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significant participation activity4 and his or her aggregate
participation in all significant participation activities for the
year exceeds 500 hours; (e) he or she materially participates for
5 out of 10 years immediately preceding the present year; (f) the
activity is a personal service activity and he or she materially
participated for any 3 years preceding the present year; or (g)
he or she participated on a regular, continuous, and substantial
basis during the year. See sec. 1.469-5T(a), Temporary Income
Tax Regs., 53 Fed. Reg. 5725 (Feb. 25, 1988). Petitioner spent a
total of 877 hours on his seven real estate rental activities,
but there is no evidence of how many hours he spent on any
specific rental property for any year.
Respondent concedes that petitioner materially participated
in his rental real estate activities if they are treated as one
activity. Thus, respondent concedes that petitioner may deduct
4 A significant participation activity is one in which the
taxpayer participates for more than 100 hours but does not
materially participate under one of the other six tests. See
sec. 1.469-5T(c)(1)(ii) and (2), Temporary Income Tax Regs., 53
Fed. Reg. 5725, 5726 (Feb. 25, 1988). Thus, for an activity to
be a significant participation activity, the taxpayer (1) must
have more than 100 hours of participation; (2) must have less
than 500 hours of participation because participation greater
than 500 hours would meet the test in sec. 1.469-5T(a)(1),
Temporary Income Tax Regs., 53 Fed. Reg. 5725 (Feb. 25, 1988);
and (3) must not be the individual with the most participation in
the activity because a person with the most participation in the
activity, if greater than 100 hours, meets the test in sec.
1.469-5T(a)(3), Temporary Income Tax Regs., 53 Fed. Reg. 5726
(Feb. 25, 1988).
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