Mehdi H. Hajiyani - Page 26




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          total rental real estate (passive activity) losses of $62,903.4             
          Petitioner reported no other income from passive activities.                
          Petitioner's passive activity loss for the year 1992 is therefore           
          $62,903.  For the years 1993 and 1994, petitioner's returns                 
          reveal on Schedules E respective passive activity losses from               
          individually and partnership owned residential rental property              
          totaling $35,456 and $82,230.                                               
               Because respondent determined that petitioner actively                 
          participated in the listed rental activities, the section 469(a)            
          disallowance of a passive loss deduction will not apply to                  
          $25,000 of petitioner's passive losses for each of the years                
          1992, 1993, and 1994.  The remainder of petitioners' passive                
          activity losses from each respective year that is disallowed as a           
          deduction may be carried over to the next taxable year for                  
          application against income from passive activities, if any, and             
          the $25,000 offset.  Sec. 469(b); sec. 1.469-1(f)(4), Income Tax            
          Regs.                                                                       
               For petitioner's 1994 tax year, the provisions of subsection           
          (c)(7) of section 469 are effective.  The "Special rules for                
          taxpayers in real property business" contained in subsection                



               4For purposes of sec. 469, petitioner must aggregate his               
          individual and partnership real estate rental income and losses             
          as passive activity income and losses.  Sec. 1.702-                         
          1(a)(8)(ii),(iii) and (b), Income Tax Regs.; see also sec. 1.469-           
          2T(d)(6)(v)(B), Temporary Income Tax Regs., 53 Fed. Reg. 5717               
          (Feb. 25, 1988).                                                            





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