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section 469(c)(7)(A). The final regulation, which is
substantially the same as the proposed regulation, became final
on December 22, 1995, and is generally effective for taxable
years beginning on or after January 1, 1995, and to elections
made under section 1.469-9(g), Income Tax Regs., with returns
filed on or after January 1, 1995. See sec. 1.469-11(a)(3),
Income Tax Regs. Therefore, to satisfy the literal requirements
for making an election to treat all rental real estate activities
as a single activity under section 469(c)(7)(A), a taxpayer must
file an election with his or her original return.
Petitioners concede that they did not attach to any relevant
return a statement electing to treat petitioner’s rental real
estate activities as a single activity. Therefore, petitioner
did not satisfy the literal requirements of section 469(c)(7)(A)
to treat all interests in rental real estate as a single
activity.
Petitioners contend, however, that they made a “deemed
election” by consistently aggregating the rental income and
expenses from the rental properties on their tax returns since
1993. Petitioners assert that such practice complies with the
OBRA sec. 13143(a), 107 Stat. 440, and the regulations
thereunder.6 In petitioners’ view, this practice of aggregating
6 Petitioners appear to rely on sec. 1.469-9(d)(2), Income
Tax Regs., for the proposition that a taxpayer must be consistent
(continued...)
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