Happy New Year from the NCBA Paralegal Division’s Utilization Committee!
One mission of the Utilization Committee is to keep the Paralegal Division informed concerning potential regulatory reform in North Carolina and other jurisdictions that might impact the paralegal profession.
As you may be aware, the North Carolina State Bar Subcommittee Studying Regulatory Change has been exploring various types of regulatory reform that might positively impact access to justice in North Carolina.
The Subcommittee has completed its work, and Mark Henriques, the Subcommittee Chair, has completed a report, Issues Subcommittee on Regulatory Change: Report and Recommendations (January 2022). The report includes recommendations to the Issues Committee and the State Bar Council concerning regulatory reform (e.g., limited licensing, regulatory sandbox, and more).
Mark Henriques will present the report to the Issues Committee at its meeting on January 19, 2022, from 2:30 p.m. to 3:30 p.m., and to the State Bar Council at its meeting on January 21, 2022, from 8:30 a.m. to 11:30 a.m.. While the Issues Committee and Council will likely be discussing many topics during their meetings, you are welcome to watch the meetings by visiting the North Carolina State Bar YouTube Channel and subscribing to receive a reminder.
After these meetings, we hope to understand better how the State Bar Council will manage the Subcommittee’s recommendations.
In the interim, click here to read the full report by viewing the 1/7/2022 update entry on the North Carolina Justice for All Project website.
***
The Paralegal Division Blog is managed by the Division’s Communications Committee. Via the blog, the Communications Committee provides information written by attorneys, paralegals, and other experts designed specifically for paralegals in the areas of substantive law, ethics, technology, paralegal practice advice, and more. If you are interested in signing up to submit a blog post on a future date, you can do so here. When you are ready to submit a blog post, you can do so by using this form.
Lawyers, veterans, public sector employers and HR departments all should be aware of an upcoming Supreme Court case that involves a challenge to a state’s sovereign immunity under the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”). If sovereign immunity is upheld as a basis to deflect private enforcement actions against public entity employers, veterans’ rights groups argue that a substantial blow will be struck to veterans in contravention of both USERRA and Congress’ intent in enacting that law. Whatever the outcome, with the U.S. involved in several overseas conflicts and a projected increase in the Department of Labor’s (“DOL”) enforcement budget, enforcement actions and private claims under USERRA are likely to remain consistent for the foreseeable future; as such, this case will be one to watch.
Section 731(c) generally treats marketable securities as money in determining gain or loss on a distribution to a partner. Section 731(a)(1) provides no gain is recognized on a distribution to a partner except to the extent any money distributed exceeds the adjusted basis of the partner in the partnership interest.
The term “marketable security” means financial instruments and foreign currencies that are, as of the date of the distribution, actively traded within the meaning of Section 1092(d)(1). For example, if a partnership distributes publicly traded stock with a value of $100 to a partner with an adjusted basis in her partnership interest of $50, the partner generally recognizes a gain of $50. However, there are a number of exceptions.
The first exception, in Section 731(c)(3)(A)(i), provides a marketable security is not treated as money if the partner receiving the security contributed the security to the partnership.
The second exception, in Section 731(c)(3)(A)(ii), provides a marketable security is not treated as money to the extent provided in regulations if the property was not a marketable security when acquired by the partnership. Reg. § 1.731-2(d)(iii) clarifies that is satisfied if (a) the entity that issued the security had no outstanding marketable securities when the security was acquired by the partnership; (b) the security was held by the partnership for at least six months before the security became marketable; and (c) the partnership distributed the security within five years of the security becoming marketable.
The third exception, in Section 731(c)(3)(A)(iii), provides a marketable security is not treated as money if the partnership is an investment partnership, and the partner is an eligible partner. A future blog post will describe what qualifies as an investment partnership and an eligible partner.
Finally, Section 731(c)(3)(B) provides for a reduction in the amount treated as money on a distribution of marketable securities equal to the difference between the partner’s distributive share of partnership net gain before the distribution and the partner’s distributive share of partnership net gain after the distribution. That is best demonstrated by Example 2 in Reg. § 1.731-2(j).
