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excluded from being taken into account for having met the
material participation requirement of section 469 in using
the facts and circumstances test of (a)(7).
Whether a person meets the material participation
requirement of section 469 is a factual determination. The
Reg. 1.469-5T(f)(2)(ii) defines investors’ activities that
are not considered in meeting the hourly requirement.
Simply signing a statement or making an election are not a
means in meeting the requirement. Although Section 469 may
not have existed at the time of your initial investment, it
is law that investors have to address in claiming investment
losses today. Contrary to Mr. Hoyt’s statement, time spent
reading and thinking about this issue should not be
considered as material participation hours for 1992.
If this letter is somewhat confusing or you are
questioning the accuracy of this letter, I recommend you
consider having an independent accountant or attorney review
this matter with you.
Petitioner also received several notices informing him that
respondent was beginning an examination of the various
partnerships in which petitioner was involved, including DSBS 87-
C. Petitioner received such notices dated August 21, 1989, May
21, 1990, August 13, 1990, February 19, 1991 (two notices),
February 3, 1992, and February 18, 1992. Finally, respondent had
frozen the refunds petitioner claimed on his 1987 and 1988
Federal income tax returns that were derived from the Hoyt
partnership losses. In late 1988 and mid-1989, petitioner twice
inquired into the status of the 1987 refund; respondent
subsequently notified petitioner by letter that his 1984 through
1988 accounts were being audited.
When petitioner received any correspondence from respondent,
petitioner would send copies to the Hoyt organization; petitioner
would take no further action or seek advice concerning the
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