- 21 -
1988, petitioner and other board members were informed by accoun-
tants of the limitations imposed on the Crestwood condominium
owners in deducting for Federal income tax purposes losses from
their respective rental activities at Crestwood.
OPINION
Petitioners bear the burden of proving that respondent's
determinations are erroneous. Rule 142(a); Welch v. Helvering,
290 U.S. 111, 115 (1933).
The General Framework of Section 469 and the Regulations
Thereunder and the Positions of the Parties
Pursuant to section 469(a), a passive activity loss of an
individual for the taxable year is generally not allowed as a
deduction for such year.18 For this purpose, the passive activ-
ity loss for the taxable year is generally the amount, if any, by
which the passive activity deductions for the taxable year exceed
the passive activity gross income for such year. Sec. 469(d)(1);
sec. 1.469-2T(b)(1), Temporary Income Tax Regs., 53 Fed. Reg.
5711 (Feb. 25, 1988).
As pertinent here, section 469(c) defines the term "passive
activity" to include: (1) Any activity which involves the con-
duct of any trade or business and in which the taxpayer does not
materially participate, sec. 469(c)(1), and (2) any rental ac-
tivity without regard to whether or not the taxpayer materially
18 Under sec. 469(b), a disallowed passive activity loss for a
taxable year is generally treated as a deduction allocable to a
passive activity for the next taxable year.
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