When gain is recognized as a result of Section 731(c), the basis of the marketable securities to which gain is recognized equals their basis as determined under Section 732 increased by the amount of such gain. IRC § 731(c)(4)(A).
John G. Hodnette, JD, LLM is an attorney with Culp, Elliott, & Carpenter in Charlotte.
https://ncbarblogprod.wpengine.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.png00TAXhttps://ncbarblogprod.wpengine.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.pngTAX2022-01-12 16:25:192022-01-12 16:25:19Marketable Securities as Money Under Partnership Tax Rules
Another year of unprecedented times has caused the council to experience some transitions in its members whose terms have not yet expired. I am pleased to announce that Yazmeen Gadalla will serve as Interim Treasurer and Kimberly Johnson will serve as an Interim Council Member for the remainder of the year. Jennifer Gaff has been nominated by our Nominations Committee to fill Yazmeen’s Council Member Seat, which is set to be officiated during our next council meeting.
With those announcements, we will have three council member vacancies in 2022. Nominations to fill the vacancies of the unexpired terms will be held at our annual meeting. Members interested in joining the council may submit their nominations to [email protected].
It is hard to believe I am already halfway through my tenure as the Paralegal Division Chair. When the year began, I announced that my overall goals for the council and division were inclusivity, transparency, and the implementation of activities to continue to advance the excellence of the Paralegal Division. Many thanks to the Executive Council and Council Members for helping to accomplish those goals.
Mendez v. Mendez, Court of Appeals of North Carolina, December 21, 2021
Defendant sought a modification of child support, citing the changing needs of the children based on their involvement in new activities, including music lessons, fencing, and acting classes. Defendant also requested an award of attorney’s fees in the amount of $7,300.00. The trial court order a reduction of child support, affirmed the trial courts ruling on extraordinary expenses and did not award defendant attorney fees.
Of course, defendant appealed and the court wrestled with the issues of potential errors of a) not imputing income to plaintiff, b) whether the children’s activities qualified as “extraordinary expenses” c) the lack of attorney’s fees to defendant.
The North Wind and the Sun got into a dispute about which one was stronger. To put the issue to a test, they decided that whoever sooner made a traveler take off his cloak would be the more powerful and win the argument.
The Wind blew with all its might, but the stronger he blew, the closer the traveler wrapped the cloak around him. Then, the Sun came out and, as it gently shone brighter and brighter, the traveler sat down and, overcome with heat, cast his cloak to the ground.
So goes one of Aesop’s fables, and the lesson taught some thousands of years ago is that persuasion is better than force, and that to be effective in winning an argument, one must consider how to argue, rather than to just rely on blunt force.
In 2021, LexisNexis cast a new Fellowship project from its African Ancestry Network and LexisNexis Rule of Law Foundation focused on solutions to eliminate systemic racism in legal systems. To be considered for this privilege, each law school student was given the opportunity to create a project that could provide solutions to eliminate systemic racism in the legal system while advancing the rule of law. I was fortunate to be one of the twelve Fellows chosen from the six HBCU law schools.
https://ncbarblogprod.wpengine.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.png00NCBA YLDhttps://ncbarblogprod.wpengine.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.pngNCBA YLD2022-01-11 09:41:062022-01-11 10:02:37LexisNexis African Ancestry Network LexisNexis Rule of Law Foundation Fellowship
The North Carolina Supreme Court decision in State v. Carter stands apart from modern federal jurisprudence in holding that Article 1, section 20 of the North Carolina Constitution – North Carolina’s analog to the Fourth Amendment – does not permit a good-faith exception to the exclusionary rule. In other words, evidence collected in violation of North Carolina’s constitutional search-and-seizure protections is excluded from criminal proceedings, regardless of the good faith of the judicial officials and law enforcement officers involved in the case. In so holding, Carter exemplifies North Carolina’s general approach when interpreting state constitutional provisions with federal analogs – the persuasive lockstep. Persuasive lockstepping considers federal jurisprudence highly persuasive but does not mechanically follow it, on occasion affording more robust constitutional protections pursuant to the state constitution.
