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which generated a loss for the year. Four of those properties
generated zero rental income, including the property with the
greatest loss and the most expenses. The Schedule E attached to
the 1987 Form 1040 indicates that four of the properties that
generated losses in 1988 also generated losses in 1987 and that
two of the properties that produced zero rental income in 1988
did the same in 1987.
The holding of real property for rental purposes normally
constitutes the use of the property in a trade or business. See
Lagreide v. Commissioner, 23 T.C. 508, 512 (1954). Losses
incurred by an individual in conducting a trade or business are,
subject to certain restrictions not here relevant, deductible
pursuant to section 165(a) and (c)(1).9 Losses are not
considered to have been incurred in a trade or business unless it
is shown that the activity in question was undertaken with the
primary motive or intention of making a profit. Lamont v.
9 SEC. 165. LOSSES.
(a) General Rule.--There shall be allowed as a
deduction any loss sustained during the taxable year and
not compensated for by insurance or otherwise.
* * * * * * *
(c) Limitation on Losses of Individuals.--In the case
of an individual, the deduction under subsection (a) shall
be limited to--
(1) losses incurred in a trade or business;
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