Stephen S. Ziegler - Page 9

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               poses of his entire interest in any passive activity                   
               (or former passive activity), the following rules shall                
                         (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                 
               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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