Southwestern Law Journal
Publication Title (Abbreviation)
The Tax Reform Act of 1976 made sweeping changes in the area of tax shelters. Real estate tax shelters are the only ones to survive with any semblance of their former vitality. Two rules were introduced to prevent investors from claiming tax losses in excess of amounts they place “at risk,” and neither rule considers a nonrecourse liability an amount “at risk.” The first applies to four specific tax shelters, not including real estate, and the second is a catchall that applies to all partnerships other than real estate partnerships. Thus, it is only in the real estate area that the use of nonrecourse financing continues unchanged. The purpose of this Article is to explain the extent to which nonrecourse financing may be used to increase depreciable basis, trace the direction of congressional response to real estate tax shelters, and identify doctrines the Internal Revenue Service and the courts can be expected to apply to arrangements they find particularly abusive.
© 1978 Donald J. Weidner
Donald J. Weidner,
Realty Shelters: Nonrecourse Financing, Tax Reform and Profit Purpose, 32
Available at: https://ir.law.fsu.edu/articles/153