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unit was rented for an average period of greater than 7 days for
each of the years in issue. Therefore, it is unclear whether the
activity in question constitutes a rental real estate activity
under section 469(i).5
Since the record is vague as to the average period of
customer use of the condominium unit, and since application of
the relevant provisions differs depending upon whether the
average period exceeds 7 days, we shall address whether
petitioners are entitled to the claimed losses under either
scenario.
1. Average Period of Customer Use Greater Than 7 Days
If the average period of customer use of petitioner's
condominium unit was greater than 7 days, the activity of renting
the unit is considered a rental real estate activity, and
petitioners must establish that they actively participated in
that activity to qualify for the offset under section 469(i). To
support their contention that they actively participated in the
rental of the condominium unit, petitioners argue as follows:
Code Section 469(i) gives an "out" to those taxpayers
who fall within the $25,000.00 offset provision. This
"out" is limited to those taxpayers which "actively
participated" in the rental of property. [Petitioners]
submit that they qualify under this exception in that
they participate and make management decisions on a
5 As previously indicated, if the average period of
customer use is 7 days or less, the activity is not considered a
rental activity. Sec. 1.469-1T(e)(3)(i) and (ii)(A), Temporary
Income Tax Regs., 53 Fed. Reg. 5702 (Feb. 25, 1988).
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