Chester F. and Faye L. Sidell - Page 24

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          that a taxpayer conducts through one or more entities (other than           
          pass through entities)."10  Sec. 1.469-4T(b)(2)(ii)(B), Temporary           
          Income Tax Regs., 54 Fed. Reg. 20543 (May 12, 1989).  Accordingly,          
          petitioners maintain:                                                       
               It is abundantly clear that Proposed Regulation sec.                   
               1.469-4 was not intended to, and in fact did not change                
               the rule from the * * * Temporary Regulations that a                   
               taxpayer's activities did not include those conducted                  
               through a C corporation. Consequently, it is clear that                
               under Proposed Regulation sec. 1.469-4, the self rented                
               property rule does not apply to the rental of property to              
               a C corporation.                                                       
               Petitioners' proposed regulation argument is founded upon the          
          transitional relief set forth in section 1.469-11(b)(1), Income Tax         
          Regs., which, as applicable herein, permits petitioners to                  
          determine their tax liability for 1993 and 1994 using the rules set         
          forth in the proposed regulations promulgated in 1992 (rather than          
          the final regulations).  As previously stated, these proposed               

               10   At trial, petitioners introduced over respondent's                
          objection a multitude of Internal Revenue Service internal                  
          documents and memoranda purporting to show intent on the part of            
          the drafters of sec. 1.469-4, Proposed Income Tax Regs., 57 Fed.            
          Reg. 20802 (May 15, 1992), to maintain the exclusion on                     
          attribution of activities from C corporations.  We find these               
          documents to be of little probative value inasmuch as they do not           
          state the final position of either the Commissioner or the                  
          Secretary.  See Connecticut Gen. Life Ins. Co. v. Commissioner,             
          109 T.C. 100, 110 (1997), affd. 177 F.3d 136 (3d Cir. 1999).                
          Normally, such internal memoranda are not binding on the                    
          Secretary and cannot be used to determine intent.  See id. at               
          109-111 (observing that material from administrative work files             
          generally reflects only personal views of various Government                
          representatives, not official statements of the Commissioner or             
          the Secretary); Armco, Inc. v. Commissioner, 87 T.C. 865, 867-868           

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