Don’t Let Capital Accounts Go Negative

The proposal would prevent negative capital accounts as a remedy to prevent tax shelters. It would suspend deductions that would otherwise result in the taxpayer’s adjusted basis being lower than the outstanding debt. When capital accounts are negative, the transaction is a tax shelter in which tax is negative, that is, tax increases the pretax return. Limiting deductions to prevent negative capital accounts will prevent negative taxes. A negative capital…
Andrews & Kurth Centennial Professor of Law, University of Texas at Austin - School of Law, USA
Skip to toolbar