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factual determinations which must be made relating to the
affected item, the tax resulting from the adjustment of the
affected item must be assessed through a computational
adjustment. Secs. 6230(a)(1) and 6231(a)(6). If there are
factual issues which must be determined at the partner level,
then respondent's permitted means of making the adjustment is
through the issuance of a deficiency notice pursuant to section
6230(a)(2)(A)(i). N.C.F. Energy Partners v. Commissioner, supra
at 744-745.
A. The section 469 issue does not involve a partnership
item.
Section 469(a)(1) provides generally that no passive
activity loss claimed by a taxpayer during any taxable year is
allowable as a deduction. Section 469(d)(1) provides that the
term "passive activity loss" means the amount, if any, by which
the aggregate losses from all passive activities for the taxable
year exceed the aggregate income from all passive activities for
such year. Section 469(c) provides generally that the term
"passive activity" means any activity which: (1) Involves the
conduct of any trade or business; and (2) in which the taxpayer
does not materially participate. In general, a taxpayer is
treated as materially participating in an activity only if the
taxpayer is involved in the operations of the activity on a basis
which is: (1) Regular; (2) continuous; and (3) substantial.
Sec. 469(h)(1). A passive activity, by definition (effective for
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