General K. Hilliard and Ida M. Hilliard - Page 19

          the $95,000 mortgage balance.  The residence was located in a               
          popular winter vacation area.  No business analysis or plan was             
          prepared by petitioners, who did not have any experience in the             
          rental property business.  Petitioners did not consult with their           
          accountant in connection with the purchase or operation of their            
          Tahoe property.  Petitioners, on their joint income tax returns             
          for 1983 through 1988, claimed losses ranging from a low of                 
          $16,107 to a high of $21,385, with an average of $19,066                    
          attributable to their Tahoe residential property.  Those losses             
          resulted from the excess of claimed deductions for maintenance,             
          interest, taxes, and depreciation over rental receipts.  The                
          annual rental receipts for the period ranged from a low of $300             
          to a high of $1,238, with an average of $711.                               
               Petitioners did not place the Tahoe property with a real               
          estate agent for rental purposes or consult with their accountant           
          in connection with their investment in the Tahoe property.                  
          Petitioners did not keep separate records for the Tahoe property,           
          and their only attempts to advertise its rental availability were           
          to post flyers at the hospitals where they practiced medicine.              
          Petitioners, on occasion, spent winter weekends at the Tahoe                
          property.  They did not use the property off-season (e.g., during           
          the summer).                                                                
               (1) Manner in which the taxpayer carries on the activity.              
          Attempts to publicize the rental property were insignificant.               
          Petitioners did not prepare a written business plan prior to                
          their purchase of the Tahoe property.  No separate books and                




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