Walter A. Barniskis and Mary Sue Barniskis - Page 9

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               activity of any other individual (including individuals                
               who are not owners of interests in the activity) for                   
               such year;                                                             
                    (4)  The activity is a significant participation                  
               activity * * * for the taxable year, and the                           
               individual's aggregate participation in all significant                
               participation activities during such year exceeds 500                  
                    (5)  The individual materially participated in the                
               activity * * * for any five taxable years (whether or                  
               not consecutive) during the ten taxable years that                     
               immediately precede the taxable year;                                  
                    (6)  The activity is a personal service activity                  
               * * * and the individual materially participated in the                
               activity for any three taxable years (whether or not                   
               consecutive) preceding the taxable year; or                            
                    (7)  Based on all of the facts and circumstances                  
               * * * the individual participates in the activity on a                 
               regular, continuous, and substantial basis during such year.           
               Petitioners argue that they satisfy the requirements of                
          section 1.469-5T(a)(3), Temporary Income Tax Regs., 53 Fed. Reg.            
          5726 (Feb. 25, 1988).  Respondent argues that petitioners have              
          not satisfied this material participation test.                             
          Petitioners' Participation                                                  
               We must first decide whether petitioners participated in the           
          rental of their unit for more than 100 hours during each of the             
          taxable years in issue.  Section 1.469-5(f)(1), Income Tax Regs.,           
          generally provides that any work done by an individual in                   
          connection with an activity in which the individual owns an                 
          interest at the time the work is done shall be treated as                   
          participation of the individual in the activity.  We consider               

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