Larry W. and Cynthia J/ Van Wyk - Page 8

                                        - 8 -                                         

          on section 1.465-10(c), Proposed Income Tax Regs., supra, is                
          flawed for the same reason we reject petitioners' argument                  
          concerning section 1.465-10(d), Example, Proposed Income Tax                
          Regs., supra, i.e., the proposed regulation just does not                   
          contemplate the source of the funds, an issue governed by section           
          465(b)(1)(B) and its related provisions.                                    
               As to what is meant by "money * * * contributed by the                 
          taxpayer to the activity" within the meaning of section                     
          465(b)(1)(A), the proposed regulations provide:  "A taxpayer's              
          amount at risk in an activity shall be increased by the amount of           
          personal funds the taxpayer contributes to the activity."  Sec.             
          1.465-22(a), Proposed Income Tax Regs., 44 Fed. Reg. 32241 (June            
          5, 1979).  According to the proposed regulations, "personal                 
          funds" of a taxpayer are those owned by the taxpayer and are not            
          those acquired through borrowing.  Sec. 1.465-9(f), Proposed                
          Income Tax Regs., 44 Fed. Reg. 32240 (June 5, 1979).                        
               Petitioners acknowledge the proposed regulations regarding             
          personal funds but note that they are over 19 years old and still           
          in proposed form.  Petitioners also note that the personal funds            
          requirement is not mentioned in either the statute or the                   
          legislative history.  Accordingly, petitioners claim that the               
          proposed regulations carry little weight as to the personal funds           
          requirement.  We think it anomalous that petitioners embrace the            
          proposed regulations as support for their argument, yet argue               

Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  Next

Last modified: May 25, 2011