Stephen and Ann Schwalbach - Page 10

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          1.469-2T(f)(6), Temporary Income Tax Regs., 53 Fed. Reg. 5686,              
          5723 (Feb. 25, 1988), served as the text of the proposed                    
          regulations).  The notice of proposed rulemaking complied with              
          the notice and comment requirements of the APA, supra; inter                
          alia, it set forth by cross-reference the substance of the                  
          proposed regulations, including the subjects, issues, and rules             
          involved, and it invited written comments.  53 Fed. Reg. 5733.              
          The notice of proposed rulemaking also invited requests for a               
          public hearing and stated that a public hearing would be held,              
          upon the request of any commentator, at a time and place to be              
          published in the Federal Register.  Id.                                     
               Section 1.469-4(a), Income Tax Regs., was prescribed by the            
          Commissioner under the broad regulatory authority that Congress             
          delegated to him through sections 469(l) and 7805, T.D. 8565,               
          1994-2 C.B. 81, 83, and is generally effective for taxable years            
          ending after May 10, 1992, sec. 1.469-11(a)(1), Income Tax Regs.            
          Section 1.469-4(a), Income Tax Regs., provides:                             
               �  1.469-4.  Definition of activity.--(a)  Scope and                   
               purpose.  This section sets forth the rules for                        
               grouping a taxpayer's trade or business activities and                 
               rental activities for purposes of applying the passive                 
               activity loss and credit limitation rules of section                   
               469.  A taxpayer's activities include those conducted                  
               through C corporations that are subject to section 469                 
               * * *.  [Sec. 1.469-1T(b)(4), Temporary Income Tax                     
               Regs., 53 Fed. Reg. 5686, 5701 (Feb. 25, 1988),                        
               provides that a C corporation is subject to section 469                
               if it is a personal service corporation.]                              
          The second sentence of section 1.469-4(a), Income Tax Regs.,                
          which contains the attribution rule in dispute, is a change from            

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