| To curb tax shelter abuses, Congress enacted the at-risk rules in the Tax Reform Act of 1976. In choosing the at-risk rules, Congress rejected other alternatives such as the Limitation on Artificial Losses (LAL) and the adoption of less accelerated methods of depreciation. In the Revenue Act of 1978, Congress added a recapture provision designed to prevent taxpayers from avoiding the at-risk rules by temporarily increasing the amount at risk at year end. Since the at-risk rules were enacted, tax shelter promoters have attempted to avoid the at-risk rules through complex legal arrangements and questionable interpretations of the law.;Computer models are constructed for all tax provisions under study. Data from the prospectuses of equipment leasing tax shelters are analyzed using these models. All comparisons are made in terms of the present value of tax benefits to an investor. The comparisons between the interpretations of the at-risk rules, LAL, and RCRS are made using the F Method of pairwise comparisons. The effect of adding the recapture provision to the at-risk rules is evaluated using matched-pairs t-tests. In addition, a descriptive analysis of results is presented with a focus on the effect of the tax provisions on the average investor.;This study shows the extent to which tax benefits to investors differ under various interpretations of the at-risk rules. Also, it concludes that both LAL and RCRS limit tax benefits to investors compared to the liberal interpretations of the at-risk rules. However, RCRS limits tax benefits to a greater extent than LAL. In addition, this study reveals that the recapture provision applies in many cases and works as intended to reduce tax benefits to investors.;This dissertation examines various interpretations of the at-risk rules. It also compares these interpretations to two tax alternatives, LAL and the Real Cost Recovery System (RCRS). In addition, it compares the at-risk rules including the recapture provision to those excluding this provision. |
