Getting Serious About Corporate Tax Shelters: Taking a Lesson from History

32 Pages Posted: 9 May 2001 Last revised: 27 Jun 2014

See all articles by George K. Yin

George K. Yin

University of Virginia School of Law

Date Written: December 1, 2001


Assuming that the problem of corporate tax shelters is as serious as some claim, this article suggests searching for a solution with the same characteristics as section 469 of the Internal Revenue Code (the passive activity loss limitations) - a broad, reasonably clear, outcomes-oriented rule that is unaffected by taxpayer purpose or intent, or the other elements making up the taxpayer's transaction. One possible solution is enactment of an "anti-abuse" rule which denies a particular tax result if no sensible legislator would have approved of the result at the time the statute was drafted. The uncertainty of such a rule, however, would likely undermine its ability to be an effective deterrent to corporate tax shelters. The other possible solution explored in this article, which deserves further consideration, is to tax public corporations on their income reported for financial accounting purposes, as adjusted by tax rules authorizing specific deviations from that base. This solution should eliminate an entire class of shelter transactions. It may also greatly simplify the law and provide much needed transparency to the process of determining corporate income tax liabilities.

JEL Classification: M41, H25, H26

Suggested Citation

Yin, George K., Getting Serious About Corporate Tax Shelters: Taking a Lesson from History (December 1, 2001). 54 S.M.U. L. Rev. 209 (2001); Virginia Law and Economics Research Paper No. 01-5. Available at SSRN: or

George K. Yin (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
434-924-7025 (Phone)
434-924-7536 (Fax)

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