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for all the ordinary and necessary expenses paid or incurred
during the taxable year for the production of income. Section
469(a)(1) and (d)(1) generally prohibits a taxpayer from claiming
deductions attributable to "passive activities" in an amount
which exceeds the income generated by that taxpayer's "passive
activities". Scheiner v. Commissioner, T.C. Memo. 1996-554;
Mordkin v. Commissioner, T.C. Memo. 1996-187. The term "passive
activity" includes: (1) Any activity which involves the conduct
of a trade or business and in which the taxpayer does not
materially participate, and (2) any rental activity without
regard to whether or not the taxpayer materially participates in
the activity. Sec. 469(c)(1), (2), (4).
For purposes of section 469, the term "rental activity" is
defined in section 469(j)(8) as any activity where payments are
principally for the use of tangible property. See also sec.
1.469-1T(e)(3)(i), Temporary Income Tax Regs., 53 Fed. Reg. 5702
(Feb. 25, 1988). An activity involving the use of tangible
property, however, is not considered a rental activity for a
taxable year if for such taxable year the average period of
customer use for such property is 7 days or less. Sec. 1.469-
1T(e)(3)(i) and (ii)(A), Temporary Income Tax Regs., 53 Fed. Reg.
5702 (Feb. 25, 1988). Therefore, owners of rental real estate
are not considered to be engaged in a rental activity if the
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