- 62 -
however, propose to deny excess passive activity losses for
purposes of computing the amount of the alternative minimum
taxable income. See TRA 1986 sec. 701, 100 Stat. 2320, 2336;
H. Rept. 99-426, at 320-323; supra, 1986-3 C.B. (Vol. 2) 320-
323.)
Section 1401 of the Senate amendment to H.R. 3838 as
reported by the Finance Committee provides, in pertinent part, as
follows:
SEC. 469. LIMITATIONS ON LOSSES AND CREDITS FROM PASSIVE
ACTIVITIES.
* * * * * * *
(h) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out
provisions of this section, including regulations--
(1) which specify what constitutes an activity or
material participation for purposes of this section,
(2) which provide that certain items of gross
income will not be taken into account in determining
income or loss from any activity (and the treatment of
expenses allocable to such income), and
(3) if necessary to prevent avoidance of this
section, determining whether income, gain, or loss from
a limited partnership or other passive activity is
treated as described in subsection (c)(3).
The Finance Committee report on H.R. 3838 did not explain
how the regulations promulgated under section 469 were to
allocate interest expense. S. Rept. 99-313, at 713-746, supra,
1986-3 C.B. (Vol. 3) at 713-746.
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