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the condominium association. Petitioner, however, performed no
personal services for his tenants in connection with his real
estate rental property activity. Petitioner was not a real
estate dealer. Respondent conceded that petitioner’s real estate
rental property activity was not passive as defined in section
469.
Petitioner explained his long-term objective for his real
estate rental property activity as a “401(k) or * * *
profitsharing or something to retire on, because I don’t have any
other thing besides that. * * * Basically if I can get enough of
this going on and it could be viable, then I could actually quit
the construction business and live on this.”
In 1996, petitioner claimed an earned income credit (EIC or
EITC) of $2,079. Respondent disallowed the credit on the ground
that petitioner’s real estate rental income was “disqualified
income” and prohibited him from claiming the EIC.
Discussion
Section 32(a) provides a credit in “an amount equal to the
credit percentage of so much of the taxpayer’s earned income
* * * as does not exceed the earned income amount.” Section
32(i), however, provides in pertinent part as follows:
(1) In general.-–No credit shall be allowed under
subsection (a) for the taxable year if the aggregate amount
of disqualified income of the taxpayer for the taxable year
exceeds $2,200.
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