Golden Gate University Law Review


Michael Gurwitz


This Comment will examine the history of nonrecourse financing and tax shelters from the fabled Crane holding to the new reality of the ARP. This will be done by dividing the Comment into four parts. Part I will discuss the period preceding the passage of the Tax Reform Act of 1976, focusing on the Crane doctrine and subsequent attempts by the Internal Revenue Service (IRS) to define and limit the use of nonrecourse debt. Part II will highlight the factors that contributed to the growing abuse of tax shelters. Part III, in general terms, will examine the statutory scheme of the ARP, including the proposed regulations and several Revenue Rulings interpreting the statute. Part IV will discuss the current status of the Crane doctrine.

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