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substantial basis during the taxable year. A threshold
requirement for meeting this test, however, is that the taxpayer
participate in the activity for more than 100 hours during the
taxable year. Sec. 1.469-5T(b)(2)(iii), Temporary Income Tax
Regs., 53 Fed. Reg. 5726 (Feb. 25, 1988).
A taxpayer may establish the extent of his or her
participation in a particular activity by any reasonable means
including "the identification of services performed over a period
of time and the approximate number of hours spent performing such
services during such period, based on appointment books,
calendars, or narrative summaries." Sec. 1.469-5T(f)(4),
Temporary Income Tax Regs., 53 Fed. Reg. 5727 (Feb. 25, 1988).
Petitioners argue that because they researched possible
stallions to breed with La Barbara, because they met with other
partners to discuss which breeding options to pursue, and because
they voted on which stallions to breed with La Barbara, they
should be regarded as materially participating in the LB
Partnership, and the losses petitioners realized on their
investments in the LB Partnership should be regarded as
nonpassive losses, not limited by the passive activity loss
provisions of section 469.
Respondent argues that petitioners have not established that
they materially participated in the LB Partnership. Respondent
argues, therefore, that for 1988, the section 469 passive
activity loss rule applies, and the $15,394 loss that petitioners
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