Steven D. Rapp and Judith A. Rapp - Page 2




                                        - 2 -                                         
               Respondent determined deficiencies in petitioners' Federal             
          income taxes for 1991, 1992, and 1993 in the amounts of $2,548,             
          $2,772, and $2,774, 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 Roseville,                
          Minnesota, on the date the petition was filed in this case.                 
               Petitioner husband works as a manager of a commercial unit             
          for Norwest Banks.  His formal education includes a bachelor's              
          degree from the University of Minnesota and a master's degree               
          from Mankato University.                                                    
               In 1988, petitioners purchased condominium unit number 6               
          (the unit) at Bluefin Bay, a condominium complex located in                 
          Tofte, Minnesota.  Tofte is located on the shore of Lake Superior           
          in Superior National Forest, approximately 225 miles northeast of           
          petitioners' residence.                                                     


          1(...continued)                                                             
          issue.  All Rule references are to the Tax Court Rules of                   
          Practice and Procedure.                                                     




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