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tioners, petitioner materially participated in his rental activ-
ity at Crestwood during each of the years at issue, that activity
thus is not a passive activity within the meaning of section
469(c)(1), and the loss petitioners reported in their return for
each of those years therefore is not a passive activity loss as
defined in section 469(d)(1) that is subject to disallowance by
section 469(a)(1). Respondent counters that section 1.469-
5T(a)(1), Temporary Income Tax Regs., 53 Fed. Reg. 5725 (Feb. 25,
1988), is valid and that in no event do petitioners satisfy that
regulation or section 1.469-5T(a)(6) or (7), Temporary Income Tax
Regs., 53 Fed. Reg. 5726 (Feb. 25, 1988).
Certain Preliminary Issues
Before turning our attention to the regulatory provisions on
which petitioners rely to establish that petitioner materially
participated during each of the years at issue in his rental
activity at Crestwood, we shall address two preliminary issues.
The first preliminary issue we address is whether respondent
is correct in contending that the work done by petitioner in
connection with the operations of Crestwood Association was work
done in his capacity as an investor in Crestwood under section
1.469-5T(f)(2)(ii)(B), Temporary Income Tax Regs., 53 Fed. Reg.
5727 (Feb. 25, 1988), that does not constitute participation for
purposes of section 469 because it is excluded by section 1.469-
5T(f)(2)(ii)(A), Temporary Income Tax Regs., supra. Our answer
is no. During 1989 and 1990, as president of Crestwood Associa-
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