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Connor v. Commissioner, T.C. Memo. 1999-185, suggested Schwalbach
had concluded that the 1994 final regulations clarified the
proposed regulations, what we actually said in Schwalbach was
that the preamble to the final regulations itself asserted that
the inclusion of an attribution rule in the final regulations was
a clarification; we didn’t so conclude ourselves. To the
contrary, in Schwalbach v. Commissioner, supra at 221-226, we
described the language added to the 1994 final regulations as a
“change” from the 1992 proposed regulations, as a “new position”,
and as a “complete reversal” from the 1989 temporary regulations.
We also stated that “the change in language from the proposed
regulations was substantial; up until the final regulations, the
Commissioner had not publicly taken the position that an
individual’s activities could include activities conducted
through a C corporation.” Id. at 226.
VII. Fairness Demands We Interpret the Silence of the 1992
Proposed Regulations as Continuing the
Nonparticipation Rule of the Temporary Regulations
Respondent and the majority assert that the silence of the
1992 proposed regulations must be interpreted as repealing the
nonparticipation rule of the temporary regulations and as
prescribing an express participation rule instead. For the
reasons just set forth, I disagree. Placing the silence of the
1992 proposed regulations in its proper context, it’s difficult
to infer from such silence either an intent to repeal a
nonparticipation rule, or an intent to prescribe a participation
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