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passive and do not address the more fundamental question of
whether an activity constitutes a trade or business. Second,
petitioner argues that instructions for the Schedule C provide
that there are no “limitations on losses” for nonpassive
activities (i.e., activities which meet the material
participation requirements). It is true that section 469 imposes
no additional limitations on such losses, but the losses are
still subject to the more general limitations discussed above.
We hold that petitioner was not engaged in the trade or
business of gambling in 1996.
Reviewed and adopted as the report of the Small Tax Case
Division.
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011