John Robert Maguire - Page 5

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               Petitioner is a licensed real estate agent in the State of             
          Connecticut, but that license is not valid in the State of                  
          Massachusetts.                                                              
               The documents submitted at trial constitute all of the                 
          Harwichport property expense records for 1990.  During the                  
          taxable year 1990, petitioner incurred and paid mortgage interest           
          expense of $9,513.23 and real estate taxes of $1,248.39.                    
               In the notice of deficiency, respondent determined that                
          petitioner's expenditures were not paid or incurred in carrying             
          on a trade or business pursuant to section 162 or for the                   
          production of income pursuant to section 212.  Respondent also              
          determined that the expenditures were not ordinary and necessary.           
          Petitioner bears the burden of proving that respondent's                    
          determination is not correct.  Rule 142(a); Welch v. Helvering,             
          290 U.S. 111 (1933).  Respondent filed an amended answer and                
          alleged that petitioner failed to substantiate the claimed                  
          expenses as required by section 274(d), and that section 469                
          precludes petitioner from deducting the expenses.  We conclude              
          that section 469 does not limit petitioner's deductions in 1990.            
          Petitioner participated in the activity for more than 100 hours,            
          and this amounted to substantially all of the participation in              
          the activity.  See sec. 1.469-5T(a)(2) and (3), Temporary Income            
          Tax Regs., 53 Fed. Reg. 5725-5726 (Feb. 25, 1988).   The parties            
          also disagree whether the expenditures were capital in nature or            
          currently deductible.                                                       




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