- 8 - Section 163(d)(4)(A) defines net investment income as the excess of investment income over investment expense. Section 163(d)(4)(B),5 in turn, defines investment income as follows: (B) Investment Income.--The term “investment income” means the sum of–- (i) gross income from property held for investment (other than any gain taken into account under clause (ii)(I)), (ii) the excess (if any) of–- (I) the net gain attributable to the disposition of property held for investment, over (II) the net capital gain determined by only taking into account gains and losses from dispositions of property held for investment, plus (iii) so much of the net capital gain referred to in clause (ii)(II) (or, if lesser, the net gain referred to in clause (ii)(I)) as the taxpayer elects to take into account under the clause. [Emphasis added.] At issue in the instant case is the calculation of section 163(d)(4)(B)(ii). To that end, the meaning of the terms “net gain” and “net capital gain” are integral to our analysis. 2. Net Gain Neither section 163, the regulations, the case law, nor the statute’s legislative history defines the term “net gain”. If a 5The Omnibus Budget Reconciliation Act of 1993, Pub. L. 103- 66, sec. 13206(d)(1), 107 Stat. 312, 467, amended sec. 163(d)(4)(B) effective for taxable years beginning after Dec. 31, 1992.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011