- 10 -
after each tenant, a cleaning service cleaned the property.
While we do not know how much time these services took, they
involve a substantial amount of time. It is petitioners' burden
to show that they satisfy the requirements of section 1.469-
5T(a)(3), Temporary Income Tax Regs., supra, and they have failed
to meet that burden.5
Petitioners alternatively contend that, if they fail the so-
called safe harbor provisions of paragraphs (a)(2) and (3) of
section 1.469-5T, Temporary Income Tax Regs., supra, they
nonetheless satisfy the requirements of section 1.469-5T(a)(7),
Temporary Income Tax Regs., supra. Section 1.469-5T(a)(7),
Temporary Income Tax Regs., supra, mirrors the statutory
definition of "material participation" set out in section
469(h)(1) and requires that petitioners show they participated in
the activity on a regular, continuous, and substantial basis
during each year. As an initial matter, petitioners'
participation must exceed 100 hours each year. Sec. 1.469-
5T(b)(2)(iii), Temporary Income Tax Regs., 53 Fed. Reg. 5726
(Feb. 25, 1988). Measuring participation in terms of time may be
useful in setting minimum requirements and in defining safe
5 No witness from the rental agency testified. Mr. Chapin
attempted to testify as to his estimate of the hours spent by the
rental agent in connection with the rental and maintenance of the
condominium. Respondent objected on the ground that Mr. Chapin
did not have personal knowledge of that fact. The objection was
sustained.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011