Rowland Setyono - Page 8

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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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