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He did not advertise the Cloudia’s availability for rental.
A summary of the income realized and expenses incurred by
petitioner from 1985 through the year in issue with respect
to the Cloudia is as follows:
Rental Mortgage Cash 1Net Income
Year Income Interest Expenditures Depreciation (Loss)
1985 -- $5,242 -- -- 2
1986 -- 4,800 -- -- 2
1987 $825 -- $3,920 $3,929 ($7,024)
1988 1,200 -- 4,768 30,690 (34,258)
1989 680 -- 12,049 29,038 (40,407)
1990 600 -- 13,014 20,741 (33,155)
Total 3,305 10,042 33,751 84,398 (114,844)
1The amounts in this column were not deducted dollar-for-dollar on
petitioner's returns because petitioner treated the rental of the Cloudia as
a passive activity subject to the limitation on the deduction of passive
activity losses set forth in sec. 469.
2No net income (loss) figure is computed for this year because
petitioner claims that the vessel was not placed in service until 1987.
Petitioner did not maintain any formal or consistent
method of recording his expenditures with respect to the
Cloudia. He occasionally collected receipts and stored
them in a box. He kept receipts on the sailboat, at home,
and at his attorney’s office. Petitioner used the same
bank account for his law practice, his activities involving
the Cloudia, his personal expenses, and his residential
rental properties, discussed below. Petitioner did not
maintain a ledger or set of books with respect to any of
his activities involving the Cloudia.
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