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rent. As of the close of 1996, petitioner owned five such rental
properties, one of which was purchased that year. Two of the
rental properties are four-unit apartment buildings; the other
three properties are two-unit apartment buildings.
For the most part, petitioner was solely responsible for
managing and maintaining his rental properties. Among other
things, he met with prospective tenants, negotiated and prepared
leases, collected rent, and, from time-to-time, initiated and
prosecuted eviction proceedings. He personally made repairs to
his rental properties, and he arranged for repairs to be made by
third-parties. Petitioner reviewed financial statements, made
monthly payments to various creditors, and developed and
maintained a bookkeeping system for recording the income and
expenses attributable to his rental real estate activity.
Petitioner maintained a detailed “activity records log” (the
log), updated at least on a weekly basis, in which he recorded
time spent performing personal services in connection with his
rental real estate activity. According to the log, during 1996
petitioner spent 2,440 hours performing various personal services
in connection with his rental real estate activity, including
1,440 hours of what is described in the log as “phone-in office
hours 360 days a year.”
On the Schedule E included with his 1996 return petitioner
reported the following income and expenses attributable to his
rental real estate activity:
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Last modified: May 25, 2011