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Having summarized the concerns of Congress in enacting
section 469 into the Code, we shall now summarize certain provi-
sions of that section that are pertinent here. Pursuant to
section 469(a), a taxpayer is not allowed to offset a passive
activity loss for the taxable year against other income for such
year. For purposes of section 469, a passive activity loss for
the taxable year is the amount, if any, by which the aggregate
losses from all passive activities for the taxable year exceed
the aggregate income from all passive activities for such year.
Sec. 469(d)(1); sec. 1.469-2T(b)(1), Temporary Income Tax Regs.,
53 Fed. Reg. 5711 (Feb. 25, 1988). The term “passive activity”
is defined in pertinent part as any activity in which the tax-
payer does not materially participate. Sec. 469(c)(1). Any
rental activity is a passive activity, regardless whether the
taxpayer materially participates in the activity. See sec.
469(c)(2).
Under section 469(b), a passive activity loss is treated as
a deduction allocable to the passive activity giving rise to such
loss for the succeeding taxable year. Under that section, a
passive activity loss may be carried forward indefinitely. In
addition, section 469(g)(1) provides in pertinent part:
SEC. 469. PASSIVE ACTIVITY LOSSES AND CREDITS LIMITED.
* * * * * * *
(g) Dispositions of Entire Interest in Passive
Activity.--If during the taxable year a taxpayer dis-
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