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also contains the suggestion that other situations may be
appropriate for such netting treatment, as follows:
The conferees anticipate that Treasury regulations
will be issued to provide for the above result. Such
regulations may also, to the extent appropriate,
identify other situations in which netting of the kind
described above is appropriate with respect to a
payment to a taxpayer by an entity in which he has an
ownership interest. * * * [Id.; emphasis added.]
There was congressional recognition that transactions, other
than those involving lending, essentially can be self-charged,
and thus lack economic significance. Congress expressly
anticipated that the Secretary would issue regulations dealing
not only with self-charged interest but also other situations
where netting would be appropriate. Like the rules for self-
charged interest, relief from nonlending situations in which
self-charged transactions arise is based on the principle that
the passive loss rules should not apply if the income to be
offset against the passive activity loss is essentially a payment
by the taxpayer to himself.
Pursuant to section 469(l), which requires the Secretary to
promulgate regulations, respondent issued section 1.469-7,
Proposed Income Tax Regs., 56 Fed. Reg. 14034 (Apr. 5, 1991),
dealing with self-charged treatment for lending transactions.
The proposed regulation, however, solely addresses lending
transactions and does not, as Congress contemplated, address any
other self-charged income and deduction situations. There is no
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