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losses in the amount of $74,763. The notice of deficiency
does not explain how this adjustment was computed or why
it is $413 more than the deduction claimed with respect to
the Cloudia. The amount of the adjustment appears to be
the difference between the aggregate amount deducted on
Schedule E, $78,751, and the current year loss with
respect to the property at 1813-15 NW 12th, $3,988. Thus,
it appears that in computing the adjustment respondent
disallowed a current loss with respect to the property at
2709 NW 12th in the amount of $113 and disallowed losses
accumulated from prior years with respect to the properties
at 1813-15 NW 22d and 1809 Carey Place in the amount of
$617 and $1,172, respectively.
OPINION
The principal issue in this case involves respondent's
disallowance of $74,763 of the deductions claimed by
petitioner on the Schedule E, Supplemental Income and Loss,
filed as part of petitioner's 1990 return. Petitioner
argues that this amount is deductible under section 212(1)
or (2). The premise of petitioner's argument is that the
entire amount of the adjustment is attributable to
"Petitioner's conduct of the Cloudia activity". However,
according to petitioner's 1990 return, after applying the
passive loss limitation rules of section 469, petitioner
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