Passive Activity Losses

Leo L. Schmolka (Professor of Law, NYU School of Law) has recently published his article entitled Passive Activity Losses of Trust and Estates: The Regulations (If I Were King) on SSRN.  This article originally appeared in 58 Tax L. Rev. 191 (2005).
   

Here is the abstract:
   

The passive loss rules of section 469 apply to trusts and decedents’ estates. How that is to come about, however, is a complete mystery because, in the 19 years since section 469’s enactment in 1986, the government has offered not a shred of published guidance on the intersection of section 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.