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indication that the Secretary considered situations other than
lending transactions; i.e., that the Secretary specifically
decided that no other transactions should qualify. We do know
that the legislative history contains a directive that
regulations be promulgated to deal with self-charged lending
transactions. Thus, the Secretary’s actions were not necessarily
voluntary. In addition, nonlending transactions have not been
specifically addressed in any of the other passive activity loss
regulations.5
B. Self-Charged Rules and Nonlending Transactions
In the absence of regulatory guidance by the Secretary and
in light of the legislative history (committee report language)
petitioners have reasonably taken the position that the netting
of nonlending items may be permissible.
In the absence of regulations dealing with nonlending
transactions, we must decide which party’s litigating position
most reasonably comports with section 469. While petitioners
urge us to invalidate section 1.469-7, Proposed Income Tax Regs.,
we are unwilling to do so because that regulation addresses self-
5 We have located only one reference to the term
“nonlending” in the context of sec. 469 and related regulations.
Sec. 1.469-11T(a)(2)(iii)(B), Temporary Income Tax Regs., 56 Fed.
Reg. 14034, 14040 (Apr. 5, 1991), is a proposed amendment that
contains a reference to “nonlending transactions”. Neither
party, however, referenced this proposed amendment, and we do not
find it relevant to the issue before us.
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