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estate activities" only if the activity constitutes a "rental
activity".
With respect to the requirement that the individual actively
participate in the rental real estate activity, the legislative
history of section 469 also provides:
The difference between active participation and
material participation is that the former can be
satisfied without regular, continuous, and substantial
involvement in operations, so long as the taxpayer
participates, e.g., in the making of management
decisions or arranging for others to provide services
(such as repairs), in a significant and bona fide
sense. Management decisions that are relevant in this
context include approving new tenants, deciding on
rental terms, approving capital or repair expenditures,
and other similar decisions.
* * * * * * *
[A]s with regard to the material participation
standard, services provided by an agent are not
attributed to the principal, and a merely formal and
nominal participation in management, in the absence of
a genuine exercise of independent discretion and
judgment, is insufficient. [S. Rept. 99-313, supra,
1986-3 C.B. (Vol. 3) at 737-738.]
In determining whether a taxpayer actively participates, the
participation of the taxpayer's spouse is taken into account.
Sec. 469(i)(6)(D).
The arguments of the parties on brief focus on the question
of whether petitioners actively participated in the activity of
renting petitioner's condominium unit for the purpose of allowing
petitioners the offset provided at section 469(i). It is not
clear from the record, however, whether petitioner's condominium
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