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incorrect. The silence of the 1992 proposed regulations simply
does not require (or as explained below, even permit) us to reach
the majority’s result.
III. The Silence of the 1992 Proposed Regulations Must Be
Interpreted in Light of the Prior and Subsequent
Regulations
In essence, the majority view section 469 and the
recharacterization rule as self-executing and as mandating a rule
of shareholder participation in C corporation activities unless
another rule expressly bars such participation. Consistent with
this view, the majority conclude that the silent 1992 proposed
regulations cannot constitute the necessary bar.
My view is different. I see section 469-–particularly as
implemented by the recharacterization rule--as an ambiguous
statute, which the Commissioner reasonably interpreted, in
temporary regulations having the force of law--not once but
twice-–as precluding shareholder participation in C corporation
activities.
Of course, the Commissioner later adopted a contrary
interpretation. However, the Commissioner did not publicly
announce this contrary interpretation until 1994, when he issued
the 1994 final regulations. This announcement came more than 6
years after the 1988 temporary regulations, and almost at the end
of 1994, the taxable year in issue. See Schwalbach v.
Commissioner, 111 T.C. at 226, where we stated that “up until the
[1994] final regulations, the Commissioner had not publicly taken
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