After providing a glimpse at the historical computation of business operating profit or loss, the authors describe the use of tax shelters as well as legislative responses to them. The authors examine the at-risk and passive activity loss rules, detailing the scope of these rules and offering guidance in the computation of deductions and losses.
Boris I. Bittker, Martin J. McMahon, & Lawrence A. Zelenak, A Whirlwind Tour of the Internal Revenue Code's At-Risk and Passive Activity Loss Rules, 36 Real Prop. Prob. & Tr. J. 673 (2002), available at http://scholarship.law.ufl.edu/facultypub/580