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1995. See T.D. 8645, 1996-1 C.B. 73. The final regulation,
which is substantially like the proposed regulation, is generally
effective for taxable years beginning on or after January 1,
1995, and is also effective for elections under section
469(c)(7)(A) and paragraph (g) of this regulation that are made
with returns filed on or after January 1, 1995. See T.D. 8645,
1996-1 C.B. at 75.
F. Petitioner’s 1995 and 1996 Returns
Petitioner timely filed his 1995 return. He reported the
seven rental properties on his 1995 return as he had on his 1994
return.
Petitioner attached a statement to his 1996 return
indicating that he qualified as a real estate professional and
elected to treat all of his rental real estate activities as one
activity under section 469(c)(7).
Discussion
A. Passive Loss Rules for Real Estate Professionals
The issue for decision is whether, as petitioner contends,
petitioner elected for 1994 and 1995 to treat his seven rental
real estate activities as one activity under section 469(c)(7).
A taxpayer may not deduct passive activity losses claimed by
the taxpayer in any taxable year. See sec. 469(a)(1). A passive
activity loss is the amount, if any, by which losses from all
passive activities for a taxable year exceed income from all
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