Karl and Birgit Jahina - Page 8




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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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