- 17 -
activities related to the apartment building and commercial
building in 1995.
Petitioners made general estimates of the hours that each
spent on administrative work, and those estimates were neither
supported by calendar entries nor calculated with respect to each
real estate rental property. Activities performed by Mrs. Fowler
would be aggregated with those of petitioner for purposes of the
material participation requirement of section 469(c)(1)(B). See
sec. 469(h)(5). However, several of the administrative
activities that petitioners performed are investor-related
activities and, thus, are not treated as participation in the
activity. See sec. 1.469-5T(f)(2)(ii)(A), Temporary Income Tax
Regs., 25 Fed. Reg. 5697 (Feb. 25, 1988).
Interest
Respondent disallowed petitioner’s deductions of $43,874 and
$2,887 in 1994 and 1995, respectively, for “other interest” that
petitioners claimed on Schedule C for United Contractors. The
amounts deducted represent deficiency interest that petitioners
paid on tax deficiencies that related to their unincorporated
Schedule C business. Respondent’s disallowance is based on
section 163(h)(2)(A), which generally disallows a deduction for
personal interest, and on section 1.163-9T(b)(2)(i)(A), Temporary
Income Tax Regs., 52 Fed. Reg. 48409 (Dec. 22, 1987), which
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011