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Article

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Recouping Losses: The Case for Full Loss Offsets (with Mark Campisano), 76 Northwestern University Law Review 709 (1981)

Abstract

All too frequently today, American businesses lose money. Under
the current tax laws, a loss, by itself, has little or no significance: Unless
the loss can offset other income, it goes unnoticed by the Internal
Revenue Code. Our thesis is that this state of affairs is highly inequitable
and distorts investment decisions. We propose instead that business
losses give rise to tax refunds, paid out to corporations in an exact reversal
of the process by which profitable corporations now pay their
taxes. of the process by which profitable corporations now pay their
taxes. This proposal for recoupment of losses may at first glance appear
quite novel, but it was suggested over thirty years ago by the
United States Tax Court in Aiprosa Watch, and proposals endorsing
recoupment have persisted, despite vigorous criticism. We believe that upon closer examination, a compelling case can be made for preferring
recoupment to the current loss deduction regime.

Date of Authorship for this Version

1981

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