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Seeing Pesach Through your Tax Return

As Americans prepare their taxes, which are due on April 18th, it is worthwhile to consider a piece of U.S. tax law that relates to the seventh day of Pesach. Suppose someone invested in a property and the value of the property depreciated over the year. Can the owner offset some of his income by claiming a loss on the property? 

It depends on the extent of the owner’s participation in maintaining the property. If he actively participated in the maintenance of the property, he can offset income with the loss. This is known as material participation. If he only passively participated, then he must wait to deduct the loss when he sells the property. The logic of this law seems to be that the active participant is more like a business owner whose livelihood is directly determined by the income and losses of the business. The passive participant is like an investor whose primary interest is whether his initial investment can yield fruit. That determination is not made until he sells the investment. Perhaps this can be explained from a psychological perspective as follows: those who are active participants are emotionally connected to the property. Those who are passive, have no inherent connection to that particular property and would be just as happy owning a different property that made a little bit more money.

This concept that active participation can lead to a more fulfilling experience is seen from the narrative of the Splitting of the Sea which we read on the seventh day of Pesach. At the conclusion of the episode, the Torah states, “…and they had faith in Hashem and in Moses, His servant.” Is it possible that after witnessing the miracles of the plagues, the Jewish people didn’t believe? And if not, what was it about the Splitting of the Sea that caused them to believe? In The Warmth and the Light to Parashat Beshalach, R. Ahron Soloveichik, suggests that at the Splitting of the Sea, the Jews were active participants in the miracle. They didn’t sit on the side and watch it happen, rather, they went into the water first and only then did it split. He notes that the Hebrew word “vayaminu” – “and they had faith” comes from the Hebrew word “oman,” which is to train oneself. The Jewish people certainly believed in G-d as they left Egypt, but it was their active participation in Splitting of the Sea that trained them to rely on G-d on a regular basis. From this we can learn an important lesson, the more we are actively involved in something, the more meaning and depth we can gain from that experince.