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of $4,604, $5,558, and $5,558. At the time the petition was
filed, petitioners resided in Des Moines, Washington.
The issue is whether petitioners are entitled to deduct
losses from their activities with respect to Gull Cottage Nursery
during the years 1991, 1992, and 1993.
The facts may be summarized as follows. In 1989, and during
the years in issue, petitioner George W. Gagnon (Mr. Gagnon or
petitioner) was employed full time as a salesman for Costco
Wholesale, and petitioner Margaret L. Gagnon (Mrs. Gagnon) was
employed full time as a secretary for the U.S. Department of
Transportation. They resided in Des Moines, Washington, a suburb
of Seattle, Washington.
During 1989, petitioners were looking for a place to which
they ultimately would retire and went to Long Beach, Washington.
Long Beach, Washington, is located approximately 160 miles south
of Des Moines, Washington, on the Pacific Ocean. Petitioners
purchased a 50 foot by 100 foot lot with a two bedroom cottage
located at 509 North Oregon Street in Long Beach (the Oregon
Street property). Shortly thereafter petitioners purchased a 100
foot by 100 foot lot (the Sixth Street property), across the
street from the Oregon Street property. The Sixth Street
property improvements included a house that was not inhabitable
and a barn. Petitioners paid $30,000 for the Sixth Street
property and approximately $40,000 for the Oregon Street
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