Bruce and Judy Bailey - Page 13

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          activities.  Petitioner attempted to summarize the activities               
          that were noted in her 1997 calendar into a summary report, in              
          which she generally explained the activities performed at the               
          rental properties and provided an annual estimate of the hours              
          spent on each rental property.  Excluding petitioner’s estimate             
          of the hours that she spent on activities directly related to the           
          Lake Arrowhead property, petitioner’s summary report estimated              
          that she spent 827 hours performing services related to the                 
          rental properties during 1997 and consisted of the following:               
          (1) Indian Wells properties, 311 hours; (2) Elderwood properties,           
          412 hours; and (3) general activities for all real estate                   
          properties (including the Lake Arrowhead property), 104 hours.              
          We believe that the methods that petitioner used to approximate             
          the time that she spent performing these services during 1997 are           
          not reasonable within the meaning of section 1.469-5T(f)(4),                
          Temporary Income Tax Regs., supra.  Petitioner’s estimates are              
          uncorroborated and do not reliably reflect the hours that she               
          devoted to her rental real estate activities.  Petitioner                   
          assigned hours to activities years later, and in preparation for            
          trial, based solely on her judgment and experience as to how much           
          time the activities must have taken her.  This Court has                    
          previously noted that, while the regulations are somewhat                   
          ambivalent concerning the records to be maintained by taxpayers,            
          they do not allow a postevent “ballpark guesstimate”.  Carlstedt            

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