Author granted license

Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International

Document Type


Publication Date





School of Law, University of California, Los Angeles




For more than thirty years a consuming preoccupation of the income tax has been the control of "tax sheltered" investments. Of most widespread concern have been acquisitions, financed by debt, of assets that enjoy some sort of "tax-preferred" treatment, most commonly some advantageous form of depreciation. Tax-favored treatment has been conferred on many productive assets through deliberate congressional action. Nevertheless, debt-financed acquisitions of those very same assets have been regarded as exploiting the available tax benefits in ways that seemed "abusive" and have widely been regarded as "bad." This perplexing, fundamentally self-contradictory state of affairs has levied constant demands on the courts and the Congress, and has captivated the attention of academic observers. In the last twenty years, debt-financed (or "leveraged") tax shelters have been the object of two major pieces of legislation-the "atrisk" rules of the Tax Reform Act of 1976, and the "passive activity loss" limitations, the complex, controversial anti-tax shelter centerpiece of the Tax Reform Act of 1986 -together with a host of less sweeping enactments. Tax shelters continue to occupy the courts, and to preoccupy academic students of taxation.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.