- 15 - with onsite management, and otherwise participate in integral functions of the business. In addition, the individual on a regular basis uses his independent discretion to make business decisions such as the following: (1) regularly establishing room rental rates, (2) establishing and reviewing hiring and other personnel policies, including review of management personnel, (3) reviewing and approving periodic and annually audited financial reports, (4) participating in budget operating costs and establishing capital expenditures, (5) establishing the need for and level of financial reserves, (6) selecting the banking depository for rental proceeds and reserve funds, (7) participating in frequent meetings at the hotel to review operations and the business plan, and (8) assisting in offsite business promotion activities. * * * Under these circumstances, if the standard requiring regular, continuous, and substantial involvement is satisfied, then the taxpayer is treated as materially participating in the hotel activity. He is not so treated, however, in the absence of sufficient involvement. No safe harbor should be inferred from the preceding paragraph. * * * [Emphasis added.] The above-quoted language summarizes colloquies between Senators Packwood and Hatfield on the floor of the U.S. Senate. See 132 Cong. Rec. 15032, 26685-26686 (1986) (colloquies between Senators Packwood and Hatfield). According to petitioner, the passage indicates Congress' intent to provide owners of condominium hotel units with the opportunity to hire onsite management without triggering the application of passive loss restrictions. Petitioner thus argues that respondent's interpretation of the management-related limitations of section 1.469-5T(a)(7), Temporary Income Tax Regs., supra, would preclude the hiring of any onsite management, thereby ignoring congressional intent. Petitioner contends that the only "management services" to bePage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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