T.C. Memo. 1996-56
UNITED STATES TAX COURT
B. THEODORE AND WENDY CHAPIN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12106-94. Filed February 14, 1996.
Ps own a beach condominium that is rented for an
average period of 7 days or less during the June to
September rental season. A rental agent handles all leasing
arrangements, cleaning between tenants, and routine repairs
and maintenance. Ps allege that they spend more than 170
hours during the nonrental season on cleaning and
maintaining the condominium. Held: For purposes of sec.
469, I.R.C., Ps' participation in the activity does not
constitute participation on a regular, continuous, and
substantial basis. Accordingly, the losses incurred are
subject to the passive loss rules of sec. 469, I.R.C.
E. Gregory Lardieri and E. Newton Steely, Jr. (specially
recognized), for petitioners.
John C. Donovan, for respondent.
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