Douglas E. Kahle - Page 1

                                        T.C. Memo. 1997-90                                            


                                     UNITED STATES TAX COURT                                          


                                DOUGLAS E. KAHLE, Petitioner v.                                       
                        COMMISSIONER OF INTERNAL REVENUE, Respondent                                  


                  Docket No. 19712-94.                Filed February 20, 1997.                        


                        P, an individual, owned rental real estate, which                             
                  produced passive losses under sec. 469, I.R.C.  P was                               
                  also a partner in partnership A, which had nonpassive                               
                  losses from a nonrental real estate operation.  Held, P                             
                  could not combine the rental operation and nonrental                                
                  operation into a single undertaking, and thus could not                             
                  deduct passive losses as active losses, because the                                 
                  resultant undertaking would not pass the common                                     
                  location/ownership test of sec. 1.469-4T(c)(2),                                     
                  Temporary Income Tax Regs., 54 Fed. Reg. 20544 (May 12,                             
                  1989), and because the de minimis exception of sec.                                 
                  1.469-4T(d), Temporary Income Tax Regs., 54 Fed. Reg.                               
                  20547 (May 12, 1989), is not satisfied.  Held, further,                             
                  P was liable for additions to tax under secs. 6653(a)                               
                  and 6661(a), I.R.C., and for a penalty under sec.                                   
                  6662(b), I.R.C.                                                                     

                  Douglas E. Kahle, pro se.                                                           
                  Veena Luthra, for respondent.                                                       






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