On August 17, 2007, stung by the court decision in The Mattie Carter Trust v. United States,1 the Internal Revenue Service in a technical advice memorandum2 reasserted the position rejected by the 2003 decision by the United States District Court in the Northern District of Texas.3 The dispute is highly important to trusts (and estates) involved in carrying on a trade or business where losses run the risk of a challenge as to deductibility as passive activity losses.4



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