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Commissioner’s inclusion of express nonattribution rules in two
sets of temporary regulations therefore completely refutes the
majority’s conclusion that shareholders participate in C
corporation activities under the plain language of section 469
and the recharacterization rule.
II. The Silence of the 1992 Proposed Regulations Is Not
Dispositive
The majority correctly note that the Commissioner allowed
the relevant portions of the temporary regulations to “sunset” in
1992. See infra p. 34. At the same time, the Commissioner
promulgated the 1992 proposed regulations, which apply to the
year in issue. See id.
Unlike the temporary regulations, the 1992 proposed
regulations say nothing about shareholder participation in C
corporation activities. The majority conclude, because the 1992
proposed regulations do not expressly preclude such
participation, that shareholders participate in C corporation
activities even when the proposed regulations apply. Once again,
I disagree.
The majority’s interpretation of the “silent” 1992 proposed
regulations rests on their conclusion that shareholders
participate in C corporation activities under the plain meaning
of the statute and the recharacterization rule. As explained
above, the majority’s plain reading is incorrect; their
interpretation of the 1992 proposed regulations is therefore also
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