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Petitioners, however, are required to put forth some indication of
the actual time spent by the Wavecrest Resort staff during 1993,
including the front desk services during the 5 weeks that
petitioners rented out the Molokai condo, maid service, and any
other services performed by others. See Goshorn v. Commissioner,
supra. Petitioners did not do so. Consequently, we are unable to
conclude that petitioners' participation in the rental of their
Molokai condo was greater than others.6 See Rule 142(a); Welch v.
Helvering, 290 U.S. 111 (1933). Thus, we hold that petitioners did
not materially participate in the rental of their Molokai condo.
To summarize, the losses sustained by petitioners during 1993
in the operation of their Maui condo are deductible, and the losses
sustained in the operation of their Molokai condo are passive
activity losses, and thus nondeductible, pursuant to section
469(a).
Issue 2. Accuracy-Related Penalty
Section 6662 imposes an accuracy-related penalty equal to 20
percent of the portion of the underpayment attributable to a
substantial understatement of tax. Respondent seeks to impose the
penalty with respect to Mrs. Pohoski's claimed Schedule C expenses
for her work as a nurse, and for petitioners' claimed passive
6 For the same reasons, petitioners' assertion on brief
that they may also come within the safe harbor provided in sec.
1.469-5T(a)(2), Temporary Income Tax Regs., 53 Fed. Reg. 5725
(Feb. 25, 1988), must fail.
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