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prescribe such regulations as may be necessary or appropriate to
carry out the purpose of this section, including regulations
* * * relating to the treatment of losses". Nevertheless,
respondent contends that nothing in section 865 requires the
Treasury to promulgate "any particular rule" with respect to the
allocation of losses on the disposition of personal property. We
disagree. Through the enactment of section 865(j)(1) directing
the Secretary to promulgate regulations necessary to carry out
the purpose of this section (i.e., residence-based sourcing),
Congress intended to change the rules regarding the allocation of
losses realized on the sale of noninventory personal property.
Otherwise, section 865(j)(1) would be unnecessary and, indeed,
meaningless. The regulations that respondent would have us apply
were already in place prior to the Tax Reform Act of 1986. If
Congress intended those existing regulations to apply, section
865(j)(1) is a nullity.
The purpose behind section 865(j)(1) is reflected in The
General Explanation of the Tax Reform Act of 1986, prepared by
the Joint Committee on Taxation, which provides as follows:
The Act provides that regulations are to be
prescribed by the Secretary carrying out the purposes
of the Act's source rule provisions, including the
application of the provisions to losses from sales of
personal property * * *. It is anticipated that
regulations will provide that losses from sales of
personal property generally will be allocated
consistently with the source of income that gains would
generate but that variations of this principle may be
necessary. * * * [Staff of Joint Comm. on Taxation,
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