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Respondent, in the notice of deficiency, determined that
these losses constituted passive activity losses, and only 10
percent of these losses were deductible for 1990, and none of the
losses were deductible in 1991. Further, for the taxable year
1990 respondent determined that petitioner was entitled to deduct
an additional $1,520 for personal interest expense but disallowed
a $55 foreign tax credit. Respondent's determinations in the
notice of deficiency are presumed correct, and petitioner bears
the burden of proving otherwise. Rule 142(a); Welch v.
Helvering, 290 U.S. 111, 115 (1933).1
Section 469 provides that passive activity losses of a
publicly traded partnership (PTP) are allowed only to the extent
of passive activity income from the same PTP. Sec. 469(a),(k).
Disallowed passive activity losses must be carried forward and
used to the extent of future income from the same PTP or used
when the entire interest in that PTP is sold. Sec. 469(b), (g),
(k). A PTP is one in which the interests are traded on an
established securities market. Sec. 469(k). A "passive
activity" is any activity involving the conduct of a trade or
business in which the taxpayer does not materially participate.
1Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code in effect for the
taxable years in issue.
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Last modified: May 25, 2011