B. Theodore and Wendy Chapin - Page 9

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          applies if petitioners did not materially participate in the                
          activity.  Sec. 469(c)(1).                                                  
               Petitioners assert that they meet the so-called safe harbor            
          requirements of section 1.469-5T(a)(2), Temporary Income Tax                
          Regs., supra.  That section provides that the taxpayer's                    
          participation must constitute "substantially all of the                     
          participation in such activity of all individuals" during the               
          years at issue.  But the rental of the condominium required                 
          continual involvement in the leasing and day-to-day management of           
          the property.  The rental agent had complete responsibility for             
          these activities, and, therefore, petitioners' participation did            
          not constitute "substantially all of the participation" in the              
          activity.                                                                   
               Petitioners also assert that they meet the "safe harbor"               
          requirements of section 1.469-5T(a)(3), Temporary Income Tax                
          Regs., supra.  To satisfy this test, petitioners must establish             
          that (1) they participated in the activity for more than 100                
          hours each year, and (2) no other individual's participation                
          exceeded petitioners' participation during each year.  Regardless           
          whether petitioners satisfy the first requirement, they have not            
          established that no other participation exceeded their                      
          participation in the activity.  The rental agent not only                   
          advertised, showed, and rented the property, but was also                   
          routinely available to handle complaints, repairs, etc.  Further,           





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