- 2 -
should not be cited as authority.
Some of the facts have been stipulated and are so found.
The stipulation of facts and the accompanying exhibits are
incorporated herein by this reference. Petitioners resided in
Grangeville, Idaho, at the time the petition was filed.
Respondent determined a deficiency of $8,506 in petitioners’
1996 Federal income tax. After concessions,2 the issue for
decision is whether petitioners’ losses during 1996 constitute
nondeductible passive losses under section 469.
Background
In 1976, Robert Blewett (petitioner) and his brother, Don
Blewett, organized Highland Enterprises, Inc. (Highland), a C
corporation. Petitioner and his brother each owned 50 percent of
the outstanding stock of Highland during 1996. Throughout the
year in issue, Highland was engaged in two separate businesses:
a general heavy construction business and a real estate sales
business. Highland’s general heavy construction business
included building logging and fire roads for the U.S. Forest
Service and private logging companies, building roads for
governmental entities, constructing homes and commercial
buildings, and developing residential and commercial land
subdivisions (including the building of streets, curbs,
2Petitioners concede that they improperly failed to report
interest income of $72 and income of $1,724 from a jewelry sales
business on their 1996 Federal income tax return.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Next
Last modified: May 25, 2011