Steven D. Rapp and Judith A. Rapp - Page 6




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          these repairs and improvements or to authorize TMC to make them.            
          If they failed to comply by certain dates, TMC would arrange for            
          the work to be performed by its employees or subcontractors and             
          charge petitioners accordingly.                                             
               Petitioners traveled to Bluefin Bay 4 to 6 times during each           
          of the taxable years in issue.  In most cases, petitioners would            
          stay at Bluefin Bay in their unit for a long weekend.  They also            
          spent one full week each year in their unit.  Petitioners' trips            
          to Bluefin Bay usually combined family vacations with owner                 
          activities such as attending board meetings and/or making some              
          repairs to their unit.  Petitioner husband also participated in             
          BBCA meetings at locations close to petitioners' residence during           
          the taxable years in issue.                                                 
               On Schedules C attached to their 1991, 1992, and 1993                  
          returns, petitioners reported the following amounts with respect            
          to the rental of their unit:                                                
                              1991              1992        1993                      
               Gross Income   $32,380.34     $31,281.31     $37,174.23                
               Total Expenses   (41,463.72) (40,864.03)     (43,834.35)               
               Net Loss       ( 9,083.38) ( 9,582.72)       ( 6,660.12)               
               Petitioners claimed business loss deductions on their 1991,            
          1992, and 1993 returns in amounts equal to the amounts of their             
          net losses reported on the Schedules C.  In the statutory notice            
          of deficiency, respondent disallowed the claimed business loss              
          deductions on the ground that the claimed losses were sustained             






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