Chapter 2

doctrine of stare decisis

the idea that the courts refer to prior decisions from themselves or a higher court and apply it to future cases where the facts are substantially the same

what is precedent and what does it usually contain

a prior legal authority or court decision that serves as a guide for deciding a current legal issue, it usually contains

• a similar legal issue,

• a legal rule or principle,

• and reasoning showing how the rule resolved the case.

what do we compare when we are ascertaining degrees of similarity and difference

1. the facts contained in the legal authorities and the current case, and

2. the reasoning used in those authorities

what does the term “common law” describe

describes a legal system where rules of law are developed from prior court decisions (case law) and then applied to future similar cases; it relies on the doctrine of precedent and uses both inductive and deductive reasoning

explain completely the way in which statutory law is similar to common law

they both rely on reasoning from precedent

• (Both depend on precedent from earlier cases.

• Both involve judicial interpretation and reasoning.

• Both evolve over time through court decisions.

• Both use prior authority to guide the resolution of future controversies.

• In both systems, the practical meaning of the law becomes clearer through accumulated interpretations.)

is tax law a system of known rules deductively applied to economic events? why or why not?

No, tax law is not simply a system of known rules deductively applied to economic events because it relies on both deductive and inductive reasoning. Because tax statutes are often ambiguous or incomplete, courts and interpretive authorities must clarify their meaning through decisions and precedent. This creates an inductive process in which principles are developed over time.

identify the two parts of substantive principle of law

propositions to be proven — the conditions that must be satisfied before the legal treatment rule can be applied

legal or tax treatment rule — a specific rule that specifies either an action to be taken or prohibited, or sometimes a definition or explanation that resolves an issue, and which carries the force and effect of law

identify the two sources of substantive principles of law in the case of tax law

(1) IRC and other tax statutes enacted by Congress (2) primary interpretive authority

identify the 3 areas of potential uncertainty which may arise concerning tax law decisions

• proper application of a tax rule

• identification of the correct tax rule

• the facts

list the 3 separate considerations that may cause us to be uncertain concerning the identity of the correct tax rule

• the identity of the propositions associated with each possible tax treatment rule

• what each proposition is requiring us to prove

• whether a particular proposition to be proven has actually been satisfied by the available facts