business Law Journal

February 23, 2010

A Value-Added Tax: Who is the Joke on?

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It has been said that a value added
tax (VAT) will not pass because liberals fear it is regressive and
conservatives fear it will increase the size of the federal government. “However, the joke continues, a VAT will be
passed when liberals recognize that it could be a money machine and
conservatives recognize that it is regressive.”
But are the terms of the joke accurate?
Would enacting a vat be trading a regressive tax for more government?

I. What Is a VAT

There is more than one way to
implement a VAT and the intricacies of such implementation are beyond the scope
of this article. Suffice it to … Read the rest

February 22, 2010

Doing Business in the Middle East

I. INTRODUCTION

The Middle East with a fast growing population of over 300 million, abundant supply of natural resources, and governmental efforts aimed at privatizing and expanding country industries has cultivated this region into a growing, lucrative market for U.S. companies. Middle Eastern countries have undertaken globalization efforts to facilitate foreign direct investment and encourage trade with other regions. The economic importance of the Middle East along with these globalization efforts suggests that any U.S. company wishing to become a global business leader should have a presence in this Region.

This article provides an overview as to the state of U.S. investment and business in the Middle East, while detailing some of the industry areas and cultural issues that U.S. companies should consider prior to investing in the Region. The six member states of the Gulf Cooperation Council (GCC), Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, and the United … Read the rest

February 22, 2010

Regulation E: Are the problems with overdraft protection properly addressed?

I. Introduction

In 1984, in the earliest days of the debit card, legal commentators were already considering the need for the legislature to curtail the banking practice of “Insufficient Fund Check Charges,” now colloquially referred to as overdraft fees. [1] The battle against overdraft fees failed in the 1980s when the courts largely agreed that overdraft fees were a competitively-priced "service" and therefore not subject to rules against unconscionability or penalties. [2] The battle against such fees, however, is ongoing. Twenty five years later, the latest battle in the war against overdraft fees came to a victorious end when the Federal Reserve Board, at the behest of President Obama, created a new regulation limiting the practice in significant ways. [3] This article will begin by summarizing the overdraft protection scheme typically used by banks. It will then consider the arguments against these practices, and finally, consider whether the Federal … Read the rest

February 21, 2010January 22, 2017

Is the NCAA Fulfilling its Tax-Exempt Status?

I. Introduction

In late 2006, Congress challenged the NCAA’s tax-exempt status, questioning the organization’s lucrative commercial contracts and alleged lack of emphasis on higher education. [1] Some point out that Division I football and basketball are looking more like minor leagues for the pros that benefit only a tiny portion of a university’s student body and may actually be more “detrimental to the overall education of the athlete given the amount of time they consume, and so forth.”[2] Smith College economist Andrew Zimbalist claims that “college sports has grown into a standard commercial enterprise — with only a tip of the hat to the academic environment they exist in.”[3] This article will first provide background to clarify the manner in which tax rules are applied to organizations such as the NCAA, an analysis on whether the NCAA is actually fulfilling its tax-exempt status, and some possible solutions for tax-exempt compliance. … Read the rest

February 21, 2010

A Corporate Duty to Hedge? Distinguishing between Speculation and Hedging (Part II)

III. IS THERE A CORPORATE DUTY TO HEDGE?

In light of the preceding section it is clear that when derivatives are properly and cautiously used they create benefits to a busines. Current US case law is unclear in establishing whether or not directors of a corporation should consider at least the use of derivatives to hedge a material market risk, in other words, whether the fiduciary duties owned by directors to the shareholders of a corporation impose an implicit obligation to hedge.

The conclusion reached by the Court of Appeals of Indiana in Brane v. Roth[1] offers important clues as to the scope of the use of derivatives in companies dealing with agricultural commodities.

A. The Point of Departure

In Brane v. Roth[2] the Court of Appeals of Indiana was confronted with a derivative lawsuit involving a dispute between a group of shareholders … Read the rest

February 19, 2010

America’s Favorite Pastime: Adding up the Stats for a Fantasy Success

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America’s
Favorite Pastime: Adding up the Stats for a Fantasy Success

Introduction

As pitchers prepare to report to training
camp, America’s favorite pastime is gearing up for the 2010 season. While players begin competing and vying for a
coveted spot on the team roster, many Americans participating in fantasy
baseball leagues are preparing to draft their own “dream team.” Each year fantasy baseball leagues gain more
attention and participation, with an average of 29.9 million active users
spending over $800 million dollars directly on fantasy sports products as well
as $3 billion of sporting goods. [1] Within this lucrative field, the Major
League Baseball Association (“MLB”) as well … Read the rest