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* by which * * * the sum of the credits from all passive activities
allowable for the taxable year under subpart D of part IV of
subchapter A * * * exceeds the regular tax liability of the
taxpayer for the taxable year allocable to all passive activities."
Sec. 469(d)(2) (emphasis added). The rehabilitation credit is a
credit allowable under subpart D of part IV of subchapter A. See
secs. 46, 38(b)(1).
In determining the existence and amount of a passive activity
credit, the regular tax liability allocable to all passive
activities must be ascertained. The regular tax liability
allocable to passive activities is defined in section 1.469-3T(d),
Temporary Income Tax Regs., 53 Fed. Reg. 5724 (Feb. 25, 1988), as
follows:
(d) Regular tax liability allocable to
passive activities--(1) In general.--For
purposes of paragraph (a)(2) of this section,
the taxpayer's regular tax liability allocable
to all passive activities for the taxable year
is the excess (if any) of --
(i) The taxpayer's regular tax
liability for such taxable year;
over
(ii) The amount of such regular
tax liability determined by reducing
the taxpayer's taxable income for
such year by the excess (if any) of
the taxpayer's passive activity
gross income for such year over the
taxpayer's passive activity
deductions for such year.
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