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Petitioners deducted $5,852 on Schedule E as a loss
sustained in renting petitioner's property during 1993.4 In
addition to a depreciation expense of $2,895, petitioners
deducted $415 for repairs, $80 for cleaning and maintenance,
$2,900 for the cost of recovering the floors in carpet and vinyl,
$415 for the replacement of the garage door, and $521 for
insurance expense.5 Respondent disallowed these expenses because
petitioners did not provide any evidence that the property
actually was rented, or substantiate the expenses.
We have found that petitioner rented the property to Murray
for a below-market rental amount. Murray is petitioner's
brother. A brother is a family member as defined in section
267(c)(4). Accordingly, the property constitutes a dwelling unit
used as a residence by petitioner under section 280A, and
petitioner is not entitled to deduct the rental expenses other
4Petitioners stipulated that they actually paid $300 in
property taxes, rather than the $1,639 they claimed on their
return. At trial petitioner conceded that a reported utilities
expense of $402 was claimed in error.
5Petitioners submitted copies of some documents to verify
these expenses. The carpet and vinyl vendor's invoice is dated
Apr. 27, 1992, and shows the cost was actually $2,850. The copy
of the insurance company's statement shows that the coverage was
from Nov. 28, 1992 to Nov. 28, 1993, and that $176.84 was paid on
Nov. 9, 1992. Thus, these expenses were incurred and paid in a
year other than the one at issue.
The invoice for the garage door is dated after petitioner
quit her rental activity. This expense was incurred to fix up
the property for sale and is an adjustment to the amount
realized.
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