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prove those determinations wrong in order to prevail. Rule
142(a)(1); Welch v. Helvering, 290 U.S. 111, 115 (1933). Because
the issues to be decided are questions of law, section 7491(a) is
inapplicable, and the Court decides the issues without regard to
the burden of proof.
1. Petitioner's Rental Real Estate Losses
Section 469(a) generally disallows passive activity losses.
Section 469(d)(1) defines "passive activity loss" as the excess
of passive activity losses over passive activity income for the
taxable year. Under section 469(c)(2), passive activity includes
any rental activity, "without regard to whether or not the
taxpayer materially participates in the activity." Sec.
469(c)(4).
However, under section 469(c)(7), section 469(c)(2) does not
apply to the rental real estate activities of a taxpayer in the
real property business (a real estate professional) if:
(i) more than one-half of the personal
services performed in trades or businesses by
the taxpayer during such taxable year are
performed in real property trades or
businesses in which the taxpayer materially
participates, and
(ii) such taxpayer performs more than
750 hours of services during the taxable year
in real property trades or businesses in
which the taxpayer materially participates.
Sec. 469(c)(7)(B).
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Last modified: May 25, 2011