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FINDINGS OF FACT
The facts have been fully stipulated, and they are
summarized below.
Guillermo Baez Espinosa (petitioner) was a nonresident alien
individual during the taxable years 1987 through 1991.
Petitioner owned two rental properties located in Austin, Texas
(the Austin property) and Ruidoso, New Mexico (the Ruidoso
property). The properties produced gross rental income during
the years in issue in the following amounts:
Property 1987 1988 1989 1990 1991
Austin $10,472 $10,200 $10,316 $10,385 $10,200
Ruidoso 1,138 1,324 804 -0- -0-
When the expenses of producing the rental income including
depreciation deductions are taken into account, each property
produced an annual loss. Petitioner sold the Ruidoso property on
February 1, 1990, for $13,000 incurring a loss on the sale in the
amount of $13,315.2
Petitioner was required to file a Federal income tax return
for each of the years in issue, and does not contend otherwise.
Sec. 1.6012-1(b)(1)(i), Income Tax Regs. For petitioner's
2 In the notice of deficiency respondent determined that
petitioner was liable for income tax on the $13,000 received from
the sale of the Ruidoso property, with no offset of basis.
Respondent concedes that sec. 874(a) allows petitioner to use the
basis in the property to determine the amount of the gain or
loss. Sec. 874(a) does, however, deny a deduction for a loss
under sec. 165.
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