- 22 -
latter temporary regulation is invalid. In support of that
position, petitioner asserts:
The regulation [section 1.469-5T(b)(2)(ii), Temporary
Income Tax Regs.,53 Fed. Reg. 5726 (Feb. 25, 1988)] too
simplistically uses the word management without any
attempt to actually look at the surrounding facts and
circumstances. The regulation provides that ONLY one
person can materially participate as a manager under
the facts and circumstances test. The regulation’s
test is two-fold. No person is compensated and no
other individual invests more hours in management of
the activity. This emasculates the regular,
continuous, and substantial requirement.
We need not decide whether petitioner is correct in arguing
that section 1.469-5T(b)(2)(ii), Temporary Income Tax Regs., 53
Fed. Reg. 5726 (Feb. 25, 1988), is invalid. That is because, on
the record before us,21 we find that, without regard to that
20(...continued)
under paragraph (a)(7) of this section unless, for such
taxable year--
(A) No person (other than such individual) who
performs services in connection with the management of
the activity receives compensation described in section
911(d)(2)(A) in consideration for such services; and
(B) No individual performs services in connection
with the management of the activity that exceed (by
hours) the amount of such services performed by such
individual.
Petitioner concedes on brief that if we were to find sec.
1.469-5T(b)(2)(ii), Temporary Income Tax Regs., 53 Fed. Reg. 5726
(Feb. 25, 1988), to be valid, he does not satisfy that temporary
regulation.
21As discussed above, we did not find petitioner’s testimony
and the 1995 document to be credible, and we shall not rely on
that evidence.
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