- 16 -
On the instant record, we find that petitioner has failed to
carry his burden of establishing that the transitional rule was
not premised upon a rational basis and instead was based upon a
9(...continued)
other relief, but only for certain taxable years, to taxpayers
who were not entitled to the relief provided by the transitional
rule and who therefore were subject to sec. 469. Sec. 469(m)
provides in pertinent part:
SEC. 469. PASSIVE ACTIVITY LOSSES AND CREDITS LIMITED.
* * * * * * *
(m) Phase-in of Disallowance of Losses and Credits
for Interest Held Before Date of Enactment.--
(1) In general.--In the case of any passive
activity loss or passive activity credit for any
taxable year beginning in calendar years 1987
through 1990, subsection (a) shall not apply to
the applicable percentage of that portion of such
loss (or such credit) which is attributable to
preenactment interests.
(2) Applicable percentage.--For purposes of
this subsection, the applicable percentage shall
be determined in accordance with the following
table:
In the case of taxable The applicable
years beginning in: percentage is:
1987...............................65
1988...............................40
1989...............................20
1990...............................10
Sec. 469(m)(3)(B)(i) defines the term “pre-enactment interest” to
mean, in general, “any interest in a passive activity held by a
taxpayer on the date of the enactment of the Tax Reform Act of
1986, and at all times thereafter.” Petitioner appears to have
qualified for the relief from the application of sec. 469(a) that
Congress provided in sec. 469(m).
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