[Federal Register Volume 59, Number 170 (Friday, September 2, 1994)]
[Rules and Regulations]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21765]


[[Page Unknown]]

[Federal Register: September 2, 1994]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8417]
RIN 1545-AQ53

 

Limitation on Passive Activity Losses and Credits; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting Amendments.

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SUMMARY: This document contains corrections to the final regulations 
(TD 8417) which were published in the Federal Register for Friday, May 
15, 1992 (57 FR 20747). The final regulations relate to the limitation 
on passive activity losses and credits.

EFFECTIVE DATE: May 15, 1992.

FOR FURTHER INFORMATION CONTACT: Donna J. Welch, (202) 622-3080 (not a 
toll-free number).

SUPPLEMENTARY INFORMATION:

Background

    The final regulations that are the subject of these correcting 
amendments are under section 469 of the Internal Revenue Code.

Need for Correction

    As published, TD 8417 contains errors that may prove to be 
misleading and is in need of clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAX; TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1953

    Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *

    Par. 2. Section 1.469-1 is amended as follows:
    a. In paragraph (f)(4)(iii), paragraph (iii) of Example 3., the 
word ``rstaurant'' is removed from the third sentence and the word 
``restaurant'' is added in its place.
    b. In paragraph (f)(4)(iii), paragraph (iii) of Example 3., the 
last sentence is revised to read as set forth below.
    c. In paragraph (f)(4)(iii), paragraph (iv) of Example 3., the word 
``or'' is removed from the last sentence and the word ``of'' is added 
in its place.


Sec. 1.469-1  General Rules.

* * * * *
    (f) * * *
    (4) * * *
    (iii) * * *
    Example 3. * * *
    (iii) * * * Thus, the taxpayer can ordinarily treat $3,000 of the 
disallowed deductions as deductions from the restaurant activity for 
1995, and $7,000 of the disallowed deductions as deductions from the 
catering activity for 1995.
* * * * *
    Par. 3. Section 1.469-2 is amended as follows:
    a. In paragraph (c)(2)(iii)(E), the reference to ``paragraph 
(6)(2)(iii)'' is removed from the first sentence and the reference 
``paragraph (c)(2)(iii)'' is added in its place.
    b. In paragraph (c)(2)(iii)(G), Example 1., the date ``Decemner 31, 
2005.'' is removed from the third sentence and the date ``December 31, 
2005.'' is added in its place.
    c. In paragraph (c)(2)(v)(C), in paragraph (ii) of Example 1., the 
reference to ``Sec. 1.469-2t(c)(2)'' is removed from the first sentence 
and the reference ``Sec. 1.469-2T(c)(2)'' is added in its place.
    d. In paragraph (c)(2)(v)(C), in paragraph (ii) of Example 3., the 
year ``1977'' is removed from the last sentence and the year ``1997'' 
is added in its place.
    e. In paragraph (c)(6)(i)(A), the year ``1996'' is removed and the 
year ``1986'' is added in its place.
    f. In paragraph (d)(5)(iii)(A), the reference to ``Sec. 1.469-
2T(2)(i)(C)'' is removed from the first sentence and the reference 
``Sec. 1.469-2T(c)(2)(i)(C)'' is added in its place.
    g. Paragraph (e)(3)(iii)(B) is revised as follows:


Sec. 1.469-2  Passive activity loss.

* * * * *
    (e) * * *
    (3) * * *
    (iii) * * *
    (B) An amount of gain that would have been treated as gain that is 
not from a passive activity under paragraph (c)(2)(iii) of this section 
(relating to substantially appreciated property formerly used in a 
nonpassive activity), paragraph (c)(6) of this section (relating to 
certain oil or gas properties), Sec. 1.469-2T(f)(5) (relating to 
certain property rented incidental to development), paragraph (f)(6) of 
this section (relating to property rented to a nonpassive activity), or 
Sec. 1.469-2T(f)(7) (relating to certain interests in a passthrough 
entity engaged in the trade or business of licensing intangible 
property) would have been allocated to the holder (or such other 
person) with respect to the interest if all of the property used in the 
passive activity had been sold immediately prior to the disposition for 
its fair market value on the applicable valuation date (within the 
meaning of Sec. 1.469-2T(e)(3)(ii)(D)(1)); and
* * * * *
    Par. 4. In section 1.469-11 paragraph (c)(1)(ii) is revised as 
follows:


Sec. 1.469-11  Effective date and transition rules.

* * * * *
    (c) * * *
    (1) * * *
    (ii) Property rented to a nonpassive activity. In applying 
Sec. 1.469-2(f)(6) or Sec. 1.469-2T(f)(6) to a taxpayer's rental of an 
item of property, the taxpayer's net rental activity income (within the 
meaning of Sec. 1.469-2(f)(9)(iv) or Sec. 1.469-2T(f)(9)(iv)) from the 
property for any taxable year beginning after December 31, 1987, does 
not include the portion of the income (if any) that is attributable to 
the rental of that item of property pursuant to a written binding 
contract entered into before February 19, 1988.
* * * * *
Cynthia E. Grigsby,
Chief, Regulations Unit, Assistant Chief Counsel (Corporate).
[FR Doc. 94-21765 Filed 9-1-94; 8:45 am]
BILLING CODE 4830-01-P