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Petitioners filed their 1996 and 1997 Federal income tax
returns timely. On the 1996 return, Mr. Jahina’s occupation was
listed as “engineer”. Mrs. Jahina’s occupation was listed as
“controller”. On the 1997 return, Mr. Jahina’s occupation was
again listed as “engineer”. Mrs. Jahina’s occupation was listed
as “accountant”. Petitioners included Schedule E, Supplemental
Income and Loss statement, with their returns for both years.
They completed line 42, Reconciliation for Real Estate
Professionals, on the Schedule E. They aggregated their real
estate income and losses and, in each year, attached breakdowns
of income and expenses by property. They reported net losses of
$128,167 in 1996 and $95,533 in 1997.
For 1996, petitioners did not include with their original
return or otherwise file an election to treat their rental
properties as one rental activity. Mrs. Jahina claims to have
provided an election form to the revenue agent later. For 1997,
petitioners claim to have filed the election with their original
return; however, no such election was attached to the 1997
return. Neither claimed election was offered into evidence at
trial.
2(...continued)
time representing each session of desk work, which would have
included both the actual phone time and the intervening time
spent preparing for and following up on the phone calls, toward
her participation in the rental property activity.
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