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December 31, 1993, section 469(c)(7) provides an exception to the
general rule in section 469(c)(2) for taxpayers meeting certain
conditions.6 The taxable years in issue in the instant case,
however, are 1990 and 1991. Accordingly, the section 469(c)(7)
exception does not apply in the instant case.
Respondent argues that, for purposes of the $25,000 offset
for rental real estate, petitioners have not established that
they "actively participated" in their rental real estate
activities as required by section 469(i). In the instant case,
however, respondent phased out the $25,000 offset because
petitioners' modified adjusted gross income exceeded $150,000 for
each of the taxable years in issue. As petitioners provide no
further arguments as to their passive losses, we sustain
respondent's determinations, to the extent that the $25,000
6 Sec. 469(c)(7) provides, for taxpayers meeting the
requirements of sec. 469(c)(7)(B), that
(A) In general.--If this paragraph applies to any
taxpayer for a taxable year --
(i) paragraph (2) shall not apply to any
rental real estate activity of such taxpayer
for such taxable year, and
(ii) this section shall be applied as if
each interest of the taxpayer in rental real
estate were a separate activity.
Notwithstanding clause (ii), a taxpayer may elect to treat
all interests in rental real estate as one activity.
Nothing in the preceding provisions of this subparagraph
shall be construed as affecting the determination of whether
the taxpayer materially participates with respect to any
interest in a limited partnership as a limited partner.
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