The Beechers thereafter filed a petition in the United States Tax Court challenging this determination. The court rendered judgment for the Commissioner, basing its decision on its own precedent, as well as that of the Seventh, First, and Fifth Circuits, citing Krukowski v. Commissioner, 279 F.3d 547 (7th Cir.2002), Sidell v. Commissioner, 225 F.3d 103 (1st Cir.2000), and Fransen v. United States, 191 F.3d 599 (5th Cir.1999). II. STANDARD OF REVIEW

We have previously held that section 1.469–2(f)(6), Income Tax Regs., is not arbitrary, capricious, or manifestly contrary to section 469(1)(2). Krukowski v. Commissioner, 114 T.C. 366, 2000 WL 656711 (2000), affd. 279 F.3d 547 (7th Cir.2002); Shaw v. Commissioner, T.C. Memo.2002–35; Sidell v. Commissioner, T.C. Memo.1999–301, affd. 225 F.3d 103 (1st Cir.2000). The Courts of Appeals for the First, Fifth, and Seventh Circuits have also upheld the validity of section 1.469–2(f)(6), Income Tax Regs.

To qualify for transitional relief under the regulation, a taxpayer must prove that the rental income in question was paid pursuant to a written lease that was entered into before February 19, 1988, and was still in effect; i.e., was binding and enforceable for the year at issue. Krukowski v. Commissioner, 279 F.3d 547, 550 (7th Cir. 2002), affg. 114 T.C. 366 (2000). "At a minimum, for a lease to be binding on a party, it must be enforceable under applicable state law."

Goldberg's argument about the existence or meaning of a contract is a question of law, which we review de novo. See Krukowski v. Comm'r, 279 F.3d 547, 550 (7th Cir. 2002). We review the denial of his request for further interest abatements for abuse of discretion, Kindred v. Comm'r, 454 F.3d 688, 694 (7th Cir. 2006), and any factual determinations underlying that ruling for clear error.

Thus, we review the Tax Court's decision to grant summary judgment de novo. See Krukowski v. Commissioner, 279 F.3d 547, 550 (7th Cir. 2002); Connor v. Commissioner, 218 F.3d 733, 736 (7th Cir. 2000). See L C Springs Assocs. v. Commissioner, 188 F.3d 866, 869 (7th Cir. 1999).

(3) requiring net income or gain from a limited partnership or other passive activity to be treated as not from a passive activity. . . . 26 U.S.C. § 469( l); see also Krukowsi v. Comm'r of Internal Revenue, 279 F.3d 547, 552 (7th Cir. 2002) (holding that 26 U.S.C. § 469( l) is a constitutional delegation of legislative power and that Congress has provided an "intelligible principle" to guide the Secretary of the Treasury's regulations). Pursuant to this statute, the Secretary of the Treasury has promulgated Treasury Regulation § 1.469-4, which states in relevant part, that, "[o]ne or more trade or business activities or rental activities may be treated as a single activity if the activities constitute an appropriate economic unit for the measurement of gain or loss for purposes of section 469."

The effect of the passive activity loss disallowance rule is that a deduction related to a passive activity is allowed against income from the passive activity, and the excess (i.e., the amount by which the deduction related to the passive activity exceeds the income from the passive activity) cannot be deducted from income from activities other than the passive activity. See Krukowski v. Commissioner, 279 F.3d 547, 549 (7th Cir. 2002), aff'g 114 T.C. 366 (2000). Generally, a passive activity is any trade or business in which the taxpayer does not materially participate.

The effect of the passive activity loss disallowance rule is that deductions related to passive activities are allowed against income from the passive activities, and the excess (i.e., the amount by which the deductions related to the passive activities exceed the income from passive activities) cannot be deducted from income from activities other than passive activities. See Krukowski v. Commissioner, 279 F.3d 547, 549 (7th Cir. 2002), aff'g 114 T.C. 366 (2000). Generally, a passive activity is any trade or business in which the taxpayer does not materially participate.

Passive losses cannot be used to offset income from nonpassive activities, such as wage income. See Krukowski v. Commissioner, 279 F.3d 547, 549 (7th Cir. 2002), aff'g 114 T.C. 366 (2000). A disallowed passive activity loss is not lost; rather, it is deferred or suspended and remains available as a deduction against future passive income.

The effect of the passive activity loss disallowance rule is that deductions related to passive activities are allowed against income from passive activities and the excess (i.e., the amount by which the deductions related to the passive activities exceed the income from passive activities) cannot be deducted from income from activities other than passive activities. See Krukowski v. Commissioner, 279 F.3d 547, 549 (7th Cir. 2002), aff'g 114 T.C. 366 (2000). Generally, a passive activity is any trade or business in which the taxpayer does not materially participate.