Evaluating Tax Avoidance Practices: Risk of Loss
Jeremy Lingenfelser

Abstract
In the constant flow of the federal tax scheme numerous backwaters have developed as havens for delaying or dodging taxation. Many of these pools have the stench of illegality emanating strongly from the stagnant tax avoidance purpose present in the motives for the transactions that pull the money out of the nation?s tax coffers. However, other pools are fed with freshwater from the spring of new business opportunities inherent in the transactions. As courts have struggled with defining the legitimacy (and illegitimacy) of these various tax shelters they have developed numerous standards and tests to determine if they are legitimate. This paper looks at these standards and concludes that the only important defining feature for determining whether a shelter is legitimate is the risk of loss.

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