-5- reported rental receipts of $1,814 and expenses of $27,643, resulting in a loss of $25,829. In 1992, they had $4,368 in rental receipts and $28,353 in expenses, resulting in a loss of $23,985. Petitioners used these losses to offset other income. In 1991 and 1992, petitioners reported taxable income of $3,925,065 and $307,638, respectively. Respondent determined that the losses from the Vermont condominium constitute passive activity losses within the meaning of section 469(a) and accordingly disallowed most of the losses in the years under consideration. OPINION Pursuant to section 469(a), a passive activity loss is generally not allowed as a deduction for the year sustained. Section 469(d)(1) defines a passive activity loss as the amount by which (A) the aggregate losses from all passive activities for the taxable year exceed (B) the aggregate income from all passive activities for such year. Passive activities are those activities which involve the conduct of a trade or business in which the taxpayer does not materially participate. Sec. 469(c)(1). Rental activity ordinarily is treated as a passive activity irrespective of whether there was material participation. Sec. 469(c)(2), (4). However, an exception exists for rental activity in which the average rental is no more than 7 days. Sec. 1.469-1T(e)(3)(ii)(A), Temporary Income Tax Regs, 53 Fed. Reg. 5702 (Feb. 25, 1988). In the instant case, the parties agree that the average rental period for petitioners' Vermont condominium was less than 7 days.Page: Previous 1 2 3 4 5 6 7 8 9 Next
Last modified: May 25, 2011