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1993 and $35,830 for 1994 relating to their chartering activity.
Respondent disallowed the claimed deductions because petitioners
were not engaged in the activity for profit and did not
materially participate in the activity.
OPINION
Even if petitioners carried on their chartering activity for
profit, their deductions for this activity shall not be allowed
because they did not materially participate in such activity.
Section 469 disallows the deduction of net losses from any
activity in which the taxpayer does not materially participate.
Sec. 469(c). An individual materially participates in an
activity when involved in the operations of the activity on a
regular, continuous, and substantial basis. Sec. 469(h)(1).
Temporary regulations provide, in relevant part, that an
individual shall be treated as materially participating if the
individual meets any of the following tests:
(2) The individual's participation in the activity
for the taxable year constitutes substantially all of
the participation in such activity of all individuals
(including individuals who are not owners of interests
in the activity) for such year;
(3) The individual participates in the activity for
more than 100 hours during the taxable year, and such
individual's participation in the activity * * * is not less
than the participation * * * of any other individual
(including individuals who are not owners of interests in
the activity) for such year;
* * * * * * *
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