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petitioners fall within one of those enunciated exceptions,
“material participation” is irrelevant. See sec. 469(c)(1);
Tarakci v. Commissioner, T.C. Memo. 2000-358; Welch v.
Commissioner, T.C. Memo. 1998-310 (“If * * * [taxpayer]
establishes that the activity was not a rental activity, he then
must establish that he materially participated in the activity to
avoid the proscription of section 469."). Accordingly, we
sustain respondent’s determination on this issue.
6. NPI Distributions
On its 1994 return, NPI reported total property
distributions other than dividends of $1,017,373. Eric’s,
Brad’s, and Mark’s shares thereof were $169,562 each. In the
notice of deficiency, respondent determined that Eric had
substantiated a basis in his NPI stock of $105,224 and that he
had distributions in excess of basis of $64,338. In the notices
of deficiency for Brad and Mark, respondent determined that they
had substantiated bases in their NPI stock of $76,926 each and,
thus, had distributions in excess of basis of $92,636.
The parties indicate on brief that the issue concerning what
amounts are properly reportable on Eric’s, Brad’s, and Mark’s
returns can be resolved by the parties under their Rule 155
computation.
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