UC Law Journal


Jeffrey H. Kahn


Many commentators, as well as the general public, believe that "fairness" should be a primary concern of the tax law. Often, this desired fairness takes the form of horizontal equity, demonstrated through the concept of parallelism (i.e., equal treatment of similar items). And, clearly, parallelism must be taken into account in evaluating many provisions of the tax code. To take it into account, however, does not mean that it must prevail over all other legitimate goals of the tax system with which it is often in conflict. Such analysis has led the author to conclude that not only is parallel treatment not always compelled, it is not always desirable. Therefore, each instance of nonparallel treatment in the tax law must be examined to determine whether the contravention of parallelism is warranted by other goals of the tax system.

Thus, this Article will examine a number of provisions where the tax law fails to provide parallel treatment for certain reimbursed and unreimbursed expenditures or losses. In each case, the relevant competing considerations will be examined, illustrating the proper role of the parallelism concept in the tax system and of the appropriate weight to be accorded that concept. In particular, this Article will focus on two circumstances in which a reimbursement of an expenditure or loss is excluded from the recipient's income: (I) where an unreimbursed expenditure or loss of the same type would not be deductible, and (2) where such an unreimbursed expenditure or loss would be deductible, but the deduction is subject to limitations.

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