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regard to the capacity in which the individual does the
work) in connection with an activity in which the
individual owns an interest at the time the work is
done shall be treated for purposes of this section as
participation of the individual in the activity." Sec.
1.469-5(f)(1), Income Tax Regs. Temporary regulations
issued under section 469 provide certain exceptions to
that definition of participation. As pertinent here,
section 1.469-5T(f)(2)(ii)(A), Temporary Income Tax
Regs., 53 Fed. Reg. 5727 (Feb. 25, 1988), provides that
work done by an individual in such individual's
capacity as an investor in an activity shall not be
treated as participation by the individual in the
activity unless the individual is involved in the day-
to-day management or operations of the activity. For
this purpose, work done by an individual in such
individual's capacity as an investor in an activity
includes:
(1) Studying and reviewing financial
statements or reports on operations of the
activity;
(2) Preparing or compiling summaries or
analyses of the finances or operations of the
activity for the individual's own use; and
(3) Monitoring the finances or
operations of the activity in a non-
managerial capacity. [Sec. 1.469-
5T(f)(2)(ii)(B), Temporary Income Tax Regs.,
supra.]
Temporary regulations relating to the meaning of
the term "material participation" in section 469(h)(1)
provide that, in general,
an individual shall be treated, for purposes
of section 469 and the regulations
thereunder, as materially participating in an
activity for the taxable year if and only
if--
(1) The individual participates in the
activity for more than 500 hours during such
year;
(2) The individual's participation in
the activity for the taxable year constitutes
substantially all of the participation in
such activity of all individuals (including
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