- 16 -
partnership issue and allocated his time spent dealing with such
matters accordingly. Moreover, in the minutes of certain
meetings, petitioner was listed as representing Citimark, while
at other meetings on the same matter, petitioner was listed as
representing CDI.
OPINION
We must decide whether petitioner materially participated in
the activity of CDI during the years at issue for purposes of
section 469 and the temporary regulations thereunder. If so,
then petitioners cannot offset their share of passive losses from
the partnerships against income from CDI. If petitioner is found
not to have materially participated in CDI, we must then consider
whether 1.469-2T(f)(2), Temporary Income Tax Regs., 53 Fed. Reg.
5721 (Feb. 25, 1988), which under certain circumstances
recharacterizes as active income that which would otherwise be
considered passive, is invalid on its face or as applied to
petitioners.
We note at the outset that the determinations of respondent
in a notice of deficiency are presumed correct, and taxpayers
bear the burden of proving that respondent's determinations are
incorrect. Rule 142(a).
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