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the members of a legislature necessarily enjoy a
familiarity with local conditions which this Court
cannot have, the presumption of constitutionality can
be overcome only by the most explicit demonstration
that a classification is a hostile and oppressive
discrimination against particular persons and classes.
The burden is on the one attacking the legislative
arrangement to negative every conceivable basis which
might support it. [Fn. ref. omitted.]
Thus, if plausible reasons exist for Congress’ decision to grant
deductions to some taxpayers while denying them to others, and
the means chosen is not so attenuated as to render the dis-
tinction arbitrary or capricious, then we uphold the law.
Indeed, the classification “will not be set aside if any state of
facts reasonably may be conceived to justify it.” McGowan v.
Maryland, 366 U.S. 420, 426 (1961) (emphasis added); see also
Bryant v. Commissioner, 72 T.C. 757, 764 (1979).
Respondent maintains, and we agree, that section
469(c)(7)(D)(ii) implements legitimate goals of ensuring that
only real estate professionals who have an entrepreneurial stake
in a real property business will qualify for relief under section
469(c)(7). The legislative history supports this view.
Congress enacted section 469 to foreclose tax shelters. See
S. Rept. 99–313 (1986), 1986–3 C.B. (Vol. 3) 714. The treatment
of all rental activities as passive, however, created problems
among real estate professionals. A full-time real estate
developer, for example, could not use losses from one aspect of
his business; i.e., renting properties, to offset income from
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