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that allows him to prescribe all necessary or
appropriate regulations to carry out the provisions of
section 469 * * * [Fn. ref. omitted.]
The Court cited the following passage from the legislative
history to support its holding:
The conferees intend that this authority be exercised
to protect the underlying purpose of the passive loss
provision, i.e., preventing the sheltering of positive
income sources through the use of tax losses derived
from passive business activities.
Examples where the exercise of such authority may
(if the Secretary so determines) be appropriate include
the following * * * (2) related party leases or sub-
leases, with respect to property used in a business
activity, that have the effect of reducing active
business income and creating passive income * * *.
[H. Conf. Rept. 99-841, at 147 (1986), 1986-3 C.B.
(Vol. 4) 147.]
Petitioner argues that the Court has not previously
considered the inequity of recharacterizing net income from
self-rented properties where self-rented properties with losses
are not recharacterized. We disagree. The taxpayers in Sidell
v. Commissioner, supra, faced a similar situation where one self-
rented property generated a net loss and the other self-rented
properties generated net income. The taxpayers argued that the
properties were either contiguous to or located across the street
from each other and that the ownership of the properties was
separate from the business for valid business reasons. The Court
held that section 1.469-2(f)(6), Income Tax Regs., was valid
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