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We are persuaded by respondent's responses to petitioners'
assertions.
Consequently, we conclude that the self-rented property rule
in section 1.469-2(f)(6), Income Tax Regs., is valid pursuant to
the Secretary's delegated regulation-making authority.
We now turn our attention to petitioners' proposed regulation
argument. The taxpayers in Connor v. Commissioner, T.C. Memo.
1999-185, advanced a similar argument.9 We rejected the taxpayers'
argument in that case and for the reasons expressed both therein
and hereinafter do so in this case.
As in Connor, petitioners herein assert that the proposed
regulations promulgated in 1992 did not specifically disavow the
provisions in the temporary regulations issued in 1989, which
provided that "a taxpayer's activities do not include operations
9 In Connor v. Commissioner, T.C. Memo. 1999-185, the
taxpayer husband practiced dentistry and was employed by a
professional service corporation in which he was a shareholder.
(Until Oct. 31, 1993, the corporation was known as Michael F.
Connor, D.D.S., S.C.; after that date, the corporation was known
as Drs. Connor & McKeever, S.C.). The professional service
corporation leased the building (the Rochester Street building)
in which it conducted its business activities from taxpayer wife.
The taxpayers reported net income from the rental of the
Rochester Street building as $10,503 and $15,937 in 1993 and
1994, respectively. They reported losses from the rental of
another property and losses from a partnership, which they used
to offset the rental income from the Rochester Street building.
The Commissioner determined that the rental profits from the
Rochester Street building constituted nonpassive income and
consequently could not be used to offset the taxpayers' passive
losses. We sustained the Commissioner's determination.
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