- 13 -
property to the taxpayer). It would be
inconsistent with the purposes of section 469
to treat rental income as passive activity
gross income in such cases * * *
In successive attempts to define the scope of the self-rented
property rule, numerous sets of regulations were promulgated. In
both sets of temporary regulations, promulgated on February 25,
1988, and May 12, 1989, respectively, activities conducted through
a C corporation were excluded from being attributed to the
taxpayer/shareholder for purposes of determining "material
participation". See sec. 1.469-5T(f), Temporary Income Tax Regs.,
53 Fed. Reg. 5686, 5725 (Feb. 25, 1988), T.D. 8175, 1988-1 C.B.
191, 235; sec. 1.469-4T(b)(2)(ii)(B), Temporary Income Tax Regs.,
54 Fed. Reg. 20527, 20543 (May 12, 1989), T.D. 8253, 1989-1 C.B.
121.6 Pursuant to the sunset provisions of section 7805(e)(2),7 the
second set of temporary regulations (section 1.469-
4T(b)(2)(ii)(B)), expired on May 11, 1992.
On May 15, 1992, section 1.469-4, Proposed Income Tax Regs.,
57 Fed. Reg. 20802, 20804 (May 15, 1992), PS-1-89, 1992-1 C.B.
6 Proposed regulations adopting the definition of
"activity" for purposes of applying the limitations on passive
activity losses and passive activity credits as set forth in the
second set of temporary regulations were issued concurrently
(i.e., May 12, 1989) with the promulgation of the second set of
temporary regulations. See PS-001-89, 54 Fed. Reg. 20606 (May
12, 1989), 1989-1 C.B. 1057.
7 Sec. 7805(e)(2) provides: "Any temporary regulation
shall expire within 3 years after the date of issuance of such
regulation."
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