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from that item of property is treated as not from a
passive activity if the property--
(i) Is rented for use in a trade or
business activity * * * in which the
taxpayer materially participates * * * for
the taxable year; * * *
The fact that section 1.469-2(f)(6), Income Tax Regs, was
prescribed by the Commissioner pursuant in part to the specific
grant of authority stated in section 469(l)(1), and that section
1.469-2(f)(6), Income Tax Regs., contains substantive rules that
are legislative in character, means that the promulgation of
section 1.469-2(f)(6), Income Tax Regs., is not excepted from the
notice and comment requirements of the APA, supra. See Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S.
837, 843-844 (1984); Bankers Life & Cas. Co. v. United States,
142 F.3d 973, 978-979 (7th Cir. 1998); Water Quality Association
Employees' Benefit Corp. v. United States, 795 F.2d 1303, 1305
(7th Cir. 1986); Wing v. Commissioner, 81 T.C. 17, 28 (1983); see
also Schaefer v. Commissioner, 105 T.C. 227, 229-231 (1995) (sec.
1.469-2T(c)(7)(iv), Temporary Income Tax Regs., 53 Fed. Reg.
5686, 5716 (Feb. 25, 1988), is a legislative regulation because
it was issued under the specific grant of authority contained in
sec. 469(l)(2)).
Section 1.469-2(f)(6), Income Tax Regs., was issued on
May 15, 1992, and it reads nearly verbatim as it appeared when it
was proposed on February 25, 1988. See Notice of Proposed
Rulemaking, 53 Fed. Reg. 5733 (Feb. 25, 1988) (text of section
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