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claim a maximum loss of $25,000 per year related to the rental
real estate.6
The general provisions for deductibility of ordinary and
necessary business expenses under section 162 must be read in
conjunction with the passive activity loss rules of section 469.
These sections must be construed together with more specific
provisions prevailing over general ones. Cf. United States v.
Estate of Romani, 523 U.S.__, 118 S. Ct. 1478 (1998).
Petitioners cannot completely circumvent the passive activity
loss rules merely by asserting that they are in the trade or
business of renting real estate.
Accordingly, respondent is sustained on this issue, and
petitioners' net loss for rental real property for 1990 is
limited to $25,000.
Issue 4. Addition to Tax Under Section 6651(a)
Respondent determined an addition to tax under section
6651(a) for delinquent filing of a return.
Petitioners were required to file their 1990 Federal income
tax return by October 15, 1991. Petitioners provided a certified
mail receipt indicating that their return was mailed on October
6 This exemption provided in sec. 469(i) is phased out
for taxpayers whose adjusted gross income is greater than
$100,000. Sec. 469(i)(3)(A). Respondent did not seek to invoke
the phaseout, and so we do not address the issue.
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