Stephen and Ann Schwalbach - Page 7

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          5 U.S.C. sec. 553(b) and (c) (1994).  The notice and comment                
          requirements of the APA provide:                                            
                    (b) General notice of proposed rule making shall                  
               be published in the Federal Register * * *.  The notice                
               shall include--                                                        
                         (1) a statement of the time, place, and                      
                    nature of public rule making proceedings;                         
                         (2) reference to the legal authority                         
                    under which the rule is proposed; and                             
                         (3) either the terms or substance of the                     
                    proposed rule or a description of the                             
                    subjects and issues involved.                                     
               Except when notice or hearing is required by statute,                  
               this subsection does not apply--                                       
                         (A) to interpretative rules, general                         
                    statements of policy, or rules of agency                          
                    organization, procedure, or practice; or                          
                         (B) when the agency for good cause finds                     
                    (and incorporates the finding and a brief                         
                    statement of reasons therefor in the rules                        
                    issued) that notice and public procedure                          
                    thereon are impracticable, unnecessary, or                        
                    contrary to the public interest.                                  
                    (c) After notice required by this section, the                    
               agency shall give interested persons an opportunity to                 
               participate in the rule making through submission of                   
               written data, views, or arguments with or without                      
               opportunity for oral presentation.  After consideration                
               of the relevant matter presented, the agency shall                     
               incorporate in the rules adopted a concise general                     
               statement of their basis and purpose.  * * *  [5 U.S.C.                
               sec. 553(b) and (c).]                                                  
               We disagree with petitioners' assertion that sections                  
          1.469-2(f)(6) and 1.469-4(a), Income Tax Regs., are invalid when            
          applied to a material participant of an activity conducted by a             
          C corporation.  Section 1.469-2(f)(6), Income Tax Regs., was                

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Last modified: May 25, 2011