Home      Login

Abstract: 

This installment of Short Takes describes (and criticizes) the Tax Increase Prevention Act of 2014 (the package of “extenders” enacted in December 2014), and then discusses other recent tax developments of interest to investors, including cases and rulings dealing with characterization of gain or loss, realization, economic substance, capitalization, depreciation, and home ownership. The extenders package is especially bad legislation: the law in effect on January 1, 2014, wasn’t determined until December 2014! While there is nothing wrong with extending worthwhile provisions, the extensions applied to provisions that had already expired in 2013, and they were extended only through the end of 2014. Legislation enacted less than two weeks before the end of the year governed the tax consequences of transactions that had been consummated as much as 11-1/2 months earlier—and thus had no prospective or beneficial economic effect. In addition to summarizing the extenders, this issue’s Short Takes also looks at some better crafted decisions and rulings that advisors should take careful note of, with a special focus on an important Tax Court ruling on characterization of gain.

Keywords: Tax Increase Prevention Act, Long v. Commissioner, Brinkley v. Commissioner, Dudek v. Commissioner, MoneyGram International Inc. v. Commissioner, Perez v. Commissioner, exclusion of settlement recovery, Rev. Proc. 2009-20, costless collar transaction

Affiliations:  1: Journal of Taxation of Investments.