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passive activities for that year. See sec. 469(d)(1). A passive
activity is a trade or business in which the taxpayer does not
materially participate. See sec. 469(c)(1).
Rental activities are automatically passive (i.e., per se
passive), see sec. 469(c)(2), whether or not the taxpayer
materially participates in the activity, see sec. 469(c)(4).
However, rental activities are not per se passive in taxable
years beginning after December 31, 1993, for taxpayers in the
real property business (real estate professionals). See sec.
469(c)(7).2 Respondent determined, but no longer contends, that
petitioner is not a real estate professional under section
469(c)(7)(B).3 We treat that as respondent’s concession that
section 469(c)(7) applies to petitioner for the years in issue.
If section 469(c)(7) applies, each interest of the taxpayer
in rental real estate is treated as a separate activity for
purposes of section 469 unless the taxpayer elects to treat all
2 Sec. 469(c)(7) became effective for taxable years
beginning after Dec. 31, 1993. See Omnibus Budget Reconciliation
Act of 1993, Pub. L. 103-66, sec. 13143(a), (c), 107 Stat. 312,
440.
3 Petitioner said in his opening brief that respondent
conceded that petitioner is a real estate professional for
purposes of sec. 469. Respondent did not address that issue in
the reply brief, and we treat it as conceded by respondent. See
Burbage v. Commissioner, 82 T.C. 546, 547 n.2 (1984), affd. 774
F.2d 644 (4th Cir. 1985); Wolf v. Commissioner, T.C. Memo.
1992-432, affd. 13 F.3d 189 (6th Cir. 1993).
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