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whether a taxpayer materially participates, the participation of
the spouse of the taxpayer shall be taken into account. Sec.
469(h)(5).
Petitioners claim that petitioner spent 1,555.5 hours and
1,052.5 hours in 1994 and 1995, respectively, on rental real
estate properties. Petitioners’ estimate of the hours of work
done on rental properties is based on petitioner’s calendar
entries, petitioner’s estimate of hours spent traveling to and
from the rental properties, and petitioners’ estimate of hours
spent performing administrative work.
Petitioners also claim that petitioner worked at United Air
Temp a total of 694 hours and 742.5 hours in 1994 and 1995,
respectively, and that all of these hours were related to real
property trades or businesses under section 469(c)(7)(D)(ii)
because petitioner was an employee of United Air Temp.
Petitioners assert that United Air Temp is a real property trade
or business under section 469(c)(7)(D)(i) because more than 50
percent of its gross receipts is derived from real property
trades or businesses.
Section 469(c)(7)(D)(ii) provides:
(ii) Personal services as an employee.–-For
purposes of [qualifying as a real estate professional
under] subparagraph B, personal services performed as
an employee shall not be treated as performed in real
property trades or businesses. The preceding sentence
shall not apply if such employee is a 5-percent owner *
* * in the employer.
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