- 18 -
The command provision of section 469(l) contemplates regulations
that reflect a “how” characterization and does not contain the
type of “only to the extent” language that is found in statutes
that are not self-executing.
Respondent’s argument is essentially that the statute is not
self-executing since the Secretary was charged with writing
regulations. Respondent’s position that congressionally intended
benefits can be withheld simply by the refusal of the Secretary
to issue regulations is peculiarly Draconian. Respondent, in a
brief devoid of case references, articulated no reason for
denying the taxpayers in this case the tax treatment sought. In
that regard, allowing netting in this case fulfills the “economic
significance” concerns expressed in the legislative history. The
failure to issue regulations covering nonlending transactions
should not be a reason to preclude taxpayer from congressionally
intended and appropriate relief. As stated in Estate of Maddox
v. Commissioner, 93 T.C. 228, 234 (1989),
we must do the best we can with the statutory provision
* * * now before us in the absence of pertinent
regulations, since, in our view, the Secretary cannot
deprive a taxpayer of rights which the Congress plainly
intended to confer simply by failing to promulgate the
required regulations. * * *
Section 469(l)(2) mandates the issuance of regulations
providing “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)”. Although
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011