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benefits nor was it an activity from which petitioner primarily
received significant personal pleasure or recreational benefits.
We find that it was engaged in for profit within the meaning of
section 183.
Passive Loss Limitations
Respondent alternatively argues that even if the activity
were engaged in for profit, the losses should be disallowed
pursuant to the passive activity loss limitations of section 469.
The passive loss rules of section 469 place limitations on the
deduction of losses relating to passive activities; namely, from
activities in which a taxpayer does not materially participate.
Sec. 469(a)(1) and (2), (c)(1), (d)(1).
As a general rule, a taxpayer will be regarded as not
materially participating in an activity if the taxpayer is not
involved in the operation of the activity on a basis which is
regular, continuous, and substantial. Sec. 469(h)(1); sec.
1.469-5T(a), Temporary Income Tax Regs., 53 Fed. Reg. 5726 (Feb.
25, 1988).
The temporary regulations under section 469 contain seven
tests, the qualification under any one of which will result in a
taxpayer's being treated as materially participating in the
activity. Sec. 1.469-5T(a), Temporary Income Tax Regs., supra.
Of the seven tests, petitioners presented evidence and made
general arguments that are applicable only to the tests found in
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