Dancing in the Dark

Before the 1986 Tax Reform Act (TRA), there was real concern about the extensive use of tax shelters investments in which a significant portion of the taxpayer's return is derived from tax savings. To curtail the practice, Congress included in the 1986 law Internal Revenue Code Section 469, which contains the passive loss rules1 that make it more difficult to take deductions for investment losses.

Before the 1986 Tax Reform Act (TRA), there was real concern about the extensive use of tax shelters — investments in which a significant portion of the taxpayer's return is derived from tax savings.

To curtail the practice, Congress included in the 1986 law Internal Revenue Code Section 469, which contains the passive loss rules1 that make it more difficult to take deductions for investment losses.

Problem is, the statute and regulations specifically provide that t

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