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certain proposed regulations to ascertain their tax liability for
years ending after May 10, 1992, and beginning before October 4,
1994. See sec. 1.469-11(b)(1), Income Tax Regs. These proposed
regulations (the 1992 proposed regulations) were prescribed by
the Secretary in 1992 to define the word “activity” for purposes
of the passive loss rules. Notice of Proposed Rulemaking, PS-1-
89, 1992-1 C.B. 1219, 57 Fed. Reg. 20802 (May 15, 1992).
Petitioner argues that the 1992 proposed regulations preclude a
shareholder from participating in the activities of a C
corporation, which, petitioner concludes, means that the
recharacterization rule cannot be applied to his 1994 income from
the office building.
We disagree with petitioner’s assertion that section 1.469-
11(b)(1), Income Tax Regs., precludes taxpayers from
participating in activities conducted by C corporations. Our
conclusion is driven by a plain reading of the relevant text;
namely, section 469(a)(2)(A) and (h)(1) and section 1.469-
2(f)(6)(i), Income Tax Regs. See Commissioner v. Soliman, 506
U.S. 168, 174 (1993); Crane v. Commissioner, 331 U.S. 1, 6
(1947); Venture Funding, Ltd. v. Commissioner, 110 T.C. 236, 241-
242 (1998), affd. without published opinion 198 F.3d 248 (6th
Cir. 1999). Section 469(a)(2)(A) provides in relevant part that
the passive activity rules apply to “any individual”. Section
469(h)(1) provides in relevant part that an individual is treated
as materially participating in an activity when he or she “is
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