Carter has been controversial since its 1988 publication as Molly Petrey and I chronicle in our recent North Carolina Law Review piece, State v. Carter and the North Carolina Exclusionary Rule. That controversy has increased over the past decade, however, from legislative calls for its reversal to North Carolina Court of Appeals opinions contending that it has been superseded by statute. Though its constitutional force remains plain for the moment, these recent developments call into question the fate of Carter as well as the means of constitutional interpretation it represents.
Interested? Read State v. Carter and the North Carolina Exclusionary Rulehere.
https://ncbarblogprod.wpengine.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.png00ConstitutionalRightshttps://ncbarblogprod.wpengine.com/wp-content/uploads/2018/06/Blog-Header-1-1030x530.pngConstitutionalRights2022-01-10 16:56:582022-01-10 16:56:58State v. Carter and the North Carolina Exclusionary Rule
Listening to your oral arguments can improve your practice – and the North Carolina Supreme Court has just made it easier.
Thanks to the tireless efforts of Fred Wood and the suggestion of our section’s communications chair, the North Carolina Supreme Court has a podcast. The Court is uploading the audio from oral arguments to its podcast.
Oral arguments from 1/5 and 1/6 are already uploaded. The Court plans to upload all future arguments.
You can find the podcast on Spotify and RadioPublic. The podcasts should be on Google Podcasts soon.
The podcast is limited to Supreme Court arguments for now but may expand to Court of Appeals arguments in the future.
While my last post focused on pregnancy support, this post focuses on what occurs when fathers fail to provide support, or at least fail to meet the court’s support definitions. Under prenatal abandonment theory, birth fathers lose “parental rights to newborn[s] by neglecting parental responsibilities during” pregnancy.[1] However, this theory can be more than a sword to terminate rights, but also a shield to protect rights via laws that 1) require fathers to “pay prenatal support or waive parental” rights and that 2) protect rights for fathers who provide such support.[2]
Limited Licensing and Regulatory Reform Update
Paralegal DivisionBy the Utilization Committee
Happy New Year from the NCBA Paralegal Division’s Utilization Committee!
One mission of the Utilization Committee is to keep the Paralegal Division informed concerning potential regulatory reform in North Carolina and other jurisdictions that might impact the paralegal profession.
As you may be aware, the North Carolina State Bar Subcommittee Studying Regulatory Change has been exploring various types of regulatory reform that might positively impact access to justice in North Carolina.
The Subcommittee has completed its work, and Mark Henriques, the Subcommittee Chair, has completed a report, Issues Subcommittee on Regulatory Change: Report and Recommendations (January 2022). The report includes recommendations to the Issues Committee and the State Bar Council concerning regulatory reform (e.g., limited licensing, regulatory sandbox, and more).
Mark Henriques will present the report to the Issues Committee at its meeting on January 19, 2022, from 2:30 p.m. to 3:30 p.m., and to the State Bar Council at its meeting on January 21, 2022, from 8:30 a.m. to 11:30 a.m.. While the Issues Committee and Council will likely be discussing many topics during their meetings, you are welcome to watch the meetings by visiting the North Carolina State Bar YouTube Channel and subscribing to receive a reminder.
After these meetings, we hope to understand better how the State Bar Council will manage the Subcommittee’s recommendations.
In the interim, click here to read the full report by viewing the 1/7/2022 update entry on the North Carolina Justice for All Project website.
S.M. Kernodle-Hodges, Utilization Committee Co-Chair
Alicia Mitchell-Mercer, Utilization Committee Co-Chair
***
The Paralegal Division Blog is managed by the Division’s Communications Committee. Via the blog, the Communications Committee provides information written by attorneys, paralegals, and other experts designed specifically for paralegals in the areas of substantive law, ethics, technology, paralegal practice advice, and more. If you are interested in signing up to submit a blog post on a future date, you can do so here. When you are ready to submit a blog post, you can do so by using this form.
You may also wish to participate in the Division by using our virtual suggestion box to submit suggestions/ideas to the Division Council, nominating a paralegal for Paralegal Spotlight, or completing the Paralegal Spotlight Questionnaire if you are nominating yourself. If you are interested in volunteering with the Communications Committee, please contact the Communications Committee Chair at [email protected]. If you are interested in joining other division committees, you can review a list of committees and sign up here.
