- 8 -
had a substantial investment intent. Miller v. Commissioner, 70
T.C. 448, 455 (1978). Whether the taxpayer had the requisite
intent was a question of fact. Id. at 455-456. The parties in
this case stipulated that petitioner did not have a substantial
investment motive when he purchased the stock. Prior to the Tax
Reform Act of 1986, he would likely have prevailed.
The Tax Reform Act of 1986 broadened the definition of
investment interest. Section 511(a) of the 1986 Act defines
"property held for investment" to include "any property which
produces income of a type described in section 469(e)(1)." 100
Stat. 2245. The definition applies uniformly to every taxpayer;
his mindset is irrelevant. As a result, the reach of the
definition under the 1986 Act is more inclusive.
Petitioners contend that the phrase "property which produces
income" in section 163(d)(5)(A)(i) is limited to property which
has actually produced one of the types of income described in
section 469(e)(1)(A). However, the Government's position here is
supported by the legislative history. In the report of the
Senate Finance Committee accompanying section 469, portfolio
income includes "gain or loss attributable to disposition of (1)
section * * * and sections 162, 164(a)(1) or (2),
or 212 attributable to property of the taxpayer
subject to a net lease exceeds the rental income
produced by such property for the taxable year.
In the case of a trust, the $10,000 amount specified in
subparagraph (A) shall be zero.
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