Walter A. Barniskis and Mary Sue Barniskis - Page 2

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               Respondent determined deficiencies in petitioners' Federal             
          income taxes for 1991, 1992, and 1993 in the amounts of $2,675,             
          $2,842, and $2,366, respectively.                                           
               The issue for decision is whether petitioners' claimed                 
          Schedule C losses for 1991, 1992, and 1993 constitute passive               
          activity losses under section 469.  The resolution of this issue            
          turns on whether petitioners materially participated in the                 
          activity of renting their condominium unit during the taxable               
          years in issue.                                                             
               Some of the facts have been stipulated and are so found.               
          The stipulations of fact and attached exhibits are incorporated             
          herein by this reference.  Petitioners resided in New Hope,                 
          Minnesota, on the date the petition was filed in this case.                 
               Petitioner husband works as an engineering manager for                 
          Honeywell Corporation at its sensor guidance products division in           
          Minneapolis, Minnesota.  His formal education consists of a                 
          bachelor's degree in electrical engineering from the University             
          of Notre Dame and some graduate courses in the electrical                   
          engineering program at the University of Minnesota.  Petitioner             
          wife works as a librarian.                                                  
               In October 1987, petitioners purchased condominium unit                
          number 40 (the unit) at Bluefin Bay, a condominium complex                  

          issue.  All Rule references are to the Tax Court Rules of                   
          Practice and Procedure.                                                     

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