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upkeep of the premises. The agreement required VDS to pay for
the cost of repair and replacement of the unit's furnishings and
household items, which would then be assessed as a shared expense
of the condominium association. VDS was also responsible for
paying all utility bills allocable to the unit, although
petitioner retained ultimate liability for those expenses. Items
of expense incurred by VDS on behalf of unit owners include:
Front desk, telephone, housekeeping, maintenance, administration,
accounting, marketing, replacement reserves, and electricity.
Furthermore, the unit was available to VDS for up to 5 days per
calendar year for promotional purposes, without payment of rent
to petitioner. Lastly, the agreement could be terminated at
will.
The record does not reflect the average period of customer
use of petitioner's unit. On Schedule E of their returns for the
taxable years in issue, petitioners reported income and claimed
expenses concerning their rental real estate as follows:
1991 1992 1993
Rent received $ 8,829 $ 9,513 $ 9,063
Expenses including depreciation (15,003) (14,284) (14,491)
Loss 6,174 4,771 5,428
A portion of the losses reflected on Schedules E for each of the
years in issue relates to petitioner's condominium unit.3
3 The items of income and expense reflected on petitioners'
(continued...)
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Last modified: May 25, 2011