Court Opinion

ID: 4472264
Source: CourtListenerOpinion
Date Created: 2020-01-13 23:21:24.555379+00
Date Added: 2024-06-11T15:03:22.649059
License: Public Domain

Beghe, J., concurring: I agree with and join the majority opinion on the close question that I think this case presents. I write separately only to try to parry the following thrusts in Judge Tannenwald’s dissent, dissenting op., p. 274-275: “As felicitous as it may be to provide for matching of investment income with investment expenses and for minimizing the loss of tax benefits which may flow from my position on the issue herein”, section 172, which also “deals with carryovers, specifically limits its benefits to business losses and excludes nonbusiness losses”, and that “The majority’s conclusion as to the scope of section 163(d) represents an erosion of the dichotomy embodied in section 172.” I would observe that there is a statutory provision which felicitously indicates that the “dichotomy embodied in section 172” is not all that clear cut, as a matter of general tax law. For the taxable years in question for which the excess investment interest was paid and carried over by petitioners, the Internal Revenue Code provided, as it continues to do, that individuals are entitled to unlimited carryovers of nonbusiness capital losses, without any limitation, express or implied, based on the absence of taxable income during the years in which they occurred. Sec. 1212(b)(1). It therefore seems to me that the allowance of investment interest carryovers, also without restriction by any taxable income limitation for the years in which they were generated, is consistent with the statutory scheme for the unlimited allowance of capital loss carryovers. With the increased differences between the higher marginal rates on ordinary income and long-term capital gain, new restrictions on the allowance of deductions of investment interest, including investment interest carryovers, with respect to long-term capital gains have been added to section 163(d) by the Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, sec. 13206(d)(1), 107 Stat. 467. However, these restrictions do not seriously compromise the existing scheme in which capital loss carryovers and investment interest carryovers continue to be available in tandem to be applied against capital gains.