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- Title
Point The Supreme Court's Statutory Interpretation in Gitlitz: A Failed Approach to Interpretation and a Bad Decision.
- Authors
Johnson, Calvin
- Abstract
The Supreme Court's decision in Gitlitz v. Commissioner[1] is an irresponsible decision disrupting the logic of tax for the benefit only of abuse.[2] In Gitlitz the Supreme Court gave the equivalent of a double deduction, both an appropriate exclusion of cancellation of indebtedness income for an insolvent Subchapter S corporation and also an inappropriate increase in shareholder basis. Congress amended section 108(d)(7) to provide that the rules for COD income and attribute reduction for S corporations would be applied without treating excluded COD income as an "item of income."[6] The Conference Committee described the Gitlitz error in explaining the legislative reversal. The Supreme Court in shifting the blame for the Gitlitz problem onto Congress mandates a congressional omniscience well beyond what any group of mortals can satisfy, at a cost of having bad law reign for whatever period it may take for Congress to overrule the court decision through legislation. In these days of partisan paralysis in Congress, the administration and courts need to get the issue right, because Congress will not be able to fix it, even for clear error.
- Subjects
APPELLATE courts; STATUTORY interpretation; SUBCHAPTER S corporations; REAL estate developers; PUBLIC companies
- Publication
ABA Tax Times, 2020, Vol 40, Issue 1, p21
- ISSN
2381-5868
- Publication type
Article