Swarens v. Department of Revenue

This is a direct appeal from a judgment of the Oregon Tax Court that affirmed an order of the Oregon Department of Revenue (the department) ordering Leslie Swarens (taxpayer) to pay additional personal income tax for the 1981 tax year.

The facts are not in dispute. Before and during 1981, taxpayer was a partner in an investment partnership. The partnership invested in tax shelters in 1979. Based on the partnership’s investments, the partnership reported large ordinary losses in 1979, 1980, and 1981. The partners deducted 100 percent of the losses against their ordinary income. Based on the…