- 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