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Double Deductions, Or Nothing: Why The Vindication Of Beulah Crane Poster Child Of Greedy Taxpayers Should Inspire Closing The Tax Trap Left Open After Tax Shelters Were Shut Down: And Other Crane Footnotes Revealed, Irwin J. Katz
Irwin J Katz
Crane v. Commissioner is arguably the most celebrated case of any kind where a footnote of dictum is more relevant than the actual holding. It was the Supreme Court’s famous Footnote 37 hypothetical query that gave Crane its vocabulary tax law case status. For the three decades following the decision, whether the Supreme Court’s response to the query portended future judicial decisions blessing tax shelters remained an open question. Subsequently, two lower courts faced the challenge of implementing the Supreme Court’s reasoning in Footnote 37 scenarios. Without appearing to overrule the Supreme Court, the courts squelched the tax shelters by …
The Untold Story Of Crane V. Commissioner Reveals An Inconvenient Tax Truth: Useless Depreciation Deductions Cause Global Basis Erosion To Bait A Hazardous Tax Trap For Unwitting Taxpayers, I Jay Katz
Irwin J Katz
Facts not discussed in the Supreme Court's decision in Crane v. Commissioner (much better known for Footnote 37) reveal an inconvenient tax truth of a hazardous tax trap for unwitting taxpayers (the "Basis Reduction Tax Trap"). For seven years, Beulah Crane operated an apartment building at a loss. For that reason, the substantial amount of allowable depreciation deductions on the building produced minimal tax benefits for her. Notwithstanding the lack of tax benefits, the basis of the apartment building was reduced by the depreciation deductions pursuant to section 1016(a) (2) of the Internal Revenue Code. Under threat of foreclosure, Beulah …