- 11 -
2057) violated the Due Process Clause because he “specifically
and detrimentally relied on the preamendment version”, id. at 33,
of that provision when he engaged in a transaction prior to its
amendment by Congress. Id. In rejecting the taxpayer’s posi-
tion, the Supreme Court of the United States observed that the
taxpayer’s
reliance alone is insufficient to establish a constitu-
tional violation. Tax legislation is not a promise,
and a taxpayer has no vested right in the Internal
Revenue Code. Justice Stone explained in Welch v.
Henry, 305 U.S., at 146-147:
“Taxation is neither a penalty imposed on the
taxpayer nor a liability which he assumes by con-
tract. It is but a way of apportioning the cost
of government among those who in some measure are
privileged to enjoy its benefits and must bear its
burdens. Since no citizen enjoys immunity from
that burden, its retroactive imposition does not
necessarily infringe due process ....”
Moreover, the detrimental reliance principle is not
limited to retroactive legislation. An entirely pro-
spective change in the law may disturb the relied-upon
expectations of individuals, but such a change would
not be deemed therefore to be violative of due process.
Id. at 33-34.
We consider now whether, as petitioner argues, section 469
is retroactive. As pertinent here, section 469(a) applies only
to a passive activity loss as defined in section 469(d)(1) for a
taxable year that began after December 31, 1986. See TRA 1986
sec. 501(c), 100 Stat. 2241. Section 469(a) does not apply to
any loss for any taxable year that began prior to January 1,
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