Larry W. and Cynthia J/ Van Wyk - Page 5

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          petitioners maintain that section 465(b)(3)(B)(ii) applies to the           
          instant case.                                                               
               The relevant portions of section 465 provide as follows:               
               SEC. 465. DEDUCTIONS LIMITED TO AMOUNT AT RISK.                        
                    (a) Limitation to Amount at Risk.--                               
                         (1) In general.--In the case of-–                            
                              (A) an individual, and                                  
                              (B) a C corporation with respect to which the           
                         stock ownership requirement of paragraph (2) of              
                         section 542(a) is met,                                       
                    engaged in an activity to which this section applies,             
                    any loss from such activity for the taxable year shall            
                    be allowed only to the extent of the aggregate amount             
                    with respect to which the taxpayer is at risk (within             
                    the meaning of subsection (b)) for such activity at the           
                    close of the taxable year.                                        
                        *     *     *     *     *     *     *                         
                    (b) Amounts Considered at Risk.--                                 
                         (1) In general.--For purposes of this section, a             
                    taxpayer shall be considered at risk for an activity              
                    with respect to amounts including-–                               
                              (A) the amount of money and the adjusted                
                         basis of other property contributed by the                   
                         taxpayer to the activity, and                                
                              (B) amounts borrowed with respect to such               
                         activity (as determined under paragraph (2)).                
                         (2) Borrowed amounts.--For purposes of this                  
                    section, a taxpayer shall be considered at risk with              
                    respect to amounts borrowed for use in an activity to             
                    the extent that he-–                                              
                              (A) is personally liable for the repayment of           
                         such amounts, or                                             

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