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property as well as recurring income such as rent. Mitchell v.
Commissioner, 47 T.C. 120, 128 (1966). In light of petitioner's
other real estate activities in Florida, we believe he originally
acquired and held the house with the expectation of realizing
gain upon its disposition. We conclude that petitioner
reasonably believed that the house was depreciable. Therefore,
he had reasonable cause and acted in good faith, and the
underpayment arising from the disallowed depreciation is not
attributable to negligence. Secs. 6662(b)(1), 6664(c)(1); see
Rezazadeh v. Commissioner, T.C. Memo. 1996-245, affd. without
published opinion 132 F.3d 36 (7th Cir. 1997).
Miscellaneous Expenses
The following chart lists various additional expenses
claimed by petitioner on Schedule C for 1990 and 1991 that were
challenged by respondent. The second column shows the amount to
which the parties have stipulated that petitioner is entitled,
the third column shows the amounts originally claimed by
petitioner on his returns, and the fourth column shows the
difference; i.e., the amount petitioner claimed to which he now
concedes he is not entitled.
Expense Stipulated Claimed Difference
1990 Taxes $2,719 $3,100 $381
1991 Taxes 4,976 6,139 1,163
1990 Utilities 1,637 1,861 224
1991 Miscellaneous1 7,101 9,942 2,841
1Aggregate figure for legal fees, utilities, insurance, and
rent.
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