Charles Gragg v. United States

OPINION

CHRISTEN, Circuit Judge:

In the 1980s and 1990s, Congress substantially amended the Internal Revenue Code (I.R.C.) to curb widespread abuses of tax loopholes. One newly added provision, I.R.C. § 469, restricted taxpayers’ ability to reduce their taxable income using passive rental losses' — that is, losses from rental properties they own but in which they do not materially participate. This case requires us to determine the scope of § 469. Specifically, it requires us to determine whether § 469 entitles real estate professionals like petitioner Delores Gragg to deduct rental losses…