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Ltd. The deductibility of the losses from his rental properties
depends on: (1) Whether petitioner had net income from self-
rented property under section 1.469-2(f)(6), Income Tax Regs.;
(2) whether petitioner qualifies as a real estate professional
under section 469(c)(7); and (3) whether petitioner’s airplane
lease activity was a passive activity under section 469(c)(2).
Section 469 generally disallows for the taxable year any
passive activity loss. Sec. 469(a). A passive activity loss is
defined as the excess of the aggregate losses from all passive
activities for the taxable year over the aggregate income from
all passive activities for that year. Sec. 469(d)(1). A passive
activity is any trade or business in which the taxpayer does not
materially participate. Sec. 469(c)(1). Rental activity is
treated as a per se passive activity regardless of whether the
taxpayer materially participates. Sec. 469(c)(2), (4). Under
section 469(c)(7)(B), the rental activities of a taxpayer in the
real property business (real estate professional) are not per se
passive activities under section 469(c)(2) but are treated as a
trade or business and subject to the material participation
requirements of section 469(c)(1).
Petitioner contends, for the first time in his posttrial
brief, that he is entitled to deduct his losses in 1995 and 1996
because Shaw’s Gulf, Shaw Ltd., petitioner’s real estate rental
activities, and petitioner’s airplane lease activity constitute a
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