U.S. Supreme Court Agrees to Hear Injured Veteran’s Employment Claim
Young Lawyers DivisionChristian Smith-Bishop
Anna Davis
By Christian Smith-Bishop and Anna Davis
Lawyers, veterans, public sector employers and HR departments all should be aware of an upcoming Supreme Court case that involves a challenge to a state’s sovereign immunity under the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (“USERRA”). If sovereign immunity is upheld as a basis to deflect private enforcement actions against public entity employers, veterans’ rights groups argue that a substantial blow will be struck to veterans in contravention of both USERRA and Congress’ intent in enacting that law. Whatever the outcome, with the U.S. involved in several overseas conflicts and a projected increase in the Department of Labor’s (“DOL”) enforcement budget, enforcement actions and private claims under USERRA are likely to remain consistent for the foreseeable future; as such, this case will be one to watch.
Read more
Marketable Securities as Money Under Partnership Tax Rules
Tax SectionSection 731(c) generally treats marketable securities as money in determining gain or loss on a distribution to a partner. Section 731(a)(1) provides no gain is recognized on a distribution to a partner except to the extent any money distributed exceeds the adjusted basis of the partner in the partnership interest.
The term “marketable security” means financial instruments and foreign currencies that are, as of the date of the distribution, actively traded within the meaning of Section 1092(d)(1). For example, if a partnership distributes publicly traded stock with a value of $100 to a partner with an adjusted basis in her partnership interest of $50, the partner generally recognizes a gain of $50. However, there are a number of exceptions.
The first exception, in Section 731(c)(3)(A)(i), provides a marketable security is not treated as money if the partner receiving the security contributed the security to the partnership.
The second exception, in Section 731(c)(3)(A)(ii), provides a marketable security is not treated as money to the extent provided in regulations if the property was not a marketable security when acquired by the partnership. Reg. § 1.731-2(d)(iii) clarifies that is satisfied if (a) the entity that issued the security had no outstanding marketable securities when the security was acquired by the partnership; (b) the security was held by the partnership for at least six months before the security became marketable; and (c) the partnership distributed the security within five years of the security becoming marketable.
The third exception, in Section 731(c)(3)(A)(iii), provides a marketable security is not treated as money if the partnership is an investment partnership, and the partner is an eligible partner. A future blog post will describe what qualifies as an investment partnership and an eligible partner.
Finally, Section 731(c)(3)(B) provides for a reduction in the amount treated as money on a distribution of marketable securities equal to the difference between the partner’s distributive share of partnership net gain before the distribution and the partner’s distributive share of partnership net gain after the distribution. That is best demonstrated by Example 2 in Reg. § 1.731-2(j).
When gain is recognized as a result of Section 731(c), the basis of the marketable securities to which gain is recognized equals their basis as determined under Section 732 increased by the amount of such gain. IRC § 731(c)(4)(A).
John G. Hodnette, JD, LLM is an attorney with Culp, Elliott, & Carpenter in Charlotte.
2021 Reflections and Moving Forward
Paralegal DivisionAnother year of unprecedented times has caused the council to experience some transitions in its members whose terms have not yet expired. I am pleased to announce that Yazmeen Gadalla will serve as Interim Treasurer and Kimberly Johnson will serve as an Interim Council Member for the remainder of the year. Jennifer Gaff has been nominated by our Nominations Committee to fill Yazmeen’s Council Member Seat, which is set to be officiated during our next council meeting.
With those announcements, we will have three council member vacancies in 2022. Nominations to fill the vacancies of the unexpired terms will be held at our annual meeting. Members interested in joining the council may submit their nominations to [email protected].
It is hard to believe I am already halfway through my tenure as the Paralegal Division Chair. When the year began, I announced that my overall goals for the council and division were inclusivity, transparency, and the implementation of activities to continue to advance the excellence of the Paralegal Division. Many thanks to the Executive Council and Council Members for helping to accomplish those goals.
Read more
Mendez v. Mendez (Bad Faith Imputation)
Family Law SectionMendez v. Mendez, Court of Appeals of North Carolina, December 21, 2021
Defendant sought a modification of child support, citing the changing needs of the children based on their involvement in new activities, including music lessons, fencing, and acting classes. Defendant also requested an award of attorney’s fees in the amount of $7,300.00. The trial court order a reduction of child support, affirmed the trial courts ruling on extraordinary expenses and did not award defendant attorney fees.
Of course, defendant appealed and the court wrestled with the issues of potential errors of a) not imputing income to plaintiff, b) whether the children’s activities qualified as “extraordinary expenses” c) the lack of attorney’s fees to defendant.
Read more
An Aspirational Statement of Equality and Civility
Featured PostsThe North Wind and the Sun got into a dispute about which one was stronger. To put the issue to a test, they decided that whoever sooner made a traveler take off his cloak would be the more powerful and win the argument.
The Wind blew with all its might, but the stronger he blew, the closer the traveler wrapped the cloak around him. Then, the Sun came out and, as it gently shone brighter and brighter, the traveler sat down and, overcome with heat, cast his cloak to the ground.
So goes one of Aesop’s fables, and the lesson taught some thousands of years ago is that persuasion is better than force, and that to be effective in winning an argument, one must consider how to argue, rather than to just rely on blunt force.
Read more
LexisNexis African Ancestry Network LexisNexis Rule of Law Foundation Fellowship
Young Lawyers DivisionIn 2021, LexisNexis cast a new Fellowship project from its African Ancestry Network and LexisNexis Rule of Law Foundation focused on solutions to eliminate systemic racism in legal systems. To be considered for this privilege, each law school student was given the opportunity to create a project that could provide solutions to eliminate systemic racism in the legal system while advancing the rule of law. I was fortunate to be one of the twelve Fellows chosen from the six HBCU law schools.
Read more
State v. Carter and the North Carolina Exclusionary Rule
Constitutional Rights & Responsibilities SectionThe North Carolina Supreme Court decision in State v. Carter stands apart from modern federal jurisprudence in holding that Article 1, section 20 of the North Carolina Constitution – North Carolina’s analog to the Fourth Amendment – does not permit a good-faith exception to the exclusionary rule. In other words, evidence collected in violation of North Carolina’s constitutional search-and-seizure protections is excluded from criminal proceedings, regardless of the good faith of the judicial officials and law enforcement officers involved in the case. In so holding, Carter exemplifies North Carolina’s general approach when interpreting state constitutional provisions with federal analogs – the persuasive lockstep. Persuasive lockstepping considers federal jurisprudence highly persuasive but does not mechanically follow it, on occasion affording more robust constitutional protections pursuant to the state constitution.
Carter has been controversial since its 1988 publication as Molly Petrey and I chronicle in our recent North Carolina Law Review piece, State v. Carter and the North Carolina Exclusionary Rule. That controversy has increased over the past decade, however, from legislative calls for its reversal to North Carolina Court of Appeals opinions contending that it has been superseded by statute. Though its constitutional force remains plain for the moment, these recent developments call into question the fate of Carter as well as the means of constitutional interpretation it represents.
Interested? Read State v. Carter and the North Carolina Exclusionary Rule here.
NC Supreme Court Starts a Podcast
Appellate PracticeListening to your oral arguments can improve your practice – and the North Carolina Supreme Court has just made it easier.
Thanks to the tireless efforts of Fred Wood and the suggestion of our section’s communications chair, the North Carolina Supreme Court has a podcast. The Court is uploading the audio from oral arguments to its podcast.
Oral arguments from 1/5 and 1/6 are already uploaded. The Court plans to upload all future arguments.
You can find the podcast on Spotify and RadioPublic. The podcasts should be on Google Podcasts soon.
The podcast is limited to Supreme Court arguments for now but may expand to Court of Appeals arguments in the future.
Happy listening!
Prenatal Abandonment
Family Law SectionBy
Jessica Wollum
While my last post focused on pregnancy support, this post focuses on what occurs when fathers fail to provide support, or at least fail to meet the court’s support definitions. Under prenatal abandonment theory, birth fathers lose “parental rights to newborn[s] by neglecting parental responsibilities during” pregnancy.[1] However, this theory can be more than a sword to terminate rights, but also a shield to protect rights via laws that 1) require fathers to “pay prenatal support or waive parental” rights and that 2) protect rights for fathers who provide such support.[2]
Read more