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activity of any other individual (including individuals
who are not owners of interests in the activity) for
such year;
(4) The activity is a significant participation
activity * * * for the taxable year, and the
individual's aggregate participation in all significant
participation activities during such year exceeds 500
hours;
(5) The individual materially participated in the
activity * * * for any five taxable years (whether or
not consecutive) during the ten taxable years that
immediately precede the taxable year;
(6) The activity is a personal service activity
* * * and the individual materially participated in the
activity for any three taxable years (whether or not
consecutive) preceding the taxable year; or
(7) Based on all of the facts and circumstances
* * * the individual participates in the activity on a
regular, continuous, and substantial basis during such year.
Petitioners argue that they satisfy the requirements of
section 1.469-5T(a)(3), Temporary Income Tax Regs., 53 Fed. Reg.
5726 (Feb. 25, 1988). Respondent argues that petitioners have
not satisfied this material participation test.
Petitioners' Participation
We must first decide whether petitioners participated in the
rental of their unit for more than 100 hours during each of the
taxable years in issue. Section 1.469-5(f)(1), Income Tax Regs.,
generally provides that any work done by an individual in
connection with an activity in which the individual owns an
interest at the time the work is done shall be treated as
participation of the individual in the activity. We consider
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