We all know tax rules are complex. Can artificial intelligence such as used in ChatGPT address tax matters? I gave it a try today while listening to some colleagues deliver an online chat about the abilities and limitations of ChatGPT. I tried two prompts with it which I summarize below with some commentary. Spoiler alert – the 2nd prompt led to a completely wrong answer! I think if there are students using this tool exclusively, they are going to get caught for turning in garbage (and work that is not theirs).

1.I asked a question related to a paper I’m working on that is a continuation of work I have done in the past – what improvements can be made to IRC section 197? ChatGPT mostly gave good information including some that sounded like it was pulled from my past work on this. It also gave me some outdated information on section 197 such as: “The rules for determining useful life under section 197 can be complex and ambiguous, leading to disagreements between taxpayers and the IRS.” Part of this sounds like pre-197 law. My paper though is calling for a legislative change to make it clear that modern intangibles such as domain names and social media assets fall under section 197.

Commentary: Where you know a good amount about the topic, ChatGPT might be a good way to see if there is anything you are overlooking or clarify something worthwhile to explore further. One item that ChatGPT brought up was whether the de minimis safe harbor should be increased to allow expensing of more intangible expenditures thereby avoiding administrative burdens for small businesses.

2. This week my MST research students present on an “important” tax case that stands for a doctrine such as substance over form (Gregory case); they each have different cases. They have already written a case brief, found a case that applied it (and summarized that case), and found and read a journal article that mentions the case. I provide them an example of a case brief I wrote on Eisner v. Macomber, 252 US 189 (1920). The parties involved are taxpayer/shareholder Macomber and IRS Revenue Collector Eisner. Macomber won with the Court finding that a stock dividend is not taxable. Another key point from the case is the realization principle.

Here is the case summary from ChatGBT:
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