Tuesday, January 24, 2006
Leo L. Schmolka (NYU) has published Passive Activity Losses, Trusts, and Estates: The Regulations (If I Were King), 58 Tax L. Rev. 191 (2005). Here is the abstract:
The passive loss rules of § 469 apply to trusts and decedents' estates. How that is to come about, however, is a complete mystery since, in the 19 years since § 469's enactment in 1986, the government has offered not a shred of published guidance on the intersection of § 469 and subchapter J: no regulations, either final or proposed, no rulings, no notices, no announcements. Nothing.
This article steps into the void. It sets forth comprehensive suggested regulations that would coordinate the interaction of the passive loss rules with the rules governing the income taxation of trusts and decedents' estates. It provides the reasoning behind, and detailed explanations of, all but the most self-evident provisions.