by Jeffrey A. Galant
Abstract
Public policy continues to inform the interpretation of applicable law, including the tax law. The language of a tax provision is obviously key to understanding its meaning and, perforce how it should be applied. Section 162 of the Internal Revenue Code of 1986, as amended (“IRC”), provides for the deductibility of “ordinary and necessary expenses paid or incurred in carrying on a trade or business.” IRC section 165 allows individuals to deduct losses incurred in a trade or business, or in a transaction entered into for profit, as well as certain casualty losses. The principles underlying a particular policy may influence how the language of such provisions should be interpreted, including whether such principles should in effect override the actual language of a provision. This is clearly the challenge when competing policies are at stake.
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