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Petitioners contend that they materially participated in the
rental of their Vermont condominium, thus making section 469(a) not
applicable. "Material participation" in an activity is defined as
regular, continuous, and substantial involvement. Sec. 469(h)(1).
Petitioners contend that they satisfy the safe harbor
requirements of section 1.469-5T(a)(3), Temporary Income Tax Regs.,
53 Fed. Reg. 5702 (Feb. 25, 1988), for material participation.
That section permits a finding of material participation if:
The individual participates in the activity for more than
100 hours during the taxable year, and such individual's
participation in the activity for the taxable year is not
less than the participation in the activity of any other
individual (including individuals who are not owners of
interests in the activity) for such year[.]
Id.
Petitioners claim they spent 139 hours in the involvement of
the operations of the rental of their Vermont condominium in 1991,
and 115.5 hours in 1992. In this regard, they testified (by using
a written activities list that was prepared from a
contemporaneously kept diary) as to specific tasks they performed
during the years under consideration. Their written activities
list for 1991 shows 7 hours spent preparing Federal and State
income tax returns, 20 hours traveling to and from Vermont for the
annual meeting and party of the condominium association, and 36
hours preparing for, attending, discussing, and reviewing minutes
of meetings of the condominium association, its Board of Directors,
and the partnership. The 1991 written activities list also records
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