- 6 -
principal business activity.6 Although petitioner's Schedule C
does not reflect any income for 1992, his Schedule E reflects
rental income and expenses from petitioner's properties.7 The
1992 return also reflects that petitioners each received wages
from employment unrelated to the Schedule C or rental activity
and that petitioners' wages from such employment totaled
$91,343.65.
Petitioner's 1993 Schedule C reflects "Real Estate--
Managing Residential Property" as his principal business
activity. Again, the Schedule C does not reflect any income.
The Schedule E, however, reflects rental income and expenses
attributable to petitioner's properties. For 1993, petitioners
reported wages in the total amount of $34,821.17.
Respondent determined that petitioners are not entitled to
the claimed business bad debt deduction in the amount of $31,060
on Schedule C of their 1992 return. Respondent further argues
that if petitioners are entitled to a bad debt deduction with
respect to the amount described above, then the loss should be
characterized as a nonbusiness bad debt rather than a business
bad debt. Respondent also determined that the $2,500 in legal
6 Petitioner's Form 1040 for 1989 does not include a
Schedule C.
7 Petitioner also reported rental income and expenses from
his properties on Schedule E for 1987, 1988, and 1989.
Petitioner did not list the Fort Washington property on Schedule
E for either the tax years in issue or previous tax years.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011