Ronald P. Barranti and Stephanya M. Barranti - Page 15

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          than those specified in section 280A(b).  No other rental                   
          expenses are allowable under section 280A, because during 1993              
          the property was never rented at a fair rental.  See sec.                   
          280A(e); McDonald v. Commissioner, T.C. Memo. 1991-242; Bindseil            
          v. Commissioner, T.C. Memo. 1983-411; Gilchrist v. Commissioner,            
          T.C. Memo. 1983-288; Saunders v. Commissioner, T.C. Memo. 1982-             
          322.                                                                        
          Loss on Sale                                                                
               Section 165 allows individual taxpayers to take a                      
          deduction for losses incurred in a "trade or business" and "any             
          transaction entered into for profit".  Sec. 165(c)(1) and (2).              
          Accordingly, once it has been established that a taxpayer held              
          property in a trade or business or for the production of income             
          and that his or her motives were profit driven, that individual             
          may, subject to certain limitations,6 deduct any subsequent loss            
          incurred on the disposition of the property.                                
               Trade or Business                                                      
               Petitioners assert that petitioner was engaged in the trade            
          or business of renting her property.  The Supreme Court has                 
          stated that to be engaged in a trade or business, the taxpayer              
          must be involved in the activity with continuity and regularity,            

               6For example, if an individual taxpayer sustains a loss on             
          the sale of a capital asset, the taxpayer's deduction for that              
          loss would ordinarily be subject to the limitations applicable to           
          capital losses, notwithstanding that the property was held for              
          the production of income.  See sec. 1211.                                   




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