James A. Petrie IV - Page 11

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          interest deduction for 1990 on Schedule E for the mortgage                  
          interest paid by him in the amount of $1,575.  Cohan v.                     
          Commissioner, supra.  (See discussion of mortgage interest                  
          deductions by co-owners of real property infra pp. 11-12.)                  
               The third issue for decision is whether petitioner had                 
          additional rental income and is entitled to claim additional                
          rental expenses for 1991.  Petitioner contends he should be                 
          permitted to exclude the rental income on his 1991 return and is            
          entitled to claim the rental expenses because the Temporary                 
          Orders mandated such treatment.  Respondent contends that                   
          petitioner must report his share of the income and expenses.13              
               Income with respect to joint tenancy property is allocated             
          and taxed in proportion to that which each co-owner is entitled             
          to receive under local law.  Parsons v. Commissioner, 43 T.C. 378           
          (1964).  A co-tenancy under Colorado law provides that each of              
          two joint tenants owns an undivided one-half interest in the                
          property as a whole.  Commercial Factors v. Clarke & Waggener,              
          684 P.2d 261 (Colo. Ct. App. 1984).                                         
               However, co-owners are entitled to a deduction for mortgage            
          interest and real estate taxes paid on jointly-owned property to            
          the extent that they have actually paid these amounts and                   
          provided that no other tenant has previously claimed a deduction            

          13        Prior to trial, respondent conceded that petitioner should report 
          rental income of $750 and be allowed rental expenses of $4,032.  At trial,  
          respondent withdrew this concession.                                        

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