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poses of his entire interest in any passive activity
(or former passive activity), the following rules shall
apply:
(1) Fully taxable transaction.--
(A) In general.--If all gain or loss
realized on such disposition is recognized,
the excess of–-
(i) any loss from such activity for such
taxable year (determined after the applica-
tion of subsection (b)), over
(ii) any net income or gain for such
taxable year from all other passive activi-
ties (determined after the application of
subsection (b)),
shall be treated as a loss which is not from a passive
activity.
We now turn to petitioner’s arguments. We first address his
argument that section 469 is retroactive. Petitioner maintains
that section 469 is retroactive because:
The effect of the 1986 Act passive loss provisions
is to deny a current deduction for depreciation (i.e.,
a segment of the expenditure) for a property already
purchased, and for interest on a mortgage loan already
committed, to the extent that said deductions exceed
the net operating income from the property. In this
case, the expenditures were made by the Partnership
[Aldus Green] - and the taxpayer made his investment in
the Partnership - before the law was enacted or pro-
posed and the passive loss rule is disallowing the
deduction for the expenditure.
In support of his argument that section 469 is retroactive,
petitioner contends that he decided to invest in Aldus Green in
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