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1997 and (2) whether petitioners materially participated in the
operation of their Lake Arrowhead property during 1996 and 1997.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
FINDINGS OF FACT
Some of the facts have been stipulated, and the stipulated
facts are incorporated in our findings by this reference.
Petitioners resided in La Jolla, California, at the time
they filed their petition. Petitioners filed joint individual
income tax returns for 1996 and 1997.
Petitioners are both attorneys admitted to practice in
California. Petitioner is an employee of Judy R. Bailey, a
professional corporation, and practices in San Diego, California.
During 1996 and 1997, petitioners owned the following real
estate properties, all of which were located in California:
(1) A condominium located at Arapaho Way, Indian Wells (Indian
Wells condominium); (2) a unit in a planned unit development
located at Arapaho Drive, Indian Wells (Indian Wells unit);
(3) two four-plex buildings located at Elderwood Court, Riverside
(Elderwood properties); and (4) a single-family house located at
Caribou Drive, Lake Arrowhead (Lake Arrowhead property).
Petitioners filed an election, with their income tax return in
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