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Treasury’s failure to provide the needed guidance should not
deprive taxpayers of the benefit or relief Congress intended.
However, if, as contended by respondent, the Secretary was given
dominion over whether taxpayers were entitled to offset self-
charged items, then a court may not substitute or exercise its
judgment in deciding what rules or regulations should have been
promulgated. To answer these questions, we turn to the statute
and legislative history.
The relevant statutory provision is section 469(l), which
provides as follows:
SEC. 469(l) Regulations.--The Secretary shall
prescribe such regulations as may be necessary or
appropriate to carry out provisions of this section,
including regulations--
* * * * * * *
(2) which provide that certain items of
gross income will not be taken into account
in determining income or loss from any
activity (and the treatment of expenses
allocable to such income),
* * * * * * *
In determining whether section 469(l)(2) is self-executing, it is
instructive to look at how section 469(l)(1) has been interpreted
by this Court. The language of section 469(l)(1) has been
generally described as self-executing. In Schwalbach v.
Commissioner, 111 T.C. 215, 226 (1998), “we [found] nothing in
the statutory text, or in its legislative history, that
conditions the effectiveness of section 469 on the issuance of
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