- 29 -
Commissioner’s actions had at least alerted taxpayers to the
possibility that the definition of activity was under
reconsideration. What we should decide in the case at hand,
however, is that by promulgating the transitional rule of the
1994 final regulations, the Commissioner wisely chose to apply
the new activity definition prospectively, unless the taxpayer
benefited otherwise.
In summary, the majority’s plain reading of section 469 and
the recharacterization rule is an inadequate analysis of, and a
woefully inadequate response to, the situation in which
petitioners (and other similarly situated taxpayers) found
themselves during the year in issue. To understand that
situation fully-–and to interpret the silent 1992 proposed
regulations properly--it’s unfortunately necessary to describe
the long and tortuous history of the section 469 regulations (and
the parties’ arguments based thereon) in more detail; to that
task I now turn.
10(...continued)
29, 1996. Of course, the Commissioner’s unexplained reversal of
position from the regulations promulgated in T.D. 8175, 1988-1
C.B. 191, 53 Fed. Reg. 5686 (Feb. 25, 1988) (the 1988 temporary
regulations), and in T.D. 8253, 1989-1 C.B. 121, 54 Fed. Reg.
20527 (May 12, 1989) (the 1989 temporary regulations), would be
relevant in any judicial review of the 1994 final regulations, if
the Commissioner had decided to apply those regulations
retroactively. See Georgia Fed. Bank v. Commissioner, 98 T.C.
105 (1992).
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