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petitioners are not entitled to claim the suspended
passive activity losses because they have not estab-
lished that they (1) disposed of their entire interest
(2) in a fully taxable transaction (3) to an unrelated
party.
Indeed the evidence established that petitioners
maintained and increased their interest in the passive
activity. Moreover, petitioner failed to establish
that the liquidating distribution petitioner received
when the partnership terminated required recognition of
either gain or loss under the provisions of I.R.C. �
731. Finally, the liquidating distribution petitioner
received from the partnership was between related
parties within the provisions of I.R.C. � 469(g)(1)(B).
We need not decide whether respondent is correct in arguing
that petitioners have not established that Mr. Ramsburg (1) did
not dispose of his entire interest in the passive activity in
question (2) to an unrelated party. Even if we were to reject
such contentions of respondent, on the record before us, we
nonetheless would, and do, find that petitioners have failed to
carry their burden of showing that section 469(g)(1) permits them
to treat for 1998 petitioners’ passive losses attributable to
Kildare Timmy as nonpassive losses. That is because on that
record we find that petitioners have failed to carry their burden
of establishing that, as required by section 469(g)(1)(A), they
recognized under section 731 all of the gain or all of the loss,
as the case may be, realized when Mr. Ramsburg received from
Kildare Timmy a distribution in liquidation of his interest in
that partnership.
It is petitioners’ position that the distribution in liqui-
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