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Sec. 1.469-5T(f)(2)(i), Temporary Income Tax Regs., 53 Fed. Reg.
5726 (Feb. 25, 1988).
Work done by an individual in the individual’s capacity as
an investor in an activity is not treated as participation in the
activity for purposes of this section unless the individual is
directly involved in the day-to-day management or operations of
the activity. Sec. 1.469-5T(f)(2)(ii)(A), Temporary Income Tax
Regs., 53 Fed. Reg. 5727 (Feb. 25, 1988). Work done as an
investor includes: (1) Studying and reviewing financial
statements or reports on operations of the activity;
(2) preparing or compiling summaries or analyses of the finances
or operations of the activity for the individual’s own use;
and (3) monitoring the finances or operations of the activity in
a nonmanagerial capacity. Sec. 1.469-5T(f)(2)(ii)(B), Temporary
Income Tax Regs., supra.
Petitioner contends that in 1995 he met the 500-hour
requirement under section 1.469-5T(a)(1), Temporary Income Tax
Regs., supra, and in 1996 his participation in significant
participation activities exceeded 500 hours under section 1.469-
5T(a)(4), Temporary Income Tax Regs., 53 Fed. Reg. 5726 (Feb. 25,
1988). Respondent argues: (1) Petitioner failed to establish by
reasonable means the hours he devoted to Shaw Ltd. and
(2) petitioner’s activities that were related to Shaw Ltd